Fri, Jul 02, 2010 - Page 9 News List

Direct cash transfers offer a new solution to global poverty

A new revolution is taking hold in the disbursement of international aid, and it started with demobbed soldiers in Mozambique and martial arts icon Bruce Lee

By Aditya Chakrabortty  /  THE GUARDIAN , LONDON

The most exciting new idea for tackling poverty and feeding billions around the world has got nothing to do with hydroelectric dams or back-slapping summitry. Instead, this one begins with a story about kung fu movies.

In the middle of the 1990s, Claire Melamed was working in a village in the far north of Mozambique. Nacuca had no electricity, nor running water, and precious few distractions.

As the development economist recalls: “Villagers would ask: ‘We have to live here, but how come you’ve chosen to stay?’”

Then one day visitors came, bearing entertainment.

They were former soldiers from Mozambique’s long civil war and, like the other 90,000 or so demobbed men, they were getting US$15 a month from donors, along with some funding to start businesses. This lot had pooled the hand-outs to buy a TV, a video recorder and a generator.

Oh, and a few old Bruce Lee movies.

The former soldiers toured villages across Mozambique showing copies of Enter the Dragon and Fist of Fury for cash or, failing that, maize and cassava. They went down a storm in the remote rural yawn of Nacuca, staying for days and playing the same films over and over.

What Melamed saw in Mozambique was one of the first major exercises in what is now among the most talked-about new ideas in aid, called cash transfers — or, as a new book title puts it, Just give money to the poor, as those donors did to the former soldiers. The authors, Joseph Hanlon, Armando Barrientos and David Hulme, count 45 countries that hand cash to more than 110 million families. In Brazil, poor families can collect money from lottery shops. Pickup trucks drive across Namibia, bearing safes with cash machines welded on the front, used by old ladies to take out their monthly pensions.

It sounds forehead-smackingly obvious: Isn’t giving cash to the poor what we do every time we shovel change into an envelope, or pledge a donation to a fundraising telethon? But when that money — whether from individuals or governments or big international institutions like the World Bank — gets to Africa or Asia, it’s typically turned into new roads, schools, even community radio stations. The idea is to give poor people the infrastructure and training they need to lift themselves out of destitution.

Or perhaps I should say that was the idea. Looking back over the last few years, we see in ­retrospect a brief golden period for aid. It was marked in Britain by turning Clare Short into the new secretary of state for international development, and defined internationally by the 2005 pledge at Gleneagles of the G8 richest countries to give more money to Africa. And it appears to be drawing to a close.

Academics and writers such as Bill Easterly and Dambisa Moyo now gain plaudits for books with titles such as Dead Aid. ­Recession-hit politicians at events such as last weekend’s G20 summit in Toronto avoid even mentioning the Gleneagles promises. Moreover, when official money is handed over, it often ends up on the most useless projects. In 2008, Berlin spent US$500,000 on what it called a “basic nutrition project,” but which turned out to be a scheme to reduce unpleasant smells from food-processing factories in China and (naturally enough) Germany. That would be called a joke, if it was only remotely funny.

Against all that, the idea of just handing over a hefty chunk of the world’s US$100 billion in aid money directly to the 1.4 billion people living on less than US$1.25 a day is pretty attractive. Less funny business from donors and far less waste. In addition, what makes this most remarkable of all is that while the rich countries squabble over how much money to give and in what form, this initiative has sprung largely from the poor nations — usually under pressure from some of their poorest people.

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