Cash-Transfer Programs Show Remarkable Success in Fight Against Global Poverty

Various paper currencies laid out in an overlapping manner

Last week, Newsweek published a story about how a growing strategy against global poverty is showing strong signs of success. The plan isn’t about infrastructure, or making necessities like food, water, and education more readily available. It involves handing out cash directly to those who need it.

As she approaches her 50th birthday this month, Zanele Figlan has seen firsthand what does and does not work in the fight against global poverty. Living in a shack on the outskirts of Cape Town, her family serves as a reminder of South Africa’s 15-year failed effort to house its poor. Instead, Figlan says, the most effective help she receives is the $1 a day the government provides for each of her two youngest sons, which amounts to more than double her monthly income and allows her to make sure they’re well fed. It also means she can afford to send them to a reputable school in a wealthier part of the city, something that was previously unthinkable.

At first glance, simply handing out cash to the poor may seem naive. When cash-transfer programs, as they’re known in the parlance of international aid, first rolled out in Latin America in the 1990s, they were met with skepticism, especially from development agencies more intent on structural reform than redistributing wealth. More than a decade later, however, evidence shows that even modest payments grant the world’s poorest the power to make their own decisions; it also indicates that they make smart choices, especially on matters of health and education. Today, cash-transfer programs are thriving in some 45 developing countries and helping more than 110 million families. The World Bank has put at least $5.5 billion into nearly a hundred different projects.

What some may find most shocking of all is that attaching restrictions to the funds actually decreases their overall impact:

One of the biggest impacts of these programs: education. Since its launch more than a decade ago, South Africa’s Child Support Grant has cut the number of children out of school in half. South Africans are free to use their payment any way they wish, but some countries require school enrollment to keep the money coming in. “It changes the dynamics of the way people conceptualize welfare,” says John Hoddinott, a senior research fellow at the International Food Policy Research Institute. “Both parties have rights and responsibilities.” In many cases, however, simply having cash in hand allows parents to keep their children in the classroom. “Poor households … need the labor of their children; that’s why they don’t send them to school,” says Santiago Levy, the architect of Mexico’s cash-transfer program, now called Oportunidades. But what works in one country doesn’t always work in another. In Malawi, one of the least-developed countries in the world, the World Bank compared two different groups of school-age girls: one was given cash only if they went to school; the other was simply given the money. The results showed little difference in attendance. In fact, those without conditions fared better when it came to reducing teen pregnancy and teen marriage, factors that often pull Malawian girls out of the classroom.

Now, it should be against emphasized such ideas aren’t really “new.” Activists working on poverty issues both locally and globally have advocated similar plans for a long time. But they can certainly use all of the good press that they can get, because convincing people in powerful positions, and those who vote them into office, that the idea has incredibly strong merits is an uphill battle.

The strategy is rooted in a simple idea: people generally know what’s best for themselves. A whole lot better than those on the outside, who often don’t recognize or understand those needs, let alone the cultural and structural barriers preventing those needs from being met. I hope all of us here can agree that at the very least, countries and organizations providing aid should be doing so by asking the people in question what will improve their situation, and putting those people on the front lines of the decision-making process, rather than making an assumption and running with it. But even then, the idea of just handing out cash can seem pretty radical.

It should be said up front that giving funds to individuals doesn’t solve structural problems. No one’s claiming it does. Indeed, the Newsweek article itself notes this:

That said, cash-transfer programs are hardly a magic bullet. Giving money to poor mothers may increase school attendance, but it has yet to show it can improve dysfunctional schools or actual learning. Developing countries and international donors will have to find other ways to improve the quality of both health care and education.

There is no magic bullet to a problem as encompassing and multifaceted as global poverty. There’s no way to undo centuries of colonialism, imperialism, all other kinds of -isms, and capitalist damage overnight with a single course of action. The point isn’t that structural change is unnecessary, but that trying to change structures without giving individuals resources tends to not work as well as we’d hope. It seems that starting out with individuals and giving them the freedom and agency to make their own decisions — you know, treating them like adult human beings rather than a monolithic group or a “cause” — does a lot more good.

