Today the Policy Exchange Think Tank published their report 'Global Britain, Global Challenges: How to make aid more effective' - a report which makes a strong case for the importance of overseas aid and supports the Government’s commitment to spending 0.7 per cent of national income on aid as well as arguing strongly that aid can and should be spent more effectively and moving the debate onto the quality of aid.
Professor David Hulme, Executive Director of the Global Development Institute, discusses...
Professor David Hulme
Executive Director,
Global Development Institute
(GDI)
Policy Exchange's focus on quality and not just the quantity of aid is excellent. It is great to see a report that is not just about the 0.7% target but about how we focus on the quality of aid. Their report has a practical proposal about how to ensure that the volume of aid and the effectiveness of aid are related. Aid quality has been given a backseat for too long.
A particularly notable recommendation links strongly to our research into aid and anti-poverty cash transfers at The University of Manchester's Global Development Institute. The report clearly recommends that all new major projects are based on interventions that are at least as effective as direct cash transfers.
Why do they choose cash transfers at the yardstick?
In our book Just Give Money To The Poor (Hulme, Barrientos, Hanlon) we showed the evidence that cash transfers are not only good for income poverty reduction but they also promote human development and raise prodcutivity. But there are five principles that need to be followed to ensure that cash transfers achieve their potential. They need to be:
1. Fair
Grants must be seen to be fair in the sense that most citizens agree on the choice of who receives money and who does not. For example, targeting the poorest of the ultra-poor requires much more care, because it can be divisive between some neighbours when some receive a grant and others do not.
2. Assured
Recipients must be convinced that the money will really arrive every month and that families can depend on it. Only then will families be able to make long-term plans and invest in schooling and income generation.
3. Practical
To be fair and assured, there is a need for a reliable system to identify legitimate recipients and to ensure they receive their grant regularly. This requires sufficient trained civil servants to administer the system and a reliable banking or cash distribution system.
4. Not just pennies
Grants must be large enough to cause a real change in behaviour, such as growing new crops or sending children to school. If money is only enough to enable one extra child in the family to go to school, then it isn't working. Indications are that the grant must not be less than 20% of poor households' consumption.
5. Popular
Any grant program must be politically acceptable and (ideally) popular and a vote winner.
As mentioned in the Policy Exchange report, long term studies have shown high rates of return and little evidence of money being diverted to alcohol, tobacco or other 'temptation goods.' From our research, not only have we seen that people avoid such temptation; we see people use cash transfers to actively move into enterprise and productivity.
To request a more in depth comment or a media interview with Professor David Hulme, please contact Joe Paxton in The University of Manchester press office on +44(0)161 275 8155
Read more about The University of Manchester and its strong history of research and influencing on the benefits of anti-poverty cash transfers.
To read about our Research Beacon on Global Inequalities and our work to address this global challenge, please click here.
