Digital Solutions for Direct Cash Transfers in Emergencies
Experiences during previous pandemics and economic crises have shown that a range of transfer programs and modalities can be effective in protecting vulnerable households, including those in the informal sector and poorer regions. In the wake of the COVID-19 pandemic, many governments are considering direct cash transfers to protect vulnerable households. In several developing countries, the scale of these payments is unprecedented. For people living in extreme poverty, such cash support can be a lifeline. However, low-income developing countries (LIDCs) and emerging market economies (EMEs) often have large informal sectors, which make it more difficult to deliver support effectively and securely.
This note focuses on how digital solutions can help governments deliver cash transfers efficiently and quickly to their intended beneficiaries, including those in the informal sector. The note offers suggestions on:
- The scope for using digital technologies to identify and validate recipients of direct cash payments.
- Mechanisms for delivering cash payments efficiently.
- Streamlining public financial management (PFM) procedures for delivering these benefits/transfers fast, while ensuring transparent reporting and adequate control to prevent serious financial irregularities.