Cash transfers: Combating poverty in Africa—A Nigeria case study

Introduction

Cash transfers to vulnerable households have long been a topic of debate among development practitioners. While these programmes hold significant potential for poverty alleviation, their success depends on careful implementation, with attention to transparency, accountability, and sustainability. A nuanced understanding of both the benefits and risks is essential to ensure cash transfer initiatives reach their intended objectives without being undermined by corruption or inefficiencies.

Recently, news channels highlighted the Nigerian Federal Government’s approval of ₦4 billion for conditional cash transfers, targeting over 10 million vulnerable households. The Minister of Humanitarian Affairs and Poverty Reduction, Professor Nentawe Yilwada, unveiled this initiative during the launch of the 2025 Nigeria Humanitarian Needs and Response Plan (HNRP) at the United Nations House in Abuja. This program, intended to address Nigeria’s growing humanitarian crises, aims to provide much-needed assistance to displaced households, particularly in the Northeast.

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Professor Yilwada noted that the initiative would prioritise women, especially widows, pregnant women, and individuals living with disabilities. While such measures look promising on paper, Nigeria’s history with similar programmes, such as Tradermoni, raises questions about the potential risks of mismanagement. This article seeks to offer a balanced analysis of cash transfers, evaluating their benefits, addressing concerns, and exploring strategies to enhance their effectiveness.

Understanding cash transfers and microcredits

Cash transfers and microcredits, though managed by different institutions, share the common goal of poverty alleviation and empowering vulnerable populations. In the EU, microcredit investments are overseen by bodies like the European Investment Bank (EIB) and member states’ development finance institutions, while cash transfers are funded by humanitarian agencies such as the European Commission Humanitarian Office (ECHO). Despite these distinctions, both tools aim to address the needs of poor individuals and households by overcoming barriers to economic inclusion and fostering sustainable development.

Cash transfer programmes (CTPs) have gained recognition as effective and flexible tools for supporting disaster-affected populations. Unlike in-kind assistance, CTPs empower beneficiaries to determine their own needs, nurturing dignity, choice, and a people-centred approach to aid. By reducing negative coping mechanisms, stimulating local economies, and creating multiplier effects, CTPs promote resilience and contribute to both recovery and long-term development.

CTPs also excel in delivering aid in insecure regions, using innovative delivery systems and technologies to ensure assistance reaches the most vulnerable. Additionally, they strengthen national systems and partnerships by involving local actors, private sector entities, and government social safety nets, thereby enhancing states’ capacity to respond to emergencies effectively. UNDP has done this across some states in Nigeria, especially to address the aftermath of the Covid-19 pandemic.

With advancements in technology and increased private sector involvement, the use of CTPs has expanded significantly. Organisations like Oxfam and the World Food Programme (WFP) have scaled up their reliance on cash-based interventions, highlighting the transformative potential of CTPs in addressing diverse needs, supporting recovery, and strengthening the resilience of affected populations.

The promise of cash transfers

When implemented with integrity and focus, CTP can transform lives. Their benefits span immediate relief and long-term empowerment, few of which are discussed hereunder:

Immediate economic support

Cash transfers provide vulnerable households with timely financial assistance, enabling them to meet basic needs such as food, healthcare, and education. In crisis situations, such as displacement due to conflict, this support can be lifesaving. Unlike in-kind aid, cash empowers recipients to make decisions based on their specific circumstances, encouraging a sense of autonomy and dignity.

Boosting local economies

By spending cash on local goods and services, recipients stimulate economic activity in underserved areas. This infusion of resources creates jobs and strengthens community resilience.

3.Cost-effective administration

Cash transfers often bypass the logistical complexities of distributing physical goods. Digital platforms streamline disbursement, reducing administrative costs and minimising corruption risks.

Positive socio-economic outcome

Global examples like Brazil’s Bolsa Família and Mexico’s Progresa programmes demonstrate how cash transfers improve child nutrition, school attendance, and health outcomes. They also encourage savings and investments, equipping recipients with tools to break free from poverty’s cycle.

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The challenges of cash transfers

Despite their potential, cash transfer programmes are not without flaws. Several issues threaten their efficacy:

Corruption and mismanagement

Cash transfers can become a playground for misuse, with funds syphoned off by officials or diverted to non-eligible individuals. Political manipulation is another risk, where governments use these programmes to gain favour rather than address genuine needs.

Dependency and short-term focus

While cash transfers provide immediate relief, they may create dependency if recipients lack pathways to self-sufficiency. Without complementary programmes addressing education, healthcare, and employment, these initiatives risk becoming a temporary fix rather than a sustainable solution.

Targeting errors and exclusion

Poor targeting can exclude the most vulnerable or include those who do not need assistance. This undermines public trust and diminishes the program’s impact.

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Oyewole O. Sarumi is a Professor of Strategic Leadership and Digital Transformation. He is the Executive Director, ICLED Business School, Lekki, and Faculty, Prowess University, Delaware, US. His main research interests include leadership and enterprise, strategy and digital transformation in leadership with emphasis on education, business and e-governance. You can reach him on +234 803 304 1421 Email: [email protected]