A synthesis of the e-forum organised by POWG and MaFI (working groups of the SEEP Network). Edited by Jan Maes.

1. 1
Role of cash transfers in pro-poor market development
programs aimed at the ultra-poor
Jan Maes
Poverty Outreach Working Group
The SEEP Network
November 2010
This document summarizes an on-linediscussion organized jointly by the SEEP Network’s Poverty
Outreach WorkingGroup (POWG)1 and the Market Access Facilitation Initiative(MaFI)2 duringJune 2010. The
focus of this discussion was on the roleof cash and/or assettransfers in makingmarkets work for the ultra-poor,
those without any productive assets and chronically food insecure.
The discussion started from the premise that addressing systemic market constraints isa necessary butinsufficient
approach to improve the livelihoodsof the ultra-poor. In addition to making markets work better for the ultra-
poor, targeted assetand cash transfers can bean effective way to enable ultra-poor households to benefit from
better functioningmarkets. Asset and cash transfers area legitimateelement of a 'systemic' intervention aimed at
improvingthe livelihoodsof the ultra-poor.Based on TrickleUp’s graduation programpilot(sponsored by CGAP
and Ford Foundation), discussion participants provideexamples and guidelines on how best to implement targeted
assettransfer interventions.
The followingMaFI and POWG members actively contributed to the discussion: Jo Sanson (TrickleUp), Jason Wolfe
(USAID), Luis E. (Lucho) Osorio-Cortes (Practical Action),Janet Heisey (TrickleUp), and Marcus Jenal
(Intercooperation Bangladesh).
1 The SEEP Network’s Poverty Outreach Working Group (POWG) is a learning and knowledge exchange community
led by SEEP members focusing on innovative approaches to reach very poor people with sustainable, demand-led
microfinance and microenterprise development services. See http://seepcommunity.com/group/povertyoutreach
2 The Market Facilitation Initiative (MaFI) is a joint effort of the SEEP Network and the Livelihoods Network, with the
support of Practical Action. MaFI aims to assist practitioners working in Pro-Poor Market Development to move from
market assessments and program design to implementation by advancing practical principles, techniques, and tools. See
http://seepnetwork.org/Pages/MarketFacilitationInitiative.aspx

2. 2
Targeted cash and asset transfers versus systemic market interventions?
Thisdiscussionfollowedapreviouson-line discussion3
organizedbyMaFIon whethersystemicmarket
interventionsreachthe ultra-poor(andassistthemingainingaccesstobetterincome-generating
opportunities) orcanultra-poorhouseholdsimproveeconomicallyonlyif theyare the recipientsof
focusedinterventionsthatstrengthentheirlivelihoodassets directly. Bothcashand assettransfersare
examplesof suchdirectinterventionsandhave gainedinimportanceasa weapontofightextreme
povertyandinequality. Onthe otherhand,directhouseholdorindividualinterventions,especiallyif
theyinvolve cash orassettransfers,are oftenfrowneduponbypro-poormarketdevelopment
practitioners.The reasonsare familiar:cashtransfersare notsustainable,theycreate dependency, or
theycannot be replicatedatscale. Atthe endof that original discussion,Mike Albu (one of the
discussants) concluded thatdirectassettransfers andsystemicmarketinterventionscangohand in
hand. “If little thoughtis given to the widersystemic constraintsfacing theextremepoor,assettransfers
may changelittle and fail to havea lasting impact.But wheregood analysisof themarketsystemhas
shown thatassetpovertyisa binding constraint and otherinterventionsarein place to ensurethe wider
marketsystemworkswell enough to maintain the gainsthatextremely poor beneficiariesachieve,then
direct assettransfersmay be a highly appropriate'systemic'intervention”.
The ensuingdiscussion,summarizedinthispaper,shiftedthe focustothe role andanticipated
outcomesof such cash or assettransferprograms,practical lessonslearnedfromfieldapplicationsof
programsemployingthem, andspecificrecommendationsonhow such transfers canbringabout
systemic,large-scale andsustainableaccesstomarkets bythe ultrapoor.
How are (conditional) cash transfers and asset transfers different?
