What’s the best way to help resource poor people? Every development institution and professional seems to have an answer to this. For many, however, the idea of putting money directly in the hands of those in need is a disconcerting one. There remains a prevailing assumption that the poor misuse and waste funds. The growing practice and success of cash transfers challenges this notion.
A new Economist article on conditional and unconditional cash transfers sheds some light on the impact of these approaches. Started in Latin America and now widely used by organizations in Africa, cash transfer programs provide small amounts of capital directly topoor people for their household needs. Where a cash transfer is conditional, the money is attached to commitments from recipients, like keeping children in school or visiting health services. Unconditional transfers, as the name indicates, have no strings attached.
The Economist article claims that cash transfers are producing promising results:
“Now enough of these programmes are up and running to make a first assessment. Early results are encouraging: giving money away pulls people out of poverty, with or without conditions. Recipients of unconditional cash do not blow it on booze and brothels, as some feared. Households can absorb a surprising amount of cash and put it to good use. But conditional cash transfers still seem to work better when the poor face an array of problems beyond just a shortage of capital.”
While the article focuses on GiveDirectly, a Silicon Valley-supported cash transfer organization, many local organizations across Africa such as African Development Solutionsand WEM Integrated Health Services (WEMIHS) have also been using a variation of this strategy for years. They, too, have seen good results. During our first campaign, Africans in the Diaspora (AiD) supported WEMIHS’ village development fund to encourage those considered “ultra-poor” to save and pursue entrepreneurship opportunities. Three months into the program, participants have already saved 50% of AiD’s funds. And note this: people who are resource poor not only know how to spend, but they can also save. We need to trust them, just as we need to have more confidence in the local organizations that are working with them.
Local organizations face a similar misconception about not managing resources well. In many of my conversations about Africans in the Diaspora, I have had people question the fundamentals behind our work. Are these local organizations trustworthy? How do you know they will use the money for intended purposes? What will happen without foreign oversight? Are they accountable?
Community-based organizations–whether in the form of small associations, local NGOs, or even social enterprises–are accountable to the communities they serve. Unlike international NGOs, they don’t get their mandate and accountability from foreign funds, at least not in the beginning of their work. First, they have to answer to their neighbors, friends, and community members who know them and their credibility best. Because they’re so close to the ground and the founders are often affected by many of the issues their organizations are addressing, they also offer better solutions. If, for example, you’ve lived in an informal settlement all your life and fought to gain access to education as Thulani, founder ofKliptown Youth Program, has, you have a contextualized sense of the interventions needed to help the people from your community access quality education. That’s why over 95% of Kliptown’s students pass high school and gain entry to college. Moreover, like international NGOs, local organizations have accounting systems and structures, are audited regularly and independently, and have internal systems of checks and balances, including independent boards. Just like the social sector in the global north, one has to filter authentic, effective, and transformational organizations from the briefcase NGOs.
Back to this piece on cash transfers: if you think poor people can’t manage money well, please, think again. Poverty is as much a deficit in power and individual agency, as it is a material lack. In addition to not having the means to meet their needs, people living in poverty are often denied the right to make decisions about those needs and priorities, with government services and aid agencies rationing everything, from food to medical supplies, school materials to farming tools. Cash transfer programs diverge from that approach and ensure those who we aim to help are able to make their own decisions about how best to use our assistance. In doing so, they recognize and honor an individual’s need for self-reliance and autonomy, thereby tackling both the material and immaterial chains that poverty places on its victims.