sQuid’s response to the recent criticism of cash transfer programming

9 January 2017

There was well publicised criticism in the media last week targeting cash transfers and their effectiveness to deliver well needed aid to the world’s poorest. The article by the Daily Mail attacks the Benazir Income Support Programme in Pakistan, where they claim the programme is rife with widespread fraud and corruption.

sQuid strongly refutes this sweeping criticism of cash transfer programming. It is misrepresentative of the many cash transfer programmes that have delivered aid efficiently around the world, and we were extremely pleased to see Prime Minister Theresa May publicly support this approach to delivering aid.

The Mail failed to report that there are more than one type of cash transfer: closed loop; open loop; e-voucher; cash; and debit card to name some examples. It’s a complex, multifaceted area of developmental assistance, where the most suitable option depends on the needs of the people in that particular situation.

Further to this, the article quotes Nigel Evans MP who claimed that cash transfers should only be a ‘temporary measure’. This is incorrect. This is only really the case in humanitarian crises settings, which are inherently short-term.

Cash transfer programming is effective

Cash transfers are proven to be one of the most effective ways of providing aid to those who need it most, be it immediately after a disaster, or to help build communities’ capacities in the longer-term. Last year the Overseas Development Institute reviewed 165 studies into 56 cash transfer programmes, in 30 different countries, to evaluate their effectiveness.

The review concluded that cash transfers can reduce monetary poverty; raise school attendance; stimulate health service use; help foster beneficiaries’ economic autonomy; are associated with a reduction in child labour; and increase women’s decision-making power and choices.

Clearly, despite all of the above positives, it is important that cash transfer programmes continue to be scrutinised. Donors must ensure that they are delivering maximum impact to beneficiaries, and can trace every pound that is spent, as aid programmes that involve cash can be susceptible to corruption or fraud if there are a lack of controls.

Digitising cash improves accountability

To combat fraud and corruption, donors and NGOs should opt for digital payment solutions that utilise high integrity, regulated payment systems. They ensure all funds are delivered to the correct beneficiaries and provide a full audit trail to eliminate fraud. Most importantly, though, they’re proven.

Digital payment systems are already being utilised by organisations such as DFID in Kenya to distribute funds to 10,000 beneficiaries. As part of the iMlango programme, sQuid’s e-voucher system delivers funds that are used to pay for food, goods and school related items to help bring marginalised girls back to school.

In the Democratic Republic of Congo, Mercy Corps - a leading global humanitarian agency - utilised the e-voucher system to deliver aid to beneficiaries as part of a study to directly compare the cost-effectiveness of different electronic cash delivery approaches.

The study compared three different cash transfer mechanisms: physical cash, electronic vouchers (e-vouchers) and mobile money within the same programme over a nine-month period. 3,355 individuals received aid assistance, many of which had been displaced from their home and who live beneath the poverty line.

sQuid’s e-vouchers proved to be faster to set-up, quicker to deploy and easier to understand for the end-user when compared to mobile money. Additionally, e-vouchers removed the security risks associated with cash, thus proving to be a reliable alternative where cash is unavailable or too risky.

Ultimately, the only way to improve transparency and accountability in aid programmes concerned with cash transfers, is to digitise them. It’s simply one of the most secure and effective methods of distributing aid, which is why sQuid will continue to work with donors and governments to deliver cash transfer programmes that provide well needed aid, efficiently, to the world’s poorest.


For more information on sQuid, our payments system or our solutions for the Humanitarian sector, please contact us.