Posted by: Bill | May 19, 2009

Cash transfer as aid

I like this idea.

In 2007, people in the Western Province of Zambia lost their homes, their livestock and their crops when heavier-than-normal flash floods swept through their area. USAID’s office of disaster assistance stepped in with $280,000 worth of with seeds and fertilizer, training for farmers, and emergency relief supplies.

Two NGOs working in Zambia, Oxfam GB and Concern Worldwide, tried a different approach: they handed out envelopes stuffed with cash—from $25 to $50 per month per affected family, with no strings attached. An evaluation found that common fears about cash transfers—that the cash infusion will cause inflation in the market, that the money will be squandered, or that men will take control of the money—were unrealized.

I’m sure it isn’t new and that there are drawbacks, but on the surface it’s intuitive. Reduce the overhead and allow the receipients of the cash transfers to make decisions for themselves. Additionally, as the cash is spent, it will be benefiting a local economy. With traditional aid, there is no guarantee that will be the case.

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