Spread sensibly across sixty years, all that funding could have provided modest, reliable income support to the poorest families. And the idea is not fanciful. Across Africa, evidence from cash-transfer studies shows that poor households spend wisely on food, school fees, medicines, seeds and roofing. Kenya’s mobile-money system, M-Pesa, has been doing this at scale since 2007. Even in remote villages, grandmothers with battered feature phones can receive and save cash securely. Direct transfers are not an aspirational reform; they are operationally straightforward.
Cash in the hands of households also achieves something Western-led aid projects rarely manage: it reaches the people it claims to help. Families know where money is most urgently needed; intermediaries generally do not. Aid funding, by contrast, evaporates into salaries, overheads, contractors and consultants, with results that are difficult to verify and harder still to link to any long-term progress. The system is designed to reassure donors, not empower recipients. Every extra layer of management is another point where funds can be delayed, diverted or diluted.
A predictable flow of support would have stimulated real economic activity at the household level. With a measure of security, families invest: a cow, a shop, better tools, a roof that does not leak, a child kept in school rather than pulled out to work. These small gains compound over time, deepening local markets and stabilising communities. None of this requires summits, frameworks or glossy reports, just a willingness to let resources reach those who can put them to work.
The deeper failure of Western development thinking lies in its conviction that progress must be engineered from above rather than enabled from below. It prefers programmes, indicators and consultants to trusting people with their own economic decisions. M-Pesa succeeded precisely because it trusted its users. The aid industry faltered because it rarely does.
Emergency relief and targeted health interventions will always matter. But the broader development enterprise, often poorly designed and managed, has not delivered the transformation it promised. A simpler model is available: send the money directly. Trust people. Strip the system back to what actually works.
The tragedy is not only that aid has fallen short, but that the most obvious alternative was ignored.
Africans did not need an industry built around their poverty. They needed resources in their own hands.
Cash may also help stimulate the economy. In a trial in Kenya, an intervention was evaluated that gave the poorest people in some randomly selected villages a lump-sum cash. They found that people living near villages, where the poorest received cash transfers, also had higher food consumption, partly because recipients spent their money in local businesses. There were no meaningful inflationary effects. Most striking of all, the study estimates a "fiscal multiplier" of 2.6 for this area of Kenya, implying that every $1 invested in fiscal stimulus will grow the local economy by $2.60.
ReplyDeleteIf this is anywhere close to accurate, the path forward for aid to Africa is clear. Over the last decade, aid to Africa amounted to just below $ 80 billion annually. If you provide that in cash to the poorest individuals and apply a "fiscal multiplier" of 2.6, as suggested above, you may have an economic impact that would grow Africa's total GDP by about 7% per year, over and above present growth rates. That would result in China-level growth, at its peak, and it would quickly make a difference. Subtle and nuanced empowerment indicators may all be good and well, but hard GDP growth beats them. If anyone bothered asking the poorest Africans, they would agree. The question might be how the 700,000-person-strong aid industry, which typically accounts for half of the $80 billion in staff costs and overheads, would react to such a paradigm shift.
ReplyDeleteThe evaluation referred to above was undertaken by "Give Direct", an NGO that gives unconditional cash directly to the very poor. It involved a one-off large sum to small communities in Kenya that might have had the stated impact. However, you can not extrapolate that to the entire continent of Africa; GDP growth is more complex than that. Other studies indicate that the impact of cash transfers is a lot more modest.
ReplyDeleteWell, if Africa's GDP is $2.8 trillion, and the aid to Africa is $80 billion, the aid adds about 2.9% to the GDP. If all this money went straight into the pockets of the poorest people in Africa, who would spend it locally, there would be a multiplier effect. How high that effect would be would vary and can be debated. However, the economic impact would be higher than if almost half of the $80 billion aid money stayed in or returned to the West due to HQ costs, overheads and staff salaries, which is broadly the case today.
ReplyDeleteA fair point that village-level evidence does not map neatly onto an entire continent. Africa’s economies are too varied, and multipliers too context-specific, for simple arithmetic. But that is precisely what makes the comparison with the current system so stark. Its leakage is not hypothetical; it is built into the model. A large share of aid funding cycles through expatriate payrolls, consultancy contracts and procurement chains that send money back to donor-country economies long before it reaches anyone poor.
ReplyDeleteCash transfers, by contrast, have two awkward virtues. First, they reliably put money into the hands of households that spend it in local markets — a vastly more direct stimulus than funds absorbed by administrative machinery abroad. Second, they rest on a premise that much of the aid industry quietly resents: that poor people can be trusted to decide what they need.
Whether the multiplier is 2.6 or 1.4 or merely 1.0 is almost beside the point. The direction of travel is unambiguous: shifting even a fraction of the $80bn away from overheads and towards households would create more real activity, more resilience and more autonomy.
The inconvenient truth is that the chief obstacle is not a lack of evidence; it is that a cash-first model leaves far less room for the 700,000-strong development apparatus. And that, more than any econometric debate, is why the simplest, most transparent option has remained the least popular.
Improvements are certainly needed, but this debate seems to lump together all aid and all African countries with a focus on one instrument. There is a need for a deeper discussion.
ReplyDeleteYes, let's discuss. Here is my sixpence: (click) Real Cash for Real People
DeleteBy all means, kick it off!
ReplyDeleteThinking about it, have we not had that "deeper discussion", year in and year out, over the past 80 years? Most African countries fell further behind the rest of the world while we were discussing. If, as was debated last week, the nutritional status of children has not improved in the Southern Highlands of Tanzania, the birthplace of our famed nutritional framework, and the dumb donors and aid agencies (as Detlef characterises them) have not even dealt with the symptoms, perhaps it is time to throw in the towel.
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ReplyDeleteThis article was copied from the BBC, published on the 9th December 2025.
ReplyDelete"In a village in the central Indian state of Madhya Pradesh, a woman receives a small but steady sum each month - not wages, for she has no formal job, but an unconditional cash transfer from the government.
Premila Bhalavi says the money covers medicines, vegetables and her son's school fees. The sum, 1,500 rupees ($16: £12), may be small, but its effect - predictable income, a sense of control and a taste of independence - is anything but.
Her story is increasingly common. Across India, 118 million adult women in 12 states now receive unconditional cash transfers from their governments, making India the site of one of the world's largest and least-studied social-policy experiments.
Long accustomed to subsidising grain, fuel and rural jobs, India has stumbled into something more radical: paying adult women simply because they keep households running, bear the burden of unpaid care and form an electorate too large to ignore.
Eligibility filters vary - age thresholds, income caps and exclusions for families with government employees, taxpayers or owners of cars or large plots of land.
"The unconditional cash transfers signal a significant expansion of Indian states' welfare regimes in favour of women," Prabha Kotiswaran, a professor of law and social justice at King's College London, told the BBC".
If India can do this, why can't Africa? That is the uncomfortable question raised by one of the most striking social-policy experiments in the world today. In Africa, traditional aid has for decades poured money into expatriate-heavy delivery systems. An international aid worker can easily cost $300,000–400,000 per year once salary, allowances and all overheads are counted. How many African women could be supported with that amount? How many children’s school fees could have been paid? How many households stabilised?
For sixty years, the continent has absorbed enormous volumes of aid, yet much of it has been consumed by administrative machinery rather than reaching ordinary people. Imagine if that money had gone into direct cash transfers for women, the people who actually keep households and communities afloat. Africa might not have slipped further behind the rest of the world.