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Cash transfers and poverty reduction in low income countries

pragmatism or wishful thinking?

Rachel Slater
Rebecca Holmes
Anna McCord


Many governments in low income African countries remain concerned that cash transfer programmes that are too generous or reach too many people will create dependency, welfare traps and distort the domestic labour market. They also fear the long-term fiscal liability that would be implied if cash transfer programmes were extended beyond a limited sub-section of the poor. These twin concerns relating to dependency and fiscal prudence mean that cash transfers are seen as acceptable and desirable in many LIC countries in sub-Saharan Africa only when they incorporate some combination of four elements: productivity-enhancing elements that ensure graduation; targeting of only a very small subsection of the poor; limited transfer value; or external funding. In many instances external funding for cash transfer programmes reflects donor priorities and results in the prioritisation of households with limited labour capacity, the ‘extreme’ poor (i.e. the bottom 10%) and agecohort groups such as the elderly and children. The implications for large sectors of the population, notably the working-age and working poor, are sobering: they are excluded from most cash transfer programmes.

Publication Type(s)

Conference Paper

Ten Years of War Against Poverty Conference Papers

Conference: Ten Years of War Against Poverty


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