What happens when aid is given as direct cash transfers?

by Alastair Leithead
BBC News, Africa correspondent, 1 March 2017

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What is the best way of ensuring aid money is used effectively and efficiently? In Kenya, charities are experimenting with direct cash transfers, allowing individual recipients to spend the money on whatever they like. Some cash comes with conditions – allowing the bearer to buy only certain things for example, but there’s a surge of support for unconditional direct cash transfers, because the research shows it can be incredibly effective. In the UK, there has been criticism of government aid payments – especially in relation to direct cash transfers – with suggestions people would waste it or abuse the system. “There is no evidence that recipients of cash transfers are using this cash on goods such as alcohol or tobacco,” said Ms Bastagli from the Overseas Development Institute. “There’s a common claim that cash transfers can make people lazy or make them work less, but there’s no evidence to suggest cash transfers lead to a reduction in people working.”

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