So why the political and popular resistance to cash-transfer type programs from countries and organizations that have the means to provide large amounts of aid, when they’ve been repeatedly shown to have a consistent positive impact? In part, because in the U.S. and other Western nations, we have pervasive stereotypes about poor people being lazy, irresponsible, and to blame for their own poverty. If only they made better choices, “we” say, and learned how to spend and save their money better, they could lift themselves up out of poverty and join the ranks of the middle class. As a result, there’s a middle class culture of people not wanting to give “their” money to low-income people, at least without highly restrictive and oppressive strings attached — after all, they haven’t earned it, and they’ll just waste it anyway. Of course, while this is a blatant, classist, racist myth in the U.S. and other Western nations where wealth is concentrated, it’s downright nonsensical when applied to people who live on less than one dollar day. And yet, the myth still seems to stubbornly hold.

There’s the further issue of these types of programs looking just a little bit too much like socialism. They are, after all, wealth redistribution. As long as socialism remains the big bad boogie man, especially in the U.S., there is going to be resistance. As long as people refuse to admit that unrestricted capitalism got the world into this mess, they’re not going to be willing to acknowledge that neither pure unrestricted capitalism nor traditional models of “charity” can get it out.

And another facet to the resistance is just good old-fashioned imperialism. Wealthy white-dominant nations remain convinced that they are rich because of a culture of hard work, rather than a culture of colonialism and theft. They thus also remain convinced that poor nations are poor because of a culture of laziness and poor values — or, at the very most generous, pure bad luck — rather than, much more commonly, because of histories and presents filled with colonization and oppression. Acknowledging the real reasons behind global poverty would require rich Western nations to take some responsibility, first of all. Secondly, it would cause powerful, wealthy, white-run nations to lose their sense of superiority over poor and overwhelmingly non-white nations and people. It would “rob” the U.S. and other countries of their supposed god-given right to “save” less fortunate people, to spread their all knowing sense of rightness, to enforce their system of beliefs regarding capitalism and social mores. If we, as Western nations, don’t attach strings to foreign aid, then we have no control over what recipients do and can’t make them listen to what we say.

And while that sounds utterly brilliant to me, there are a whole lot of people who unfortunately still have a problem with it. Even a lot of progressive folks will likely feel an immediate sense of uneasiness or even outrage the moment they see a recipient of a cash transfer use it to do something ethically questionable or even downright oppressive — forgetting that wealthy Western folks have been using cash in ways more powerful and oppressive than these recipients could ever dream for countless years, only to have no one bat an eye, let alone demand an immediate relinquishment of all of their funds.

That’s something I think it’s important to remember, in this discussion — while a vast majority of recipients of cash transfers have been shown to use them in ways that have been officially deemed “smart,” some will inevitably use them to do things some or most of us just flat out don’t like. But that is, frankly, precisely what people do with money. Always. Everywhere. And if it’s “our” right, then it should be considered “theirs” too.


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22 Responses to Cash-Transfer Programs Show Remarkable Success in Fight Against Global Poverty

  1. abby jean says:

    yay for cash grants without restrictions! this comes up a lot in the U.S., too, when low-income folks relying on government benefit programs find they don’t have money they’re allowed to use to buy things they need. for example, both food stamps and WIC (benefits for women with infants or young children) are restricted and cannot be used for diapers – which is something that people with infant children need a lot of. but since there’s no specific “diaper stamps” government benefit, they can be near impossible to afford or purchase.

    thanks, Cara, for highlighting the importance of this issue for both industrial and developing countries.

  2. An effective pro-choice argument, to me at least, is “Trust Women”. In this circumstance, “Trust People” would seem appropriate.

    The problem is that we really don’t trust other people, and the real tragedy is that we often don’t even trust ourselves.

  3. Mike says:

    I’ve studied programs like S6 in Sub-Saharan Africa and Kiva/various other microloan operations that have seen substantial success in a lot of less-developed nations. It would be interesting to compare those programs to this; obviously, the microloan programs require repayment, which would seem a more restrictive restraint than a school attendance requirement, but from what I recall, the default rates are stunningly low (something like 3%) and I know they’ve done a lot of good. I’d like to see some qualitative comparisons.

