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Cash transfers might be the answer to global poverty

Categories : Cash connects people, Cash is the first step of financial inclusion
May 11, 2017
Tags : Freedom, poverty, Social Inclusion, Social network, South America
A 10-year study led by the Dutch UNU-Merit University researched the long-term effects of cash transfer programmes in developing countries. The preliminary findings praise the benefits of such programmes as vectors for improved nutrition and poverty reduction.
Communication Team / Equipo de Comunicación

A 10-year study led by the Dutch UNU-Merit University on the effects of cash transfer programmes in developing countries demonstrated that cash allowances improve social mobility and help reduce poverty. The study was based on Ecuador’s Human Development Bond (BDH), a cash transfer-programme designed to help extremely poor families with children.

At the beginning of the project in 2003, beneficiaries received a monthly cash allowance of $15 as long as their children were attending school and regularly visiting health clinics. The financial aid was then gradually raised over the years to $50 per month in 2013. Such programmes exist in numerous countries worldwide, for instance in Brazil (Bolsa Familia) and in Mexico (Prospera). It has already been demonstrated that cash transfers have a positive impact on low-income households and help them rise from poverty and improve their quality of life. Furthermore, cash transfers benefit the economy by improving labour supply, supporting local markets and reinforcing social networks.

Preliminary results on the long-term effects of cash transfer-based projects were published in January 2017. Franziska Gassmann and Andrés Mideros Mora, determined that people receiving cash transfers were 12% more likely to climb up the social ladder than people who were not supported financially. Moreover, the study also demonstrates that cash transfers not only ensure a minimum level of health, food intake and education, but can also be regarded as a tool to improve nutrition and promote long-term upward mobility.

Finally, the researchers believe that cash allowances should be tailored to each household’s specific vulnerabilities and associated with complementary policies to foster equity between ethnic groups and between rural and urban areas.

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