One of the most successful tools in the fight against poverty, one that has attracted increasing attention over the past decade, is social protection via cash transfers. In fact, the New America Foundation’s Global Savings and Social Protection Database – which focuses on Latin America, Africa, East and Asia – has identified over 90 cash-transfer programs in 45 countries, with over a half billion beneficiaries. As the Chronic Poverty Research Centre puts it, “social protection is critical in preventing descent into chronic poverty and reducing the depth of poverty... [and the cash transfers] protect household consumption and human capital investment and [facilitate] the inclusion of poorest households in economic activity.”
Cash-transfer programs have evolved over time in an effort to address their shortcomings and maximize their impact on poor households. One such movement within programs is linking them with bank accounts and other formal financial services. The Global Savings and Social Protection Database has found that almost 70 percent cash-transfer recipients are now able to store their payments for future use, though they often are unable to access other services such as the ability to make deposits. While the field of work and study on the topic is only emerging, recent experience suggests that there exists untapped potential to further leverage developing opportunities for both financial inclusion and social protection. Such strategies can help to more quickly and effectively provide financial and human capital asset-building opportunities for millions of the world’s poorest.
This paper proceeds in three parts. In Part I, this paper examines the increasing emphasis on long-term, integrated interventions to build both the physical and financial assets necessary to increase resilience and graduate from poverty. Part II analyzes the shift toward electronic payments and developments in payment infrastructure (especially mobile banking) that are accelerating the development of financial asset building. Part III looks at current efforts to promote financial inclusion and savings to enable asset building and the graduation from poverty. The paper concludes with a synthesis of how the trends in program structure and payment infrastructure can best inform ongoing work to promote financial inclusion through social protection payments.