From Hand Outs to a Hand Up: Social protection payments can also deliver access to finance
by Mark Pickens: Friday, August 31, 2007
Emergency aid used to be a short-term fix to a grim situation: handouts of food and other needed goods to alleviate the suffering of some of the world’s poorest beset by famine, drought or flood. Now, aid agencies increasingly deliver cash in continual social protection payments which help the poor build safety nets and avoid crises. And a few pioneering thinkers in the aid industry realize that cash + technology can also = infrastructure for financial services. Donors and governments can not only get social payments to the right people, but improve access to finance for entire communities historically off the radar screen of traditional banks.
Aid agencies are wising up to new ways of delivering help. They’ve realized that smaller amounts of aid, spread out over time and in the form of cash, can help poor people build there own safety nets, before a crisis hits. Cash is also much cheaper and more efficient way of delivering aid. Some 65% of America’s US$ 2 billion food aid program is eaten up by red tape and logistical costs, according to a US government report.
