Why Oxfam is 'just giving the cash': Unconditional cash transfers to the very poor in central Vietnam.

Why Oxfam is 'just giving the cash': Unconditional cash transfers to
                            the very poor in central Vietnam.

           Prepared for the International Conference on ‘Chronic Poverty’
                        BRAC, Dhaka, Bangladesh – December 2006

                                            Peter Chaudhry
                   East Asia Poverty Researcher, Oxfam Great Britain

Introduction 1
Oxfam Great Britain in Vietnam is giving a one-off, cash payment to around 500 households
on or below the official poverty line in all 8 villages of An Loc Commune, Can Loc district of
Ha Tinh Province in Vietnam. The payment of around USD 375 is equivalent to more than
half of the average annual income of a poor household in the commune, and is provided with
no conditions attached other than that, if the household accepts the money, they agree to
report over a three-year period on how the money has been used.

This research project has just begun (as at November 2006) and so little ‘hard evidence’
currently exists against which to report. This paper instead discusses why Oxfam is
experimenting with unconditional cash transfers in a development (non-emergency) context,
and highlights some of the methodological and conceptual challenges that have arisen in the
course of setting up the research.2 The paper also discusses expectations for the study, in
light particularly of a growing international literature on direct cash programming, and an
increasing policy interest in Vietnam and elsewhere of the potential of cash transfers to
address chronic poverty within a social protection framework.

Overview of the Study
Ha Tinh province is located on Vietnam’s central coast. The province is disaster prone, with
frequent floods and typhoons, and the tough climate and poor quality of land make rural
livelihoods challenging for farmers, who make up the overwhelming majority of the provinces
inhabitants. Although a poor province of Vietnam, however, Ha Tinh is not considered to be
amongst the very poorest, according at least to official poverty measurements. The province
also does not have a high proportion of ethnic minority peoples, whom the latest government

1
  The Oxfam GB team responsible for the development of this research project is Nguyen Quang Quynh, Kate
Raworth, Ashvin Dayal & Steve Price-Thomas. This paper has benefited enormously from their comments,
though responsibility for remaining limitations rests solely with the author.
2
  Oxfam has considerable experience already of delivering unconditional cash transfers in emergency situations.

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Chronic Poverty Conference                                              Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

data identifies as the population group overwhelmingly most vulnerable to living in poverty.3
The reason for selecting Ha Tinh for this research project was made on the grounds that
Oxfam has a track record of working with the provincial authorities (an important
consideration in Vietnam) and that, given the sensitivity and relative uniqueness of the
project, an area which we knew, and where we were known, would best facilitate
establishment of a research pilot. If it proves to be successful, Oxfam will consider rolling out
to more challenging locations.

At the same time, the poverty landscape of Vietnam is changing, and inequality gaps in
particular appear to be widening. These gaps are appearing between provinces, but also
within provinces and districts too. So it is possible to see very poor communities even in
districts where the aggregate poverty indicators are not so low. This is the case for Can Loc
district, where the research project is located, and particularly for An Loc commune, which
has a poverty rate of 55% according to people’s committee estimates (against the national
poverty rate of 19.5% in 2004). Within the eight villages of the commune, four have poverty
rates of above 59%, with the highest rate 84% in one village.4

The commune’s eight villages have an estimated 3,358 people living in 758 households.
According to official poverty data, there are 4 households that could be considered rich, and
84 that are better-off with incomes of at least VND 400,000 per person, per month (double
the official income-poverty line).5 Oxfam is planning to give VND 6 million (approximately
USD 375) to approximately 400 households below the official poverty line, and VND 3 million
to around 100 households just above the poverty line. The money will be delivered as a one-
off cash payment into a savings account, with male and female household heads free to
decide whether they have a joint account (requiring joint signatures for withdrawals), or two
separate accounts. Oxfam will impose no conditionality upon the use of the cash, other than
it should not be used for illegal purposes, and require only that beneficiaries participate in the
monitoring of the use of the money over a three-year period.6

A baseline socio-economic survey of household income and consumption patterns, and
household assets, was completed in November 2006 and identification of the poorest
households through the survey was subsequently validated through village discussions and
with the commune people’s committee. Discussion groups will take place with project
beneficiaries every six months after dispersal of the money, to monitor both how it has been

3
  The official poverty rate for ethnic minorities in Vietnam in 2004 was more than three times the rate for the
majority Kinh ethnic group.
4
  The poverty rate for Ha Tinh province overall is 35%, and for Can Loc district 38.5%.
5
  The official income poverty rate of VND 200,000 per person, per month is equivalent to approximately USD
$12.5.

