Across the world, over 170 poor people receive regular payments of money, or cash transfers, from governments. Now a new study outlines how governments could use these payments to help include the poor access financial services they have largely been excluded from until now.
The report, called “Banking the Poor via G2P Payments” was produced by the UK’s Department for International Development (DFID) and CGAP – an “independent policy and research center dedicated to advancing financial access for the world’s poor.” (G2P means government to person.)
Genrally, governments deliver payments to people in cash (such as over the counter at a post office or other delivery point), or through electronic cards that only allow the person to withdraw money, but nothing else. The CGAP paper reports that governments could make life a whole lot easier for poor people by adopting electronic cards that give people access to basic financial services such as bill payments, deposits, and withdrawals.
Governments who currently pay social grants in could save a lot of money by switching to electronic payments. And a switch to a more financially inclusive service would save poor people time and money, and enable them to manage their finances more productively (for example, instead of having to travel to a fixed pay point to withdraw cash, they could use the card to pay for purchases at a local store — or transfer money to relatives in other places.)
Existing programmes in Brazil, India, Mexico and South Africa are proving the benefits of such an option. According to the report’s authors,”a growing body of evidence shows that financial services enable poor people to better withstand shocks, build assets, and link into the wider economy as fuller economic citizens.”
A more comprehensive outline of the report can be found here.
And you can download the full report here.
Wahenga Reporter 