Key insights into different cash transfer payment mechanisms in Malawi
Abigail Carpio, Ian MacAuslan, Andrew Kardan, Marta Marzi, Sean O'Leary, Sourovi De
This project will provide key insights into the impact of different cash transfer payment mechanisms on some of the poorest households in Malawi. Currently operating in seven districts, the Government’s Social Cash Transfer Programme aims to provide regular and reliable cash benefits to ‘ultra-poor’ and ‘labour constrained’ households across the country. The traditional manual method of distribution is time-consuming and expensive for district council personnel and programme beneficiaries alike. We are conducting an impact evaluation, assessing the relative benefits of two e-payment mechanism pilots – mobile phone transfers and bank cards – to help inform the proposed national roll-out of the programme. The team has designed and is implementing a community-randomised control trial evaluation, based around indicators for five key financial and wellbeing impact areas. The evaluation will include a baseline survey of 1,039 households in the Mchinji and Machinga districts and three follow-up rounds to compare the effectiveness and impact of the two e-payment systems with the existing manual distribution system. Survey findings will be combined with cost and efficiency assessments of each distribution mechanism.
The Malawi Social Cash Transfer Programme (MSCT) aims to support the poorest 10% of households in the country through regular and reliable cash payments. First piloted in the Mchinji District in 2006, the social protection programme has been expanded across seven districts and currently targets around 30,000 vulnerable households.
Our expert team designed and implemented a randomised control trial evaluation to measure the relative impact of alternative payment mechanisms on the following key impact areas:
- Financial access
- Economic and material welfare
- Food security
- Preferences and decision-making
- Vulnerability to shocks
Over 1,039 households from the Mchinji and Machinga districts were surveyed based on a multi-stage sampling design that included random selection of ‘treatment’ communities (those due to receive transfers via. one of the two e-payment mechanisms) and ‘control’ communities (those continuing to receive transfers manually). The purpose of this baseline survey was to ensure the communities are similar enough that any differences observed between them during subsequent survey rounds can be attributed to the introduction of the alternative e-payment mechanisms.
The same households will be surveyed in a number of follow-up rounds over the next two years to help capture variations in the impact areas over time. Results from these follow-up surveys will then be combined with cost and efficiency assessments of the pilot e-payment systems to provide a broader understanding of the overall performance of the different distribution mechanisms.
Specific activities being undertaken by the team include:
- Designing and implementing a community-randomised control trial impact evaluation based around indicators for five impact areas
- Conducting baseline, follow-up and end-line surveys of 1,039 households
- Completing detailed cost assessments and process evaluations for the different cash transfer payment mechanisms
Following positive results from an initial impact evaluation, the Government plans to scale-up the programme, rolling it out across the country. The success of this national scale-up will depend, in a large part, on the development of a reliable, auditable and cost-effective payment system that eliminates the issues associated with the existing manual distribution system.
Alternative e-payment methods have a number of potential advantages over manual systems: they are less costly and time-consuming, less open to fraud and theft and recipients do not need to withdraw all their money at once, promoting saving and greater financial inclusion. Electronic systems are can also provide a more flexible response mechanism during times of stress and shock periods, than manual systems.
This project was established to assess the relative benefits of two alternative e-payment mechanisms – mobile phone transfers and bank cards – compared to the traditional manual system. Research will focus on the impact of the different payment mechanisms on householders’ use of, and access to, financial services as well as other aspects of wellbeing.
This project will provide key insights into the impact of different payment mechanisms on the financial activity and well-being of some of the poorest households in Malawi. In turn, these findings will help inform the Government of Malawi’s decision on whether to adopt these new electronic payment systems as part of their plan to effectively and efficiently expand the country’s Social Cash Transfer Programme.
The project findings could also contribute to wider social protection policy in Malawi by providing a foundation for evidence-based decision-making in the sector as well as adding to the wider international debate around cash transfers and their role in promoting financial inclusion, and social and economic development.