Ideas to Action:

Independent research for global prosperity

X

Views from the Center

Feed

For once, some good economic news out of Zimbabwe: a recent humanitarian cash transfer pilot is showing promising results. A program financed by DFID that provided unconditional digital cash transfers of US$5 per person per month to 67,000 vulnerable households reported an 18 percent decline in hunger. While the evidence on cash transfers is strong and growing for responding to both humanitarian crises and a range of other situations, this is the largest such cash program in Zimbabwe.

The encouraging results are important because the Zimbabwean economy is in dire circumstances. The latest IMF assessment reports: “Real growth has dropped below the level needed to raise per-capita income, formal employment has shrunk, signs are that poverty is on the rise, and 3 million people are now estimated to be at risk of lack of access to food.”

But what to do when the government is bankrupt, pathologically corrupt, and has no apparent interest in helping its own people? The hope of the World Bank and others that emergency financing to the government might finally instigate reform or curb human rights abuses is a naive dead end.

That’s where the cash transfer pilot becomes interesting. Instead of organizing a billion-dollar bailout and crossing your fingers that the government suddenly behaves, why not finance the expansion of the $5 per month? To cover the entire population would run about $1 billion per year. This approach has the added advantages of delivering directly to the people, avoiding the government corruption gauntlet, and helping the country build a foundation for eventual recovery. If paired with national ID and mobile money, the potential benefits extend to credible voting rolls, expanded financial inclusion, enhanced accountability, and more, as my CGD colleague Alan Gelb has written about. (The government would not be involved but would have to agree not to interfere and lift the import ban on basic goods.)

While I’ve adamantly opposed a bailout for the Mugabe regime, a bailout for the population—if the cash is delivered directly to citizens—is something all friends of Zimbabwe should get behind.

Disclaimer

CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.