Cash Transfers in Africa: Generating Evidence on Impact

July 22, 2014

By

Dale Rutstein

New research shows social cash transfer programs may be very effective.

Dale Rutstein is chief of communication and advocacy for the UNICEF Office of Research-Innocenti in Florence, Italy.

For a long time now, the international development community has been looking into the benefits of simply giving cash to the poorest families. One theory is that rather than investing large amounts in costly and wasteful government bureaucracies, delivering small amounts of cash to materially deprived households could be a much more efficient and flexible way to provide aid directly where it is needed most. Now, especially in Africa, data is piling up which may prove the theory right.

Zambia: a case study

The UNICEF Office of Research-Innocenti is currently supporting an in-depth, long-term research partnership to scientifically measure the impact of cash transfer programs across a wide stretch of sub-Saharan Africa. Using rigorous impact evaluation standards, hard evidence is mounting that tiny monthly cash transfers can bring about significant improvements for children, especially in the most remote rural communities where services are limited or non-existent.

Below is a fascinating table showing the impact of the Zambian Government’s Child Support Grant programme, a $12/month unconditional payment targeting households with young children in Zambia’s three poorest districts. In key indicators of material poverty, early child development, income generation and agricultural productivity, significant, tangible improvements were found to be related to cash transfers, not other factors.

Zambia is one of 13 countries involved in the Transfer Project impact evaluation in sub-Saharan Africa. There are now at least 30 social protection programmes in this region based on long-term application of cash transfer strategies. And in 19 of them, there are rigorous evaluations of the impact on the most vulnerable children underway. When current impact evaluations are complete, the world may well look to Africa to find the most up-to-date research on the possible impact of cash transfers.

A better tool for development?

Having first emerged in Latin America in the 1990s, cash transfer programs in Africa are now sparking important social gains in food security, school attendance and promotion of young people’s safe transition to adulthood. One impact assessment (pdf) of the Child Support Grant in South Africa has shown statistically significant associations between receipt of the grant and adolescents reduced sexual activity, reduced pregnancy and reduced alcohol and drug use.

Research findings on cash transfers are beginning to spark talk of the development “silver bullet.” Sudhanshu Handa, social policy expert with the UNICEF Office of Research-Innocenti, recently took part in a debate in Washington, D.C., titled “Cash Transfers: The New Benchmark for Foreign Aid?” where questions such as “When are cash transfers better than traditional aid?” and “Should aid be benchmarked against the cost effectiveness of cash transfers?” were thrashed out.

In a period of austerity, cost effectiveness of development aid is more critical than ever. The development community can now look to Africa for hard-nosed evidence on the impact of cash transfers.

Read more about the UNICEF Office of Research's current projects.