Over the last week the ever more shrill criticism of international aid found a new target - the practise of giving money directly to some of the poorest and most vulnerable people, otherwise known as cash transfers. The allegation made was that this amounted to setting up UK-funded cashpoints for the poor. However the reality is somewhat different.
Clearly, every effort should be made to ensure aid money is never be misspent or wasted - but in the right circumstances cash-transfers are in fact widely recognised as both an effective and highly cost-efficient use of aid money. An argument rightly made by Prime Minister Theresa May when she publicly defended the approach. In the right circumstances, giving poor people the ability to make choices by cash transfers empowers them and is an efficient way to use resources. It is also backed up by extensive research
The National Audit Office, the UK Government's effectiveness watchdog, found that Department for International Development transfers were targeting aid at some of the most impoverished and vulnerable people and that the "transfers show clear immediate benefits including reduced hunger and raised incomes."
A separate study by the respected Overseas Development Institute (ODI) found that cash transfers can be 25-30% more efficient than food aid, especially in humanitarian situations.
Cash payments are effective because they allow people to spend the money on what they need most, rather than having other people decide on their behalf. This is particularly important to help empower women who might not otherwise have access to money or be able to make spending decisions.
Money will often be spent in local markets, meaning that it can help protect local production, create jobs and benefit other people in the area. However, there should always be strong safeguards in place to ensure payments are not exploited for fraud or corruption.
Direct cash transfers have been shown to be one of the most effective and financially efficient ways of tackling poverty or assisting with disasters.
Cash transfers are widely used across the aid sector. At ActionAid, we have seen how cash payments can help empower women, particularly in emergency situations. In Nepal we helped 1,600 households to rebuild following the devastating earthquakes in 2015. Among them was Julum Tamang, 52 years old from Kavre district, who was one of many in her village who lost her home and livelihood as a result of the earthquake. ActionAid gave her the metal sheets and toolkits she needed to build a temporary shelter for her and her family, but also 15,000 Rupees (just over £110) to begin rebuilding their lives.
With the support she received, she invested the money to buy an ox which she hires out to others to plough their fields or breed with their cows. She says: "The ox I bought has helped me a lot to support my livelihood... it has been a good economic source for me."
In Haiti, ActionAid was the first organisation to reach women in some of the areas worst affected by Hurricane Matthew in October. Elphine Joseph, 70, had her home destroyed by the hurricane and had nothing to rebuild it with. We ran a programme to help support and empower 1,000 women like Elphine, giving them 10,000 Gourdes (around £120) through an already established local microfinance institution. This money enabled Elphine and women like her to start recovering from the storm's impact, and buy the things they needed like shelter materials or food.
An effective approach
The UK has a proud history of supporting those most in need. We are one of the few countries to meet the UN target of spending 0.7% (the equivalent of 70p in every £100 the UK earns) on international aid - a commitment which is helping to transform the lives of people around the world. The generosity of the UK helps to cure disease, feed starving families and send girls to school for the first time.
Aid money is precious and should always be spent wisely and focused on those who need it most. It is money that is needed to help give the poorest people in the world a decent and dignified life, and is a vital investment that is bringing us closer to a world without extreme poverty (the number of people earning less than US$1 a day has more-than halved since 1990).
Giving cash directly to women like Julum and Elphine is not wasteful but it is empowering and effective. We need to be vigilant to always ensure aid money is not being misspent.
However, from ActionAid's four decades of fighting poverty and responding to emergencies, we know that in the right circumstances, direct payments to the people who need it - or 'cash transfers' - can be one of the most effective ways of spending aid money.Suggest a correction