Before discussingtheirrole andimpact,participantsinthe discussionemphasizedthe critical distinction
betweencashtransfersandassettransfers. Cash transfers,usuallyconditionalcashtransfers(CCT) are
small sumsof moneygiventopoor households(oftentothe motherof those households) onthe
conditionthatrecipientsparticipate incertainsocial services.Theyare asocial protectionmechanism
(oftenthroughlarge-scalegovernmentprograms) aimedatstrengtheningthe humancapital of the
extreme poor,improvingtheirhealth,educationandnutrition.Since cashisusedasan incentive,such
programsalso contribute directlytoincreasedfinancial assets(incomes) of beneficiaries. Assettransfers
on the otherhand are usuallytargetedgrantsinthe formof productive assetstoverypoorpeople
aimedat strengtheningtheirincomegeneratingpotential. Oftenthese productiveassetsare notgiven
inkind,butin the formof cash, withan explicitconditionthat the moneyisspentonproductive assets.
Thisillustratesthe maindistinctionbetweencashandassettransfersthatthe formerare meantfor
consumptionandthe latterforproductionpurposes.
Referringtoan assettransfer pilotprogramimplementedbyTrickle UpinIndia(one of several so-called
graduationprogramssupportedbyCGAPand FordFoundation),JoSanson(Trickle Up) emphasizedthat
3 This discussion was summarized in “Do systemic interventions reach the poorest of the poor” (Marcus Jenal) provide
proper reference

3. 3
Trickle Up doesnot approach assettransfersas safetynets. Inorderto ensure thattransferredassets
are usedproductively,TrickleUpIndiabuilds inprotectionmechanisms,suchasstipends tohelp
participantssurvive throughparticularlydifficultperiods (suchasleanseasons,pregnancy). Many
livelihoodactivities initiatedthroughassettransfers,suchasanimal husbandryandagriculture,require a
longleadtime before theyyieldprofits,andthe extremepoorusuallydonothave the luxuryof putting
aside activitiesthatbringinincome orfoodmore immediatelytoinvestinalongertermactivity.
Withoutsuchtargetedstipendsandotherinputs(training,etc) participantsmaywell be compelledto
sell assetsinorderto feedtheirfamilies,ortosimplyneglecttheirassetsastheyfocusonmeetingshort
termneeds.
Box 1: Key terms
Ultra-poor The ultra-poor have no productiveassets.They are chronically food-insecure,highly
vulnerableto shocks and typically depend on occasional wageor domestic labor for
cash income.
Systemicmarket
interventions
Market interventions that address systemic constraints within an entiremarket system
(as opposed to addressingsingularmarketinteractions),takinginto accountmultiple
interactions amongdiversemarket players,standards,advocacy,market rules et cetera.
Social safetynet Non-contributory transfer programs seeking to prevent the poor or those vulnerableto
shocks and poverty from fallingbelowa certain poverty level. Safety net programs can
be provided by the public sector (the State and aid donors) or by the privatesector
(NGOs, private firms,charities,and informal household transfers).Safety net transfers
includecash transfers,food-based programs,in-kind transfers,conditional cash
transfers,pricesubsidies,publicworks,etc.4 Social safety nets do not typically include
assettransfers.
Cash transfers Provision of assistancein the form of cash to the poor or to those who face a probable
risk of fallinginto poverty in the absenceof the transfer.The main objective of these
programs is to increasepoor and vulnerablehouseholds' real income. 5
Conditional cash
transfers(CCT)
Conditional cash transfer programs transfer resources to poor households conditional
on them taking activemeasures to build up the human capital of their children
(enrollingtheir children in school,takingthem for regular health care visits).CCT
programs have two clear objectives.First,they seek to providepoor households with a
minimum consumption floor. Second, in making transfers conditional,they seek to
encourage the accumulation of human capital,and break a vicious cyclewhereby
poverty is transmitted across generations.6
Assettransfers Transfers of productive assets.In contrastto cash transfers (thataimto increasea
household’s income directly),assettransfers aimto increasethe household’s assetbase
for future income generation.
Graduationprogram The CGAP-Ford Foundation Graduation Programis a global effort to understand how
safety nets, livelihoods,and microfinancecan besequenced to create pathways for the
4
Grosh M, del Ninno C, & Tesliuc E (2008) ‘For Protection and Promotion: The Design and Implementation of
Effective Safety Nets’. Washington DC: The World Bank
5
Fiszbein, A. and Schady, N. (2009) Conditional Cash Transfers: Reducing Present and Future Poverty World Bank
Publications.
6 Grosh M, del Ninno C, & Tesliuc E(2008) ‘For Protection and Promotion: The Design and Implementation of
Effective Safety Nets’. Washington DC: The World Bank

4. 4
poorest to graduateout of extreme poverty, adaptinga methodology used by BRAC in
Bangladesh.7
Usingthe large-scale Bolsa Familia programinBrazil as an example,LuisE.Osorio-Cortes(Practical
Action) explainedthe critical factorscontributingtothe successof conditional cash transfer programs.
