Cash transfers: Affordability and sustainability

Drawing on case studies in Kenya, Malawi and Zambia, this paper explores the affordability and sustainability of providing cash transfers to alleviate poverty. The paper reviews cash transfer programme coverage and costs, the fiscal implications of programme extension to cover all eligible beneficiaries, the extent of national government resource allocation to cash transfers, the role of donor funding and perceptions of affordability and prospects for the sustainability of cash transfer programming.

The case studies were part of a three-year study on cash transfers by ODI, funded by the Swiss Agency for Development Cooperation.

Key points:

• Cash transfer programmes in Kenya, Malawi and Zambia reach only 1-4% of the poor
• Targeting is determined largely by donor preferences, and is restrictive, resulting in large exclusion errors
• Given low national funding commitments, existing cash transfer programmes can only be scaled up nationally with donor support equivalent to 1-2% of GDP.

Anna McCord, ODI - November 2009