G2P

Relevant Work We Have Done

G2P and financial inclusion (2008)
(India)

Directed project to refresh evidence and conclusions from 2006 paper. Project included: a. commissioning a new paper on Indian NREG scheme (Case Study on the Use of Smartcards to Deliver Government Benefits in Andhra Pradesh, India);b. writing a new paper amending the 2006 framework for further understanding the strategic role of financial inclusion in G2P programs (Promoting Financial Inclusion Through Social Transfer Programs); and c. convening/ facilitating a workshop of sectoral experts to discuss the paper and agenda for further work in this area.

Payment of social transfers through financial system (2006)
(Global)

Directed research on scoping report involving primary research in three countries with large G2P schemes; involved categorizing approaches and recommending ways of enhancing the financial system aspects for payment of social transfers.

Review of the Prosper program funded by DFID-Bangladesh (2009)
(Bangladesh)

Completed the second annual review for DFID-Bangladesh of the multi-year Prosper program designed (1) to address seasonal starvation through cash-for-work, flexible micro-finance products, and an innovation fund; and (2) to establish a microfinance regulatory agency and a microfinance research and training institute. Provided analysis and recommendations on financing, organizational development, and program design for all four program components.

Financially inclusive payments manual (Global, 2009)
(Global)

Developed a manual for the client, DFID, with the objective to provide governments, donors and NGOs promoting social transfer programs with clear and practical guidance on how to assess, design and implement financially inclusive payment arrangements.

The Problem:

All over the world, poor people are benefiting from government to person (G2P) social transfer programs. Governments as well as multi-lateral donors are responding to the opportunity to move millions of people out of the poverty cycle in which they are trapped.

Increasingly, these social transfer programs are being paid in cash rather than in the form of food or specific income-generating resources, in acknowledgement of the beneficiaries’ ability to make good choices for their well-being.

However, many of these funding programs remain sub-optimal. In traditional cash distribution systems, beneficiaries often must travel long distances, and wait in long lines to receive their periodic cash payment, and suffer the risk of robbery on their trip home. Furthermore, if they do manage to arrive home with the money, they face a high likelihood that friends and relatives will expect a share of the benefit.

For the funding agencies, there can be considerable losses of funds not merely through expensive distribution but also the corruption that often accompanies the passage of cash through many hands.

The Solution:

In recent years, technology has offered the opportunity to streamline the process and also provide greater security and discretion for the beneficiaries. Sophisticated means of identifying beneficiaries, and the provision of financial accounts have not only reduced the “leakage” of funds from the system, but have strengthened the ability of beneficiaries to choose the time and amount of funds to use for their specific purposes. The entry onto the economic ladder by beneficiaries also provides them with opportunities to avail other financial services like savings, credit and insurance. Taking a broader view, this can then enhance market visibility which can lead to increased provision of financial services to community members who are non-beneficiaries as well.

Furthermore, wireless communications technology is stretching the frontier of banking services so these payments can be made in remote places not served by conventional bank branches. Wireless communications via both point-of-sale devices and mobile telephones offer the opportunity of transacting from a bank account without journeying to a banking facility.

The benefits of technologically enabled branchless banking seem obvious; and the concept of using it for social transfer payments is simple. But the actual implementation must coordinate not only the technologies involved, but the available utilities infrastructure, the necessary financial transaction system including the availability of cash, and the government regulatory requirements designed to assure the stability of the financial system.

These conditions, along with the needs of poor people, differ widely from country to country. The technologies are constantly evolving, and world economic conditions ebb and flow, increasing the importance for government social transfer programs to remain up to date with both the nature of the demand and the potential means of facilitating financial aid to the poor.