DFID: Transferring cash and assets to the poor
The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, today said:
“DFID has brought real benefit to the poorest people and communities through the direct transfer of cash, food, and assets such as livestock. In 2010-11 the Department spent £192 million on social protection programmes, which includes its transfer programmes.
Transfer programmes appear to pose a lower risk of waste and fraud than more traditional forms of aid, with money going directly to recipients. They have been effective at tackling hunger and malnutrition and improving access to health and education services.
“So it is surprising that transfer programmes are not being used more.
The Department leaves decisions about whether to adopt transfer programmes to staff working in individual countries, and currently has no plans to use them in 11 of its 28 priority countries. It should develop a clear overall strategy for the use of transfers and give systematic consideration to whether they could apply in other or all priority countries.
“It is currently unclear how transfer programmes will be sustained in the future and where the funding will come from. It is very unlikely that some recipient countries will be able to take on the responsibility. The Department also has a limited understanding of the long-term effects of its programmes, though the indications are positive. When new programmes are set up the Department should establish clear means of measuring their long-term impacts.
“Gaps in cost and performance data are preventing the Department from being able to determine if it is achieving best value from programmes and make valid comparisons between them. It is welcome that the Department has agreed to obtain this data and that it has also committed itself to examining whether larger cash transfers to recipients might not be a better return on its investment than very small cash transfers.”
Margaret Hodge was speaking as the Committee published its 65th Report of this Session. The Committee had taken evidence from the Department for International Development.
The Department’s transfer programmes deliver cash, food and assets, such as livestock, directly to people living in poverty. Transfers can be used to tackle a range of issues, such as hunger and malnutrition, or access to health and education services, in a variety of contexts. In 2010-11 the Department spent £192 million on social protection programmes, which includes its transfer programmes.
The evidence we heard suggests transfer programmes are effective in targeting aid, and ensuring the money goes directly to the poorest and most vulnerable people. There is strong evidence of short-term benefits for recipients of transfers, for example better nutrition and greater access to health and education services. Research following-up recipients over a number of years after their participation has so far only been done on one transfer programme. While the results of this longer term evaluation are encouraging, overall there is less evidence for longer-term impacts. No aid spending can be fully immune to waste and fraud, but transfer programmes appear to be less risky than other methods, especially when money can be tracked through electronic payments, as has been done in Kenya.
We are surprised that the use of transfer programmes has not increased more in light of the evidence of positive outcomes. The Department only plans to support transfer programmes in 17 of its 28 priority countries. It does not have an overall strategy for the use of transfers and its decisions on where to support transfer programmes look reactive. The decision as to whether or not to propose a transfer programme is taken by staff working in the country and it is not clear why there are extensive programmes in some countries and none in others.
The Department does not collect data on all the costs of the transfer programmes it supports. For example it does not factor in the cost of diverting health and education professionals to act as payment administrators, as is done in some programmes. The Department is therefore unable to say whether it is lifting more people out of poverty for every pound spent on transfers compared to other programmes. It also lacks information to compare the efficiency of running programmes at district or neighbourhood level. However we are encouraged that more attention is being given to this area; the Department recently published guidance for its country offices that provides advice on data collection and evaluation. We also welcome the Department’s greater transparency in publishing business cases and reviews, including those for transfer programmes.
The Department’s long-term objective is for the governments of recipient countries to take on the responsibility of owning and funding transfers as part of a sustainable social security system. However, the Department has not been clear about how individual programmes will be sustained. It is likely that many transfer programmes can only continue with funding from the Department as in many of its priority countries even a basic social security system may be unaffordable and unrealistic.