In additionto cash transfer(inthe formof a monthlyallowance rangingbetween$10 to $70) to very
poor families inreturnforkeepingtheirchildreninthe classroomandpayregularvisitstohealthclinics,
the Braziliangovernmentintroducedwide-rangingmacro-economicreformsincludingprivatization,
reductionof trade barriersand marketliberalization.Millionsof Brazilianshave sinceclimbedoutof
poverty,owing-accordingtoOsorio-Cortes- toasystemicapproach(thatinadditiontomacroeconomic
reformalsoincludedimprovedhealthandeducationsystems) accompanyingarelativelylow costcash
transferprogram.
Marcus Jenal (IntercooperationBangladesh)notedthatthe twopreviousexamples(assettransferand
conditional cashtransfer,respectively) are at completelydifferentlevelsof intervention intermsof
effectiveness,cost,sustainabilityandimpact. Trickle Up’sassettransferprogramworks on a microlevel
and there isnothingthatsuggeststhatit alsotargetsthe systemaroundthe directbeneficiaries.
Furthermore, thisintervention seemsrathercostlyas measuredininvestmentperbeneficiary, especially
takingintoaccount the highlevel of additional supporttothe programgrantees.
The Bolsa Familia programin Brazil,onthe other hand, includes interventionsatmacro level targeted
at the system(structural reforms)inadditiontodirect supporttothe poor(inthe form of cash grants) to
take advantage of these macroeconomicchanges. Suchinterventionsare fairly cheapandreacha
massive scale,targeting55mpeople inthe case of Brazil. The interestingquestiontoaskfromboth
approachestheniswhichhas the highestimpact inthe longterm?
One has to keepinmind,however,thatbothtypesof programshave quite differentoutcome
objectives.The conditional cashtransferprogramenablespoorhouseholdstoincrease theirincome
while improvingnutrition,healthandeducationof theirchildren, whereasinTrickle Up’sassettransfer
program,such governmentsocial safetynetsare anexternal variable (theultra-poormightormightnot
enjoythem),butthe mainexpectedoutcome istojumpstartnew income-generatingactivitiesby
targetedultra-poorhouseholdsthroughproductiveassettransfers. Inthiscase,cash stipendsare also
provided,astemporaryincome supporttogive these householdssome breathingspace while building
up theirnewmicroenterprises.
JanetHeisey(Trickle Up) remarkedthatTrickle Up’sgraduationprogrampilotinIndiahelpsbuildthe
social capital of ultra-poorprogramparticipants bylinkingthem toexistingsafetynetprograms.One
program objective istoimprove healthcare practices throughprovisionof basicinformationaround
healthandhygiene andbyintroducingparticipantstolocal healthcare providers. Trickle Up’slocal
partnerorganizations alsohelpcreate linkageswithsocialsafetynetprograms(guaranteedwork
schemes;publicdistributionschemes,etc.),asappropriate. Finally,forlivelihood-specifictrainingsuch
as farming,Trickle Uptriesto engage government agricultural extensionagents withthe expectation
that participants will continue tohave accesstothese individuals,orat leasthave anunderstandingof
howserviceslike thiscanbe accessed,afterthe programends.
7 http://www.cgap.org/p/site/c/template.rc/1.11.1925/ accessed November 13, 2010.

5. 5
Guiding principles for targeted asset transfers
At thispart of the discussion,participantsexpressedaninteresttolearnmore abouthow to implement
assettransferprogramsmost effectively. JoSanson(Trickle Up) startedoutby statingthat asset
transferprograms needtobe precededbyanintensive planningprocess(thatincludes the whole
household)and a marketassessment forpotential microenterprises. Startingamicroenterpriseisa
difficultprocessforthe extreme poortargetedbyTrickle UpinIndia,as theyare usedto sell low-skill
laborfor wagesandhave little experience withasset-basedlivelihoodactivities.Theyoftenfindthatthe
income-generatingactivitythattheyfirstidentifyisnotthe one theyeventuallychoose, once they
spendtime thinkingthroughthe laborandotherresource requirements,the timingof returns,risks,and
so on.This planningprocess cantake months andtakesintoaccount both the specificneedsand
capacitiesof the household aswell as local marketopportunities,whichhave beenassessed inadvance
of these discussions.
