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Cash Transfers in Government Policy

Cash Transfers in Government PolicyIn recent years, humanitarian organizations have recognized cash transfers as an effective way to pull children and families out of poverty. In the early 2000s, just a few UNICEF country offices experimented with cash transfer initiatives to reduce child poverty. After a few years, these initial projects and several cash transfer programs implemented by UNICEF in Latin America showed promising results. For this reason, cash transfers form an integral part of UNICEF’s Framework. In fact, as of 2015, more than 70 countries globally are implementing cash transfer programs. These programs show the importance of including cash transfers in government policy.

Conditional Cash Transfer Initiatives

Cash transfers prove to be a simple and efficient way to provide low-income families with access to food rather than providing the food itself. Research shows that families struggling to make ends meet will likely spend cash transfers on pure necessities. However, critics still remain concerned over the misuse of cash transfers given to poorer families.

This is why cash transfer programs often rely on pre-agreed conditions. For example, for a family to be a beneficiary of a cash transfer program, they must agree to send their children for regular health checkups and must ensure school attendance.

In a study conducted by Bastagli et al. (2016), monitoring and assessing 56 cash transfer programs across 30 countries, households noted significant positive impacts from cash transfer programs. In a vast majority of cases, cash transfers led to an increase in household food expenditure, a reduction in the poverty rate and a positive local economic impact.

The Hidden Benefits

Despite the effectiveness of cash transfers in pulling people out of poverty, governments rarely use these programs or do not at all. Why? The short answer would be politics. Voters are not likely to vote for a party that requires higher tax payments from individual citizens but is far more likely to support a “free-school lunch” project. That is because to the average citizen, free lunches to low-income children do not feel like a cost coming from their own pocket while a cash transfer does.

Further, many fail to consider that cash transfers address financial limitations to basic social services, such as education and health care, and thereby, are able to reduce multidimensional child poverty. For many, the cost of school supplies, stationery, health service costs and prescription fees is not within the realm of what is financially possible.

An evaluation of cash transfer programs finds that 13 out of 20 reporting studies note a rise in school attendance rates. Furthermore, nine out of 15 reporting studies witnessed a rise in beneficiaries’ utilization of health care services.

Argentina’s Cash Transfer Program

In 2009, the Argentinian government implemented the Universal Child Allowance (AUH) Programme, a conditional cash transfer program with the goal of breaking intergenerational cycles of poverty. The program targets individuals younger than 18 who reside in financially unstable households, including households facing unemployment or households headed by workers in the informal economy sector.

The individual that qualifies for the program will receive 80% of a specific allowance monthly. The individual will receive the remaining 20% and future payouts on the condition that they satisfy certain school attendance requirements and attend health check-up appointments. By 2018, the program had benefited 3.9 million children since its implementation, equating to 0.6% of the nation’s GDP.

In agreement with the importance of cash transfer programs, the chief executive of the Child Poverty Action Group, Alison Garnham, has argued that countries should ensure a “minimum layer of protection”  via free school meals and sufficient cash transfers in government policy as a part of a long-term poverty reduction campaign.

– Pauline Luetzenkirchen
Photo: Flickr