Social Safety Net - Common Interventions - Cash Transfers

Cash Transfers

Cash transfers are defined as the provision of assistance in the form of cash to the poor or to those who face a probable risk of falling into poverty in the absence of the transfer. The main objective of these programs is to increase poor and vulnerable households' real income. The growing use of cash transfers is driven significantly by improvement in their design and implementation. Some critical issues include targeting methods, payment modalities, and institutional arrangement.

Types of cash transfer include:

  • Needs-based assistance programs are mostly means-tested benefits which may either be a periodic or an occasional transfer, and may either be flat or can vary depending on the beneficiary’s resources and size. They can be found in areas as different as Eastern Europe, Mozambique and Zambia in Sub-Saharan Africa, and in Pakistan in South Asia.
  • Family allowances may be a categorical or a means-tested benefit – regular or occasional – paid to families with children under a certain age. Transfers can be in the form of subsidies on school uniforms or children’s goods.
Opportunities Constraints
  • Provide recipients with freedom of choice
  • Once the administrative infrastructure is in place, the operating cost diminishes
  • Do not usually distort food prices
  • Benefits can be differentiated by level of need, household size or composition, and so on
  • Targeting methods can be information intensive
  • Transfers are fungible, therefore subject to unintended household uses
  • Program impact may be affected by price increases in the goods that the beneficiaries purchase

Read more about this topic:  Social Safety Net, Common Interventions

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