Still accordingtoJo, the objective of assettransfersistobuildsustainable livelihoods - all the
transferredassetsare productive assets(livestock,inputsforfisheries,agriculture,etc). Progress is
measured notonlybythe profitabilityandsustainabilityof the livelihoodactivities resultingfromthose
assets,butalsothe extenttowhichparticipantscontinuetoreduce vulnerabilitytoshocksbyusing
profits(andloansfromsavingsgroups – see below) tosuccessfullydiversifyintootheractivities.
As healthexpensesusuallyconstitute amajorarea of "leakage"thatcan undermine the accumulationof
productive assetsamongthe ultrapoor,Trickle Up alsoprovidesbothdirectsupportaround
preventativehealth,andlinkparticipantstopublichealthservicesfromwhichtheyare entitledto
receive benefitsbutoftendonotdue to lack of knowledge,confidence,andsocial capital todemand
entitlements.
Specifictechnical knowledge(skills) relatedtoeachlivelihoodactivityisanotherconditionthat needsto
be in place.Forthistarget group,whogenerallyhave noorverylittle formal education,"justintime"
trainingmethodsgenerallyworkbest,where local partnerstaff regularlyvisiteachhouseholdtoprovide
advice basedonthe stage of developmentof eachactivity.Beingable toimmediatelyputlearningtouse
appearsto be importantforinstillingknowledge,whichisthe pay-off forbeingfairlylaborintensive.
Anothercrucial stepisto setup self-helpgroups (SHG) bythe programparticipantstoinstill anethosof
saving(howeversmall amounts) andtoassistinthe livelihoodplanningprocess. SHGandprogram
participantsare selectedthroughaprocessof participatorywealthranking(PWR) andtherefore groups
are notformedspontaneously. Trickle Up’sSHGs inIndiatendto have from10 to 20 female only
members. Inadditiontosavingsandloans,animportantfunctionof the SHGs isto buildmutual support
and social capital amongprogram participants. Onlyultra-poorwomenare selectedandmembersof a
givenSHG are from a fairlyhomogenoussocioeconomicbackground. Asa result,the amount
participantscanand will save regularissimilar.If there wouldbe significantdifferencesinsavings
capacityamong SGH members, the cohesivenessof the group wouldbe jeopardizedandlesssuccessful
members mightleave the grouporbe excluded.

6. 6
An Economic Strengthening Pathway
In a recentpaper8
JasonWolfe (enterprise developmentadvisor,USAID) describesan Economic
Strengthening Pathway model,whichpresentsanew wayto linkvulnerable households(whoprioritize
riskreductionabove income maximizationandallocate theirscarce resourcestomaintainconsumption)
to growth-orientedstrategies. “Reconcilingthe needforbothrisk-sensitiveandgrowth-oriented
strategiesisthe centerof the challenge toreduce householdvulnerabilityandimprove familyresiliency.
The overall programframeworkshouldvieweconomicstrengtheningnotasa single event –a household
was vulnerableandnowit isnot – but as a pathwaytowardsgrowthanddecreasingvulnerability.”
Trickle Up’sgraduationprogram pilotinIndia(sponsoredbyCGAP) aimstograduate ultra-poor
households fromcash transfers orfood assistance (tostabilizeconsumptionandmeetbasicneeds) toa
more growth-orientedstrategyfacilitatedbyaproductive assettransfer,livelihoodtrainingandaccess
to savingsandloans.
Jasonadds that the pathwayconceptembraces the dynamicnature of workingwithreal people(as
opposedtoidealizedeconomicmodelsof unrealisticallyrational humanbehavior). Onone hand,people
change theirperceptionsandbehaviorsinresponse tointerventions,and practitioners have tohave
some schemainmindfor how they thinktheirbehaviorwill change so thatinterventionscangrowwith
them. On the otherhand, there are toomany projectswithutterlymismatchedinterventionsforthe
householdsthey're tryingtobenefit. Forinstance,manygostraightforpromotinghigh-returnincome-
generatingactivities thatactuallyexpose householdstogreaterriskinthe short-termwithoutensuring
that these same householdshave waysof managingandmitigatingthe risk.
