In reading the GiveDirectly study on cash transfers, Chris Blattman’s analysis, and the background research on both mobile money and cash transfers, I’ve come to agree with a point that Chris made in a Technology Salon: mobile money cash transfers will disrupt traditional development practices.
If your career or company business model is based on giving food, training, or agricultural inputs to poor people, mobile money is now your direct competitor.
Why? GiveDirectly gave poor people around $720 US on average to spend however they wanted and households increased their monthly livestock and non-agricultural businesses incomes by 33% percent ($15), durable assets, mainly roofs, by 58% ($279), and consumption by 23% ($36). The mobile money cash transfers also lead to a 0.25 standard deviation increase in the food security index for households (but truth be told, I’m not really sure what that means).
Anyway, show me a skills training course with those outcomes. Better yet, show me any training program where 92% of the funding reached the poor themselves. Yes, that’s right, the total cost of GiveDirectly programming is just 8% of the total funding raised.
What does this mean for your job?
I think we are on the cusp of a seismic shift in development. All the mobile phone and mobile money hype is starting to be justified. We’ve already seen mobile services upend domestic cash transfers, with national banks international remittance companies in a panic. We are starting to see real disruption in education and even mobile device manufacturing.
This study is the first shot across the bow of the development ship. And while we are on a big boat (no, not the Titanic or Lusitania), those groans you are hearing is it slowly shifting. We have to get more efficient, and have more impact, if we are going to hold overall funding steady, much less fight to raise it in this political climate.
I see abandoning much of our insistence on capacity building and training as a first step. This study shows we can have amazing impact without any technical assistance. Now cash transfers are not for everything – notably education and health outcomes didn’t change over the year – but why should we ever hand out food to increase food security? And why do business training when the poor seem pretty good at increasing incomes themselves? Finally, don’t give a cow this Christmas – give cash.
There will be few winners and many losers
Have you see the staff list for GiveDirectly? One thing that strikes me about the $2 million a year charity, is that they have 5 staff. When Inveneo was that size, we had 12 staff, and most development organizations are equally staffed. Yet GiveDirectly has a tiny staff in comparison, and mainly M&E field staff.
If we apply anything near that funding/staffing ratio to the top 5 USAID vendors (John Snow, Chemonics, MSH, FHI360, and DAI), we are all in for a restructuring on par with the US manufacturing sector. It may be more profitable than ever, but domestic manufacturing is really only the high-end boutique firms or place-specific specialists, neither of which are major employers, and certainly not of the generalist middle manager.
So should we all run scared like Chicken Little? No, of course not, but that doesn’t mean we can be complacent. Mobile money is here, its only getting bigger, and it will impact every single one of us. And every single one of our companies.
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