When to cash out

Matt Collins is concerned that the current fad in international aid for direct cash transfers may squeeze out other important investments, especially in public goods which may not be financed otherwise. I quite agree. For a long time in aid the mantra was: “Don’t give a guy a fish, teach him to fish instead.” ‘Cash is best’ is almost the complete opposite of this. Both perspectives are valid; neither are universally satisfactory.

Two lines of thought that might help to bridge the gap:

  1. Is there already a cash disbursement programme? If not consider setting one up as a first step (seeing as the evidence in their favour is so good) and then add on public goods / services later.
  2. To what extent might cash payments be more beneficial when they are the exception rather than the rule? If households come to expect them will it not simply generate more aid-dependency?

Putting my cynic’s hat on for a moment (I do occasionally take it off!) I suggest that this fad will in time fade just like all the others, leaving behind a useful legacy of a different way of thinking. The question “Would the beneficiaries be better off with straight cash?” will always be a good one to ask.

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