There is a "strong value for money case" for the Department for International Development's work supporting direct cash transfers to some of the world's poorest people, the UK's official aid watchdog has said, after DfID found itself at the centre of a media storm over the schemes.
Cash transfers are payments made directly to poor individuals and households. Most are very small – a few pounds a month for each household – and they are sometimes conditional on activities such as visiting health clinics.
Between 2011 and 2015 DFID spent an average of £201m a year on cash transfer schemes, which aim to alleviate extreme poverty and improve nutrition as well as a range of other specific objectives in different countries.
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For example, one programme in Nigeria aims to improve the nutrition of pregnant and breastfeeding women, while in Pakistan poor households receive cash transfers only if their children attend school.
The schemes were recently criticised in some sections of the press, and by Tory MP Nigel Evans – a member of the international aid select committee – who described them as “exporting the dole to Pakistan, which is clearly not a clever idea".
However, the Independent Commission for Aid Impact’s (ICAI) report, published today, supports DfID’s argument that cash transfers are an effective way to deliver aid, awarding the department a "green/amber" rating for its work.
"Looking across the full range of impact data collected for this review, we find that DFID’s cash transfer programming offers a strong value for money case," the watchdog said.
"There is solid evidence that it delivers consistently on its core objective of alleviating extreme poverty and reducing vulnerability. Building national social safety nets is an important complement to DFID’s increased emphasis on promoting economic development."
Cash transfers are, ICAI added, "a proven method of helping the most vulnerable".
However, Dr Alison Evans, ICAI’s chief commissioner who led the review, said there was "no room for complacency" on the part of DfID.
"Going forward DFID needs to do more to improve on school attendance, health and nutrition and women’s empowerment, where the global evidence shows that cash transfers can make even more of a difference," she added.
The ICAI report found that DFID had exceeded its target of reaching six million people with the programme, and consistently delivered the core aims of increasing incomes for the poorest households.
Performance was more variable against secondary goals such as improving access to education, nutrition, health and the empowerment of women, the aid watchdog said.
In these areas evidence is mixed, according to the report, and while many schemes aim to improve women’s empowerment, ICAI says there has not yet been rigorous measurement of results on this front.
DfID is not, for example, monitoring potential negative impacts such as increased risk of domestic abuse to recipients.
“DfID should do more to follow through on its commitment to empowering women through cash transfers by strengthening its monitoring of both results and risks, and using this data to inform innovations in programming,” the report says.
ICAI did raise some further concerns about the scheme, giving DfID an amber-red rating for its work to help partner governments improve their own systems of national support, and saying it could do more to challenge recipient countries.
In most cases, the report notes, DfID has chosen to take “a long-term approach to systems development, sharing international and local evidence but generally choosing not to challenge partner countries on strongly held positions".
The watchdog cautions that this may “lead to a lack of ambition and urgency in addressing core challenges”.
The report calls on DfID to take a more strategic approach to technical assistance in particular, saying: “DFID has good relations with its national counterparts and has helped to increase country ownership of cash transfer programmes, [but] it lacks a systematic approach to both financial and technical assistance, and does not adequately monitor and assess the results of its system-building efforts”
Despite these caveats, ICAI believes that DfID should consider increasing contributions to cash transfer schemes where it is clear that a national government is committed to improving both the schemes themselves and their value for money.
Responding to the report, a DfID spokesperson said: “Cash transfers get aid to those who need it, when they need it, and achieve value for taxpayers’ money – and this independent report recognises that.
“Small cash transfers can be the difference between food and no food for families who are living on less than $2 a day. They empower people to make decisions about what they need, cut out the middle man, and reduce waste.”