2.3 Cash transfers
Consider an alternative view for financing poor people out of poverty and into better livelihoods: cash transfers. The case below documents an Oxfam cash transfer project in Vietnam.
Read the extract from ‘Oxfam’s unconditional cash transfer project in central Viet Nam’ (Chaudhry, 2010)
Make notes on the pros and cons of cash transfers and the conditions needed to make them successful. In particular, make notes on the issues of social relations, power and agency raised by this project, and which you have considered in Chapter 11.
What arguments would you make for supporting micro-credit over cash transfers or vice versa?
I was intrigued by this example for the following reasons:
- The idea of unconditional cash transfers assumes that the recipients know best what to do with the money – i.e. they do not necessarily have to use it for investment in a business but can use it to act on other dimensions of their lives which will improve their living standards (e.g. mending the roof). It’s important to note that such expenditure is not simply a luxury or of a secondary nature to investment, but may well be important for the health of the household so that they are able to work.
- The villagers did, however, spend a high proportion of the money in productive investment, while second came investment in household assets (such as repairing the roof), third were for such things as paying back debts and addressing food shortages, health and education needs, and finally came a tiny amount of savings.
- However, the issue that really grabbed my attention was the village dynamics. Many ‘customs’ were brought into play by different interests in the villages to extract a social contribution from cash transfer recipients (one of the reasons savings were so low and why the cash transferred was spent so quickly). It is suggested by this account that elites in the villages prevailed over the relatively voiceless poor and that the poor only gained confidence through negotiations with the elites over the use of the funds by their advocate, Oxfam. This aspect of the story raises a number of other issues:
The importance of understanding the cultural and institutional setting in any intervention to improve livelihoods..
By that I mean the current rules, norms and values that people live their lives by, even if there are differences between people about them. Such rules, norms and values might in turn have stories that people construct about them (‘we always do things this way’), which may or may not be true and which may or may not support particular societal interests.
As a corollary, the importance of understanding power relations in any intervention to improve livelihoods.
Such understandings need to take into account powerful interests in any social setting, as well as the social relations of gender – both as they are manifested in the social setting and within households. Note that this account, as extracted, did not address the gender dimensions of how decisions were made to use the cash transfers by men and women in the households.
- Finally, if not organised, the poor often need an advocate (which can have positive effects on their own confidence and voice in the longer term). (There are other examples of this in Chapter 11 – make a note of what they are if you haven’t already.) I wonder what you thought about the advocacy role in this case?
So what conclusion did you come to about the relative merits of micro-credit and cash transfers for improving livelihoods? It seems that both have potentially positive and negative sides to them.
To my mind, the bullets above are as important in thinking through the administration and management of a micro-credit scheme as for cash transfers, if households are to avoid predatory lending and indebtedness. You can probably also see that the issues in the bullets are dimensions of the questions in the evaluative grid in Chapter 11 (Table 11.1), and from the accounts of these two types of initiative, you can see why such questions need to be asked.