Peter Chaudhry                                                                                        Page 2
Oxfam Great Britain

Chronic Poverty Conference                                                Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

used, and what wider changes are noticeable in the community. A follow-up household
survey will take place in year three, to analyse the medium term impact upon household
income and assets of the cash payment. It is also intended that market information will be
provided to beneficiaries, to enable them to track movements in prices. But otherwise,
households are free to use the money for consumption, investment, or how so ever they see
fit to best meet their livelihood needs.

Oxfam’s Rationale for ‘Just Giving the Cash’
In 2003 Lord Meghnad Desai, then of the London School of Economics (LSE), observed the
following:
      ‘We are giving fifty billion dollars of overseas aid. There are a billion poor people in
      the world. Why don’t we just find the poor and give them one dollar a week and do
      nothing else. No questions asked. What they do with the money is not our concern.
      That would probably do more to relieve poverty than anything else’. (quoted in
      Hanlon, 2004, Pg 375).
This is an oft-quoted belief, frequently made by development practioners, politicians,
academics and ‘lay’ observers alike. Although frequently borne of frustration with the
perceived failures of development assistance, Oxfam in East Asia believes that the
presupposition that simply giving cash unconditionally can make a real difference to poverty
bears serious discussion and analysis, and the project was therefore developed to test
hypotheses around this, in a ‘real world’ situation. Unconditional cash transfers to the very
poor challenge many of the assumptions under which development organisations work, with
traditional development projects often favouring a high level of outside technical assistance,
and the delivery of often highly technocratic solutions to perceived poverty problems.
Beneficiaries participation is actively sought, but this is often ‘framed’ within the context of the
kind of assistance the project is seeking to provide (i.e. agricultural extension support,
education or health service provision). Implicit in this (whether conscious or not) is a belief
that development agencies know what’s best for the poor. By ‘just giving cash’ to the poor
and observing the impact, Oxfam hopes to benchmark, in broad terms, what the net poverty
reducing effect of a project would need to be, to outweigh simply giving the poor a lump-sum
cash payment.

This project is predicated on the assumption (borne out by Oxfam’s experience with
unconditional cash transfers in emergency contexts) that the poor can use money
responsibly when given the chance, and that they themselves are best placed to make

6
 The project’s implementation and monitoring will be carried out by a local partner, the Pro-Poor Centre (PPC), in
collaboration with the commune, district and province people’s committee’s.

Peter Chaudhry                                                                                           Page 3
Oxfam Great Britain

Chronic Poverty Conference                                     Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

choices about their priorities. This is not to say that the only obstacle to people escaping
poverty is a lack of cash. The project recognises that there are significant structural obstacles
facing the poor, which they cannot necessarily overcome alone. Foremost among these is a
lack of voice in decision-making processes, particularly for those considered to be ‘on the
margins’ of mainstream development processes, (such as marginal small-scale and upland
farmers, or in other context’s in Vietnam, ethnic minority groups or slum dwellers) or actively
excluded from decision making through cultural ‘norms’ (often the case for poor rural
women). The project is seeking to understand what role a significant injection of cash can
play as a potential catalyst in wider change processes, and what sort of complimentary
measures might help address the underlying ‘drivers’ of deep seated, chronic poverty. In the
course of developing the project, a number of methodological and conceptual challenges
emerged, which are discussed in the following section.

