Zap It to Me: The Short-Term Impacts of a Mobile Cash Transfer Program - Working Paper 268

Conditional and unconditional cash transfers often help improve development outcomes, yet their costs to program recipients and implementing agencies are rarely discussed. Mobile money transfer systems in many developing countries now offer more cost-effective implementation of cash transfer programs. This paper reports on the first randomized evaluation of a cash transfer program delivered via the mobile phone. In response to a devastating drought in Niger, the trial provided households in targeted villages monthly cash transfers as part of a social protection program. One-third of targeted villages received a monthly cash transfer via a mobile money transfer system (called zap); one-third received manual cash transfers; and the remaining one-third received manual cash transfers plus a mobile phone. The authors show that the zap-based program strongly reduced the variable distribution costs for the implementing agency, as well as program recipients’ costs of obtaining the cash transfer. The zap approach also resulted in additional benefits: more diverse purchasing, a greater diversity of diet, fewer depleted assets, and a greater diversity of crops grown, especially marginal cash crops grown by women. The authors suggest that the lower costs and greater privacy of the zap mechanism—as well as changes in intra-household decision-making—explain the advantage. Their research suggests that mobile transfers could be a cost-effective means of providing cash transfers for remote rural populations, especially those with limited road and financial infrastructure.