Jo Sanson remarkedthatemployingapathway conceptiscrucial for determiningthe appropriatenessof
differentinterventions,aswell asassessingeffectiveness.Otherwise youcanendup tryingto compare
applesandoranges,as the needsandcapacitiesof targetpopulationscandiffersomuch,requiringquite
differenttypesof interventions,especiallyinthe earlystages.Thisissomething of astruggle,as
specificallytargetingpeople whoare towardsthe bottomof the economicstrengtheningpathwaydoes
usuallyrequire more resourceswithlessdramaticresults,atleastinthe shortrun - it'sso much easierto
demonstrate manyof the qualityof life type resultsthatpeople like tosee (andwe all aimtoachieve)
whenyou're alreadystartingatthe "expandhouseholdincome andconsumptionstage".
JanetHeiseyaddedthat careful monitoringisakeycomponenttoensure successful outcomes. For
instance,initsIndiagraduationpilot Trickle Upneededtofine-tune andintensify the coachingby
partnerstaff and to strengthen the livelihoodplanningcomponentof the program.Thisstrategy evolved
as Trickle Up gainedgreaterclarityaboutthe nature of the population itserves andthe objectives it
seekstoachieve throughthe intervention.
Summary
Cash andassettransfers are provingtobe effective waystoenable ultra-poorhouseholds tobenefit
frommarketopportunitiesandascendthe economicstrengtheningladder.Itisimportant,however,
8
Wolfe, J. (2009) Household Economic Strengthening in Tanzania: Technical Guidance for PEPFAR II Programming.
http://www.scribd.com/doc/33448072/Household-Economic-Strengthening-in-Tanzania-Framework-for-PEPFAR-
Programming

7. 7
that theyare implementedwhile simultaneouslyaddressingwidersystemicconstraintsthatkeepthe
ultra-poorfromfullyparticipatinginmarkets.
Cash transfersandassettransfersare differentinterventionswithdifferentobjectives. Cashtransfers
seektoincrease a poorhousehold’sincome(andconsumption)directly,andif such transfers are
conditional,they alsoencouragehumancapital (education,health,nutrition…) formation.Asset
transfers,onthe otherhand, aim to increase the household’s productiveassetbase enablingverypoor
householdstogenerate more incomethemselves.
Trickle Up’sexperience inIndiawiththe CGAP/FordFoundationgraduationprogramhasyielded
importantlessonsonhowtoimplementtargetedassettransferprogramssuccessfully. Thisincludesan
intensiveplanningprocess withparticipants andathorough marketassessment forpotential
microenterprises. Healthshocksare a majorthreat to accumulationof productive assetsamongthe
ultrapoor, andTrickle Up provides bothdirectsupportsaroundpreventative health, aswell as linking
participantstopublichealthservices. Just-in-timeskill trainingduring regularhouse visitsisalso
importantto helpmostlyilliterate participantstogainthe confidenceandknowledge toconducttheir
newmicroenterprise activities.Lastly,participantsformself-helpgroups (SHG) toinstill anethosof
savingandto assisteach otherincontinued livelihoodplanning.
Targetedassettransferscan be consideredaspartof an EconomicStrengthening Pathway,allowing
householdstomove fromarisk-reducingconsumption-maintainingstage tomore growth-oriented
livelihoodstrategiesandreducedvulnerability.Employingapathway conceptiscrucial for determining
the appropriatenessof differentinterventions,aswellas assessingeffectiveness,allowingpractitioners
to fine-tunetheirstrategiesascircumstancesandbehaviorof programparticipantsisbetterunderstood
alongthe way.

8. 8
Links and References
For more informationonthe CGAP/FordFoundationGraduationProgram, see
http://www.cgap.org/p/site/c/template.rc/1.11.1925/
For paperson impactof cash transferprograms:
Adato,M. and J. Hoddinott(2007). Conditional CashTransferPrograms:A “Magic Bullet”forReducing
Poverty?
http://www.ifpri.org/sites/default/files/publications/beijingbrief_adato.pdf
JohnA. MaluccioJ. and R. Flores(2005). ImpactEvaluationof a Conditional CashTransferProgram:The
NicaraguanRedde ProtecciónSocial.
http://www.ifpri.org/sites/default/files/publications/ab141.pdf
Skoufias,E.(2005). PROGRESA andIts Impactson the Welfare of Rural HouseholdsinMexico.
http://www.ifpri.org/sites/default/files/publications/ab139.pdf
AkhterU. Ahmed,AgnesR.Quisumbing,MahbubaNasreen, JohnF.Hoddinott,andElizabethBryan
(2009). ComparingFoodandCash Transfers tothe Ultra-PoorinBangladesh.
http://www.ifpri.org/sites/default/files/publications/rr163.pdf