The current uses of cash transfers - disaster response and social security
Direct transfers of money to citizens already take place all over the world. Both governments, aid organisations and global institutions use cash transfers to support children and older people, alleviate poverty, and support productive work in local economies. These schemes provide insights into how a world basic income could operate to benefit people around the world.
In an emergency, money makes all the difference
Cash transfers are a well-established tool used by humanitarian organisations during wars, natural disasters and other emergencies to provide for the people affected. Rather than handing out food, fuel and other goods, people experiencing crises may now be given cash to spend on these goods as they need them. An aid industry collaboration forum, the Cash Learning Partnership, explains:
"There is a growing recognition in the humanitarian sector that cash transfers can be appropriate and effective tools to support people affected by disasters in a way that maintains dignity and choice for beneficiaries while stimulating local economies and markets."
"There is a growing recognition in the humanitarian sector that cash transfers can be appropriate and effective tools to support people affected by disasters in a way that maintains dignity and choice for beneficiaries while stimulating local economies and markets."
The World Food Programme now gives around a quarter of its food assistance in the form of money (cash, vouchers or electronic transfers), which people can spend as they see fit in order to support their well-being. Cash transfers have been used as part of the humanitarian response to the Ebola crisis, the 2010 earthquake in Haiti, the Syrian refugee crisis, the 2015 Nepal Earthquake and many more. In some cases, these initiatives have been the subject of rigorous evaluations, which provide many interesting insights.
Supporting Syrian refugees with cash
Syrian refugee households living in Lebanon were provided with around £400 over 5 months to help them through the winter. The evaluation showed that the money was mostly spent on clean water, and increasing the number of meals per day. A small proportion was spent on heating fuel and warm clothing, on the small costs of sending children to school, and other essential expenses. There was no evidence of spending on alcohol or tobacco, and the money was found to have decreased the need to use negative coping strategies such as sending children out to work or adults undertaking dangerous work. When surveyed, 80% said they preferred cash to in-kind support, while a further 15% preferred a mixture of cash and in-kind help.
Furthermore, the cash transfers were found to have significantly reduced conflict within the household, and improved relationships with the local Lebanese population. The money was not captured by local elites or extremist groups through intimidation, as some commentators had feared, nor was there any evidence of the transfers causing an inflation in prices, as supply tended to expand to meet the growing level of demand. Analysis showed that for every £1 given out in cash transfers, £2.13 was generated for the Lebanese economy.
Furthermore, the cash transfers were found to have significantly reduced conflict within the household, and improved relationships with the local Lebanese population. The money was not captured by local elites or extremist groups through intimidation, as some commentators had feared, nor was there any evidence of the transfers causing an inflation in prices, as supply tended to expand to meet the growing level of demand. Analysis showed that for every £1 given out in cash transfers, £2.13 was generated for the Lebanese economy.
Recovery in Haiti - experiments with different cash transfer models
Follwing Haiti's devastating earthquake, a number of humanitarian organisations provided cash transfers to sections of the population. The evaluation study found that the money was spent in diverse ways. On average, 30% was spent on food, 18% on cooking fuel and 14% on education. Smaller amounts were spent on water, paying rent if displaced or rebuilding damaged homes, and on re-starting small businesses to generate further income. The organisations gave transfers in different ways, allowing comparison between the methods used. This showed that regular transfers were strongly preferred over single lump sums, with 66% favouring monthly transfers, and a further 17% preferring to receive their money weekly. Overall, 98% of beneficiaries preferred receiving cash to in-kind support, and despite some commentators' concerns about the security of handing out money in fragile urban settings, 94% of recipients said this was not a worry for them.
Social security - reliable cash that transforms lives
The most common way in which cash is transferred to citizens, as happens in most countries around the world, is through social security - pensions, child benefits and welfare programmes. It is well-known that such benefits exist in most well-off countries, but the extent of social security cash transfers in lower-income nations is less widely understood. These schemes demonstrate both the financial and political feasibility and the social desirability of large-scale redistribution of money in countries of all income levels.
South Africa's Child Support Grant
In South Africa, children from low-income families are entitled to a grant of around £15 a month. It was introduced in 1998 for children under the age of 7, and has gradually expanded to cover children up to the age of 18. To register for the scheme, children and their caretakers provide their names and biometric data, and are given a unique ID number and a chip card. Payments are made by electronic transfer or as cash at social security offices, supermarkets or pay points. As unemployment and poverty rates are high, the child support grant plays a vital role in ensuring children get enough to eat. Children who receive the grant are on average 3.5cm taller than those who do not. The grant has also been shown to reduce risky behaviour in teenagers, with lower rates of teen pregnancy and drug use among grant recipients.
Bolsa Família - large scale family cash transfers in Brazil
Bolsa Família is a programme of variable conditional benefits aimed at tackling extreme poverty in Brazil. In low-income families (representing around 25% of the population), each household member including children receives a minimum of £15.60 per month, and in return is obliged to fulfil certain obligations such as ensuring children attend school and clinic appointments. The programme has helped to lift 36 million people above the country's extreme poverty line. In areas with high Bolsa Família coverage, child mortality from diarrhoea has dropped 46% and deaths from malnutrition have fallen by 58%. The programme tends to generate further side benefits as well, as it brings families into closer contact with wider social welfare and vocational training services, as well as micro-finance and small business support. Fears that the benefit may discourage productive work have not been confirmed - 75% of adults in recipient families are actively employed or self-employed.
The social pension in the Philippines
Following intense campaigning by older people's groups in the Philippines, in 2010 the government introduced a social pension, which has since been expanded to cover people with low family incomes over the age of 65 who have a long-term illness or disability. The pension level is widely considered to be very low (£7.60 a month), but it nevertheless constitutes a substantial contribution - around 29% - of the household income of homes where these pensioners live. The biggest impacts were on people's ability to buy food and medicines. Expenditure on pensioners' medicines made up 20% of household spending, up from 15% among older people not receiving it. Similarly, 54% of non-recipient households reported not having enough money for food, whereas this dropped to 47% in pension-receiving households. Pensioners tended to share their pension money amongst their household too, often helping to pay school fees and medical expenses for their grandchildren.
World basic income - the ultimate form of cash transfer?
These examples, of cash transfers in humanitarian crises, and of long-term social protection programmes, make it clear that money is already distributed to people all over the world to spend as they see fit. Governments, aid organisation and global institutions have recognised the value of providing money directly, in order to tackle hunger and destitution, kick-start local economies, and ensure children get a decent start in life.
A world basic income would build on these cash transfer and social security schemes, aiming to make these safety nets secure and universal.
A world basic income would build on these cash transfer and social security schemes, aiming to make these safety nets secure and universal.