  4. Dana says:

    Wow, it’s so good to read something positive, even when it’s a drop in the bucket. I am so inclined to focus on the many, many roadblocks to helping people that I just avoid thinking about it. :/

    I still find it absolutely mind boggling that “socialism” is a dirty word in the US. I didn’t know that until I worked with a USAian a couple of years ago, well into my 20s! Sure, there are conservatives in NZ who are anti-socialism but it’s not a byword for *bad* here, and in fact I cannot imagine people being willing to *say* they dislike socialism because that’s like saying they dislike helping other people? Because? O_o

  5. Dank says:

    It’s a legacy of our long conflict with the Soviet Union. Anything associated with our arch-enemy was painted with the same ‘evil’ brush, which is turning out to have several interesting consequences since the USSR broke apart.

  6. Caroline says:

    I can’t come up with a though provoking comment, but I think was beautifully written.

    I will say, having done social work teens in court-ordered rehab, another analogy is all the issues with prison-industrial complex in the US. How the “we” need to “solve” crime (punish people) by locking people up, and further not helping them and in term breaking down their communities. (obviously a very incomplete breakdown)

    Or the USs great history of attaching welfare to birth control. And on and on.

  7. Rkel says:

    Dank, NZ and other more socialism-friendly countries were WELL within the western bloc during the cold war; we fought with the USA in Korea and Vietnam.

    It’s not really a legacy of the conflict, there is something more to it. Red scare was big business down here too, and in other western bloc/NATO countries during the Cold War.

  8. karak says:

    There’s a saying about how we hate most in others what we see in ourselves. Middle-class Americans live an entire life engineered by credit. Our ability to obtain good credit is a linchpin in our current social organization. And, as people who live on credit, buying bullshit we don’t need on credit, and living in a world wherein credit is absolutely vital to our existence, we can’t fathom how one of THOSE PEOPLE could possibly manage and spend money appropriately—because we don’t. And we honestly don’t have to. So, the assumption that “those poor people” are going to buy crap is a reflection of the fact that we middle-class and wealthy people often buy crap. But, see, WE’RE allowed to have crap, because our ability to buy crap without consequence makes us better people! (this logic is used about why those on welfare don’t deserve soda or lobster).

    I wonder about how these cash-transfers affect local economy. My guess is that it would stimulate it, creating a need for more goods and services, and (maybe) even help the locals get out of poverty–or at least take a step away from it.

    (The “we” I’m using refers to myself and the social class I belong to, not the lovely readers here at feministe, who are often not members of that over-privileged “we”.)

  9. Diana says:

    I’ve been aware of the impact that microloans make for awhile, and it’s significant. That such a small donation can make such a difference speaks volumes against the attitude that “giving a handout increases the problem.” This allows for these people to gain real independence. Yay!

  10. Kristen J. says:

    Rkel: Dank, NZ and other more socialism-friendly countries were WELL within the western bloc during the cold war; we fought with the USA in Korea and Vietnam.

    It’s not really a legacy of the conflict, there is something more to it. Red scare was big business down here too, and in other western bloc/NATO countries during the Cold War. Rkel

    I think Dank is on to something…not that it was the natural outcome of the cold war, but the way USian society processed the red scare was extremist. We basically reformed our entire society to hate communism, communists and anyone who had the smallest connection to either. I think that combined with the rise (in political power) of evangelical christianity has a lot to do with the current love of unfettered capitalism. Jeff Sharlet’s The Family is pretty interesting in that regard.

  11. abby jean says:

    historically, the idea of the “deserving poor” – who are awarded aid based on their circumstances and aid is usually quite restricted to certain purposes – goes back to at least the 16th century and the creation of almhouses to provide shelter and food to people who were out of work. they were given aid in kind – space in a shelter and limited food – rather than cash. that’s the trend in the US, also, with our first welfare system developed as an aid to widowed mothers in the early 1900s to help keep their kids out of the juvenile delinquency system, where it would cost the government more to care for them. so while the cold war and the current rise of evangelical christianity have certainly exacerbated those tendencies, they’ve existed for a long long (long!) time. (if you’re really interested, i can’t recommend the cloward/piven book ‘regulating the poor’ highly enough.)

