Time to rethink our aid! Cash Transfers, resilience and agriculture development

Tom Alberts, nationalekonom och biståndskonsult, menar att biståndspengar bör distribueras direkt till mödrar i utvecklingsländer. Det skulle inte bara leda till att en större andel av pengarna används till att värna om familjens behov, utan också öka kvinnors ställning i samhället.

Some personal thoughts on the seminar, Cash Transfers, resilience and agriculture development on 11 September 2012, organised by the Swedish Church, Sida and SIANI (Swedish International Agricultural Network Initiative)

In the past, the following idea circulated a lot: “If you give a man a fish he will live for a week if you teach him how to fish he will live his whole life”. This view has permeated a lot of international aid in agricultural and rural development. In the minds of the donors, how should this be accomplished? Agricultural research would provide the needed technology and the extension workers (advisers) would transfer this new technology to the rural sector. And the end results would be a rapid agricultural growth and poverty would be erased among the peasants. In Sub-Saharan Africa (SSA) like in many Latin American countries this idea has generally failed. (Some years ago DFID published an important book on the subject). So what to do to erase rural poverty?

Well, we did not need to do much. The problem tended to have its own solution. Already in the 70:s Michael Lipton pointed out that there was an urban bias in development. So the peasants were “voting with their feet” thus transferring rural poverty into urban poverty. As a result, on a global scale today there are many more people living in urban than rural areas. The globalisation and more liberalization of trade resulted in a very rapid economic growth. The economic growth has been sufficiently rapid to counteract the worsening of income- and wealth distributions. Global poverty has decreased on a large scale.

But there are reasons to be concerned. For many reasons global food prices tend to increase thus breaking the previous long run trend of decreasing prices. While in the past the rural poor could be forgotten, the urban poor are revolting and more conflicts will surely emerge. In Latin America the more well-to-do live behind well protected and guarded fences and this phenomenon is rapidly growing in SSA.

It was clear from the seminar that cash transfers to poor people generate a great number of positive effects. For example, people eat more and better. The health situation has improved and school attendance increased. Local trade increased as well as agricultural production. (

Below follows a series of comments. The objective is to further improve on the system of cash transfers.

In what form should purchasing power be transferred?
Frequently vouchers are used. The World Food Program (WFP) has finally realized that the distribution of food may not be the optimal way to alleviate hunger. Already in 1984 Amartya Sen wrote his famous book: “Poverty and Famines. An Essay on Entitlement and Deprivation”. He pointed out several instances where starvation in drought ridden regions occurred when there were no food shortages in the markets.

Often, or perhaps most of the times, a very large share of the food disappears and never reaches the starving people. Distributing food creates havoc with markets and tends to perpetuate dependency on food receipts. Agricultural recuperation is slowed down when food is distributed freely. The rich countries used the WFP to dump excess agricultural production to the detriment of agricultural growth in poor countries. Horror stories abound.

The idea of vouchers is definitely an improvement in the system. But such a system invites corruption, in a similar way as with food aid. Why not distribute money directly to starving people? Vouchers have an element of patronizing people. Would not poor people know how to and where to spend the money?

Having said this, there will obviously be need for distributing food, water and providing medical help in emergency situations. My personal view is that the WFP has a long experience in this. That the WFP embarks on distributing money and vouchers on a large scale can hardly be their primary objective.

Who should receive the money
This issue was not directly addressed during the seminar. Informally we joked about men drinking beer instead of using the money for the benefit of the family. My strong view is that the money should be allocated through women. There is ample experience in SSA that women tend to cater more to the needs of their families than men do. This would also have the positive effect of empowering women which is an objective of many, if not most, donors.

Focus on a child allowance scheme
Already in 1938 a child allowance scheme was introduced in Sweden. Originally it was designed only for poor people. However, soon it became a universal scheme. Most of the participants were convinced or became convinced that universal schemes are to be preferred. One major aspect of the Swedish scheme was that the money was transferred to the mothers to ensure that the money was well spent. There is a moving story from the first years of the child allowance scheme. One mother said that she would not use any of the money for herself and that priority would be given to her children’s education. And the money would never be used to buy luxuries such as bicycles.

There is now ample evidence from research and evaluations that channelling money through mothers would produce more benefits than giving the money to the men. And with an increase of the female income, there would be a positive empowerment effect on women.

How to distribute the money
There are many ways to distribute money. The use of mobile phones has spread very rapidly in SSA and they are increasingly used for financial transactions. The cost of distributing millions of mobile phones in SSA would be relatively small. We should also consider the important social effects of introducing mobile phones in rural areas. The child allowance scheme would result in more children going to school, not least girls. Imagine the social impact when the children can discover the world outside their villages through the phones. Is it not an exciting idea?

Corruption is widespread in SSA. By transferring the money directly to mothers it should be possible to reduce the risk of funds disappearing. A research component should be attached to the programme – what will be the impact on health, school attendance, nutrition etc.

What is also needed
The income- and wealth distributions are becoming more unequal, both globally and within countries. Should we not think in terms of a global redistribution scheme? Here the debate from the 70:s on “Redistribution with growth” is very relevant. With the collapse of the socialist systems re-distribution issues were forgotten and they are only slowly emerging again.

And Sida has not done very much in providing child allowance schemes. Is it not time to consider such a programme in countries which are very corrupt and with growing inequalities such as Zambia, Tanzania and Mozambique?

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