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I was struck by the advent of a new form of overseas charitable giving. GiveDirectly, which opened this summer, allows anyone on earth to directly wire money to the poorest of the poor. The transfers go to very low-income Africans over mobile phones, which have become suddenly ubiquitous across the continent.
My column for Foreign Policy this week has a theme that will ring familiar to anyone who has been around global poverty advocacy for the last few years. It puts a price tag on ending poverty. My price is $100 billion, based on just handing over enough money to everyone worldwide living on less than $1.25 a day to bring them up to that level. The World Bank’s Shanta Devarajan was kind enough to comment on the article:
This is a joint post with Stephanie Majerowicz
The World Bank’s Shanta Devarajan and Marcelo Giugale in yesterday’s Guardian Poverty Matters blog write:
Except for Botswana, the track record of Africa's mineral and hydrocarbon exporters is sobering. While Africa's central banks are today better equipped to deal with currency appreciation, and its civil society more alert to environmental hazards, the institutions that control graft are not strong. They must be improved. However, this will take time. Is there a shortcut to better accountability in the management of natural resources? Yes, there is: direct transfers of resource dividends to citizens.
This is a joint post with Caroline Decker
Last week CGD published our working paper on the use of fingerprint and iris scans for cash transfers. As we continue to look into this topic, we are even more convinced of the potential this technology has for transfer systems, particularly those in resource-rich countries.
Cash transfers are increasingly being used by developing countries and development agencies to address a range of economic and social problems, including human investment and greater equality. But the option to directly distribute natural rent to citizens of resource-rich developing countries may also be especially relevant. Such an approach could encourage better resource management and head off the governance problems associated with the concentration of large rents in the hands of the state. Unfortunately, it is often difficult to establish efficient transfer programs in developing countries, many with a record of corruption and leakage. Evidence suggests that even well designed transfer programs experience 10-20 percent leakage, if not higher.
The idea of cash transfers—or just giving money to the poor—is gaining ground quickly. The use of conditional cash transfers as a way to assist the poor have shown pretty impressive results in Mexico and Brazil, leading to lots of other copycat programs in dozens of countries. Iran, and now India, are replacing inefficient and costly subsidies of basic goods with cash payments.
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Tina Rosenberg has a terrific piece in the New York Times on cash transfer programs in Brazil. She concludes:
For skeptics who believe that social programs never work in poor countries and that most of what’s spent on them gets stolen, conditional cash transfer programs offer a convincing rebuttal. Here are programs that help the people who most need help, and do so with very little waste, corruption or political interference.
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