Project Challenges
How we understand poverty, and identify the poor
Vietnam’s recent track record in poverty reduction has been widely heralded. The analysis of
this record is deeply rooted in the mainstream methodologies and agenda of the World Bank,
which has played a key role in developing the capacity of the government of Vietnam, and
associated research institutes, to undertake poverty research in a certain way. Income/
consumption definitions dominate the national level discourse as a result, and a powerful
narrative exists in Vietnam over how poverty should be ‘measured’, which in turn drive
definitions of what it is to be poor.7 As John Harriss points out, through this process poverty
becomes solely about what can be measured, and not about the ‘social and political-
economic relationships that bring about the effect of poverty’ (Harriss, 2006, pg 23).

In our approach to this research, Oxfam has had to accept some of the presuppositions
about poverty which the prevailing discourse in Vietnam throws up, for practical reasons.
Because of limited resources and a need to work closely with the Government, we have
relied upon largely income/ consumption measures of well-being in communities, to define
poor households. This is not to say, however, that relational and non-economic dimensions
to poverty have been ignored in our analysis and approach. The baseline survey has
concentrated upon establishing a monetary benchmark of poverty to define possible
beneficiaries of the cash payment, but this has been supplemented by community
discussions into the wider aspects of powerlessness that the project seeks to address.
Villagers have also validated, as a group, the poverty status of proposed beneficiaries case
by case following the survey. Regular discussions will take place over the course of the

Peter Chaudhry                                                                            Page 4
Oxfam Great Britain

Chronic Poverty Conference                                               Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

project to understand what role the cash transfers have played in wider socially
transformative processes for the poor within communities, and particularly how these have
affected relationships of power. And at the household and community levels too, the project
will carefully monitor how the cash has impacted gender relationships, and how (if at all)
some of the structural obstacles faced by women in terms of lack of power and voice have
been challenged.

The project recognises that within the communities, poverty is experienced in different ways.
There are those, for example, with some assets, who are nevertheless extremely vulnerable
to shocks over time, and those in a deep and chronic state of poverty, whose circumstances
seem to change little over time.8 The project seeks to capture both a large (and therefore
representative) group of the poor within the commune, whilst ensuring also that the available
resources for the cash payment are not spread too thinly – that the money can still be
potentially ‘life changing’. Possible targeting scenarios that were considered included giving
money to all households from the three poorest villages in the commune; targeting the very
poorest in all villages in the commune with a large payment to each; and covering both the
very poorest and poor in all villages, but with a smaller cash payment. Eventually, it was
decided to make the payment to all households in all eight villages that were below the
poverty line in the baseline survey, and make a smaller payment to those households just
above the poverty line, who nevertheless face a significant risk of falling into poverty
periodically. This was seen as being least divisive, and a flexible cut-off point for the payment
also ensures that the project is not creating a new ‘underclass’, by simply catapulting those
who are currently poor, above those who are marginally better off.

The centrality of existing (and enduring) local configurations of politics and power
The research project is taking place within an existing political context where, by definition,
the poor are relatively disadvantaged and powerless. Local relations, between governors and
the governed, between groups, and between the powerful and powerless, have a history and
ongoing dynamic over which the project will be ‘superimposed’. These relations of power will
not simply cease to exist once the project is introduced, and they may well dictate how the
cash transfers are perceived, and perhaps ‘re-negotiated’. Cash transfers to the very poor
are particularly vulnerable in this regard, with the threat of the cash being ‘re-appropriated’ by
the powerful, either from within village elites, or from within the local Government structure.

7
  See Pincus and Sender (2006).
8 Emerging panel survey data from the region shows evidence of a significant ‘churning’ in and out of poverty,
reflecting both increased economic opportunity in a booming region, and a related high level of vulnerability and
insecurity. A recent study in Cambodia, part of the World Bank’s global ‘Moving Out of Poverty’ study, has more
than half of households slipping into poverty at some point over a four year period (CDRI 2006). (See also Baulch
& Scott, 2006, on the importance of Panel Surveys and Life History methods).