  12. April says:

    I think karak is onto something.

    Also, it’s interesting, because it is really so counter-intuitive, at least as far as prevailing Western, middle-class thought is concerned. In light of the new laws banning soda from being purchased with food stamps, I think this says a lot.

  13. Usually Lurking says:

    Which is more important:

    Actively finding good places to use government funds, or avoiding misuse of those funds?

    Giving money to people who need money more than you do, or avoiding giving money to people who don’t need money as much as you do?

    And so on.

    In the U.S. many people have a strong bias against doing the “wrong” thing, and are willing to lose a lot of opportunity in order to avoid it.

    In some other countries, they have never really managed to do the “right” thing, so they are granted greater flexibility in accomplishing it, and can take risks which work on average.

    Imagine that the U.S. gave money (instead of food stamps) to 100,000 people. Even if it vastly improved the lot of 99,900 of them, there would surely be 100 people for whom it would create a problem: maybe they’d spend it on booze or gambling or smokes, and not buy food for their kids, or whatever.

    Overall? It’s still a huge benefit. In the hypothetical, it’s only 1 out of 1,000 people who has such a problem.

    But we all know that the papers would pick it up, and those 100 problems would be featured no the front page and would kill the program even in light of the 99,900 improvements.

  14. Jadey says:

    It still boggles my mind that there are people out there (as is in the world, not on this thread) who are opposed to these things solely on the grounds of the work disincentive effect, even when that effect takes the form of “a person receiving income support will work one shitty job instead of three”. Because somehow a narrowly defined vision of meaningful “work” (raising kids? Not real work) is the most important thing – if poor and working class people aren’t busting their humps 24/7, then they aren’t earning their keep. But then no one ever calls them workaholics or suggests that maybe their priorities are wrong if they aren’t spending time at home with the family enough. Stress leave? Vacation? Time off? Early retirement? Only if you’re in the right income bracket do those concepts even begin to apply, apparently. Otherwise it’s pure “laziness” to even want it.

  15. UnFit says:

    Reminds me of this time, a while back, when I gave some small change to one of the many junkies who hung out in my old neighborhood.
    My friend said, “you know he’s gonna spend that on drugs, right?” I just looked at him and said, “Really? Says the one who just bought cigarettes from his unemployment check?”
    Somehow, even though he was living off other people’s tax monies at the time, my friend still felt entitled to make the rules for people even worse off than him.

  16. SharonKayMac says:

    While we contemplate global poverty, there is a great holiday prayer on the subject:

    http://www.ethicsoup.com/2008/12/a-christmas-prayer-to-end-poverty-in-our-time.html#more

    And then comes the New Year and a prayer from Eleanor Roosevelt:

    http://www.ethicsoup.com/2008/12/a-prayer-for-the-new-year-eleanor-roosevelts-daily-prayer.html

  17. Grace says:

    Thanks for this Cara! I’m a second year geography and development student currently doing loads of really depressing readings about the failures and problems with aid and it is so nice to read something that a. is positive and b. reminds me why i care about this degree in the first place – that i believe that development and equality can happen and make people’s lives better, not whether i take a ‘methodological populist’ or ‘ideological populist’ approach to development! Breath of fresh air and I agree with every word xxxxx

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  20. Eghead says:

    @SharonKayMac

    Are you serious? “The poverty of having too much and sharing too little and having the burden of nothing to carry.” Oh my GOD (irony intended). Not to mention how utterly offensive it is to even think that praying helps in the first place.

    Just, no.

  21. Muse142 says:

    Eghead: @SharonKayMacAre you serious?“The poverty of having too much and sharing too little and having the burden of nothing to carry.”Oh my GOD (irony intended).Not to mention how utterly offensive it is to even think that praying helps in the first place.Just, no.  

    Seconded.

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