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Direct cash transfers have bigger impact, says study

Direct cash transfers have more impact on the needy
Direct cash transfers have more impact on the needy, a new research has shown, noting that targeted development programmes to such people yield little. FILE PHOTO | NMG 

Direct cash transfers have more impact on the needy, a new research has shown, noting that targeted development programmes to such people yield little.

Through a random controlled trial on low-income Kenyans, a research by Busara Center for Behavioral Economics shows that cash transfers for aid are more effective at building feelings of autonomy and respect among recipients.

“We do find that cash transfers increase feelings of autonomy and produce more favorable views of the implementing organisation than non-cash interventions,” says the research.

“When agencies operate programmes providing goods and services such as subsidised commodities and basic agricultural extension with high overhead costs, they are likely destroying value for recipients relative to cash transfers.”

The research, “The impact of recipient choice on aid effectiveness”, was authored by Jeremy Shapiro and published at World Development, a monthly peer-reviewed academic journal covering development studies.

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Dr Shapiro, an advisor at Busara Centre, concluded that non-cash programmes such as agricultural extension, subsidised agricultural inputs, and poultry transfers yielded little at a higher cost when compared to unconditional cash transfers.

“This mirrors a shift in international aid: from paternalistic colonial origins to a focus on the poor as agents in bringing about economic development,” he said. The study reinforces last year’s recommendations by World Bank that the Treasury should ramp up allocations for direct cash transfer programmes beyond the 519,878 Kenyans covered as at 2015 under the social safety net plan.

“These programmes, which have been introduced only recently, should further be expanded in order to increase their poverty-reducing effect,” WB said in country economic report.

Dr Shapiro concludes that aid organisations should avoid development programs, that mostly come with high overhead costs, yet cash transfers are as effective.

He wants aid organisations and governments to consider a holistic view of recipient welfare, including perceptions of the process in choosing among available interventions

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