MICROFINANCE PAPER WRAP-UP: “Digital Technology in Social Assistance Transfers for COVID-19 Relief: Lessons from Selected Cases;” by Alan Gelb, Anit Mukherjee; Published by Centre for Global Development

In this paper, the authors analyze the use of digital technology to implement government-to-person (G2P) social transfer programs in response to the COVID-19 pandemic in Brazil, Colombia, India, Namibia, Pakistan, South Africa and Togo. The analysis is organized around the following steps in the process: (1) informing potential beneficiaries about available programs; (2) onboarding beneficiaries – if they are not already participating in pre-existing programs some countries are harnessing to facilitate COVID-19 relief; (3) screening beneficiaries for eligibility; (4) issuing payments; and (5) following up to resolve any problems that may have occurred.

The authors find that digital identification (ID) systems, mobile communications and digital payment systems are the three most important components of G2P value chains, enabling governments to: (1) identify potential beneficiaries; (2) communicate with these beneficiaries efficiently; and (3) transfer funds to them electronically. Despite progress in some countries, a significant portion of the population in many countries – especially women and those living in rural communities – were excluded from key services such as nationwide ID systems and mobile network coverage. Another challenge is that many people – especially those working in the informal sector and internal migrants – were not enrolled before the pandemic in programs such as disability insurance, child support grants or pensions, which have been used as a platform for some COVID-19 relief efforts.

In response to these problems, the authors note eight emerging lessons on digital social transfer programs, including how best to deliver benefits to groups most affected by the pandemic: women, those living in rural communities and informal workers excluded from preexisting social transfer programs.

(1) The more investment in digital services a country had prior to the pandemic, the easier it was to disburse social transfers.

(2) While social transfer programs should be administered primarily through national government agencies, local government as well as local and international NGOs and companies are essential in providing support, such as to serve as conduits for program funds.

(3) Digital media campaigns are one of the most effective ways to make citizens aware of social transfer programs and educate them regarding how to apply.

(4) While digital screening and onboarding processes have significantly expedited social transfer applications, reaching the most vulnerable groups – specifically women and the “ultra-poor” – may require personalized options such as online chats and in-person meetings.

(5) Digital social transfer programs have increased formal financial inclusion, such as through the opening of accounts with banks and mobile money services.

(6) Lower transaction charges encourage more people to use digital payments. Although fees that are too low are not sustainable long-term, the authors recommend that charges be lowered or kept low during the course of the pandemic.

(7) Governments need to communicate clearly about any changes to social transfers, such as how they are being disbursed or if there are changes to eligibility requirements.

(8) Despite concerns about data privacy, having a digital national ID service that is connected to all social benefit systems improves the odds that beneficiaries: (1) access all of the social programs that they require while reducing the need for multiple application and screening procedures; and (2) do not take advantage of the system by drawing support from programs contrary to program rules.

By Madigan Ruch, Research Associate

This is a summary of a paper by Alan Gelb and Anit Mukherjee, published by the Centre for Global Development, September 2020, 21 pages, available at https://www.cgdev.org/sites/default/files/digital-technology-social-assistance-transfers-covid-19-relief-lessons-selected-cases.pdf

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