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Policy paper

Cash Transfers, Social Protection and Poverty Reduction

2011 — By Rachel Slater

Cash transfers form an important and growing part of social protection programming in many developing countries. This article evaluates the use of different types of cash transfers in different regional contexts as a tool for reducing poverty and inequality in developing countries. Particular attention is paid to knowledge about the appropriateness and cost-effectiveness of targeted versus universal cash transfers and about conditional versus unconditional transfers. The article finds that a fine balance is required. On the one hand, over ambitious procedures for targeting or conditionality should be avoided where administrative capacity is low. On the other hand, to rule out any possibility of conditionality or targeting on the grounds of weak administrative capacity leaves only the option of universal transfers.