Peter Chaudhry                                                                                          Page 5
Oxfam Great Britain

Chronic Poverty Conference                                     Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

Indonesia’s recent experience with social protection programmes, (both unconditional cash
transfer programmes and conditional schemes) clearly highlights these risks. Education
subsidies intended for the poorest households immediately after the economic crisis in the
late 1990’s were often appropriated by village heads and re-distributed through their own
patronage networks. (Mukherjee et al. 2002). And a recent review of the Indonesian
Government’s unconditional direct cash transfer programme to the poor (the SLT) to offset
the effects of the removal of the national fuel subsidy, has highlighted how, in some
incidences, communities forcibly redistributed the cash assistance intended for specific poor
households, to a general subsidy to all villagers, irrespective of their wealth. (SMERU, 2006).
The project has taken steps to mitigate this risk, (on the ‘official side at least) by electing to
work with local Governments we know, who appear committed to the objectives of the
research. But understanding more broadly how change can (and can’t) happen in a particular
local context, what the structural obstacles are, and the opportunities afforded to over come
them, is the primary purpose of the research, so engaging with the ‘politics’ is a key study
objective.

The impact of the cash upon the wider economic landscape
Experience from Oxfam’s cash transfer work in disaster contexts shows how important cash
is to maintaining a functioning local economy, and the key role cash transfers play in quickly
re-establishing markets for key goods. By extension then, a significant injection of cash to
local economies should facilitate greater economic activity. It is recognised, though, that
there are risks associated with unconditional cash transfers in a development context – the
risk of inflationary pressure from introducing a large quantity of cash in a short time, and the
possibility that the cash will simply bolster the already dominant position of local elites in
economic relations, through existing monopolies on trading networks and economic
opportunities. But much of the existing cash transfer literature seems to highlight the
potential wider benefits an influx of capital can provide to local economies, and with money
spent or invested locally, a far wider group of beneficiaries stand to benefit, across all income
groups. (See Farringdon & Slater, 2006).

Intra-household dynamics: who should control the cash?
The project team has discussed long and hard over who within the household should control
the money. Women in poor households are often subject to a punishing double burden of
work (productive and household) that leaves them amongst the poorest of the poor.
Intuitively then, giving women control of the cash would appear to offer the greatest poverty-
reducing dividend. Evidence to date from micro-credit and other schemes also seems to
suggest that women use funds more responsibly, and for family well-being, whereas men are

Peter Chaudhry                                                                            Page 6
Oxfam Great Britain

Chronic Poverty Conference                                     Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

more likely to spend money irresponsibly, for personal benefit, and particularly on the
consumption of alcohol. Initial project design therefore favoured giving women in the
household sole control over the cash. However, after extensive consultation with partners
and Vietnamese staff, it was decided that giving control of the funds to women alone could
exacerbate the potential for domestic violence within the household and that, as a result, it
would be better to establish bank accounts that required the signature of both male and
female household heads.

Inherent risks in ‘windfall gains’?
Some early reviewers of the project concept warned against the dangers inherent in ‘windfall
gains’ – that there is a significant risk in giving money to people when they have not
budgeted for, or anticipated this money. They are less likely then to use the cash in a
productive way, as they do not consider it to be a part of their everyday household budget.
There is certainly an acknowledged risk that the money may not be used for productive
purposes, and may well be spent on consumption. But the boundaries for what constitutes
‘frivolous’ or ‘non-productive’ expenditure are blurred and, to a degree, culturally loaded – is
the purchase of a karaoke machine frivolous, for example, if it is periodically hired out for
weddings and other social events, and so offers an (unpredictable) economic return? Is
money spent on entertaining influential businesspeople and officials misspent, if it results in a
good business opportunity? As discussed above, the project is premised on a presumption
that the poor are not inherently irresponsible in using money. If evidence shows this
assumption to be well-founded, then misuse of money by the ‘poor’ in other context’s may be
as much about mistargeting (i.e. giving money to those who don’t really need it) than the
inherent incapacity of the poor to make sensible decisions about money.

One-off, or staggered payments?
The project team also discussed how the cash payment should be delivered: as a large one
off payment, or as several smaller payments over time. Smaller payments would certainly
reduce any risk of money being ‘squandered’, and would perhaps have a ‘long, slow burn’
effect in reducing poverty, through regular payments to cover education costs for example,
which could result in better educated children and therefore a better long term prospect of
the household ‘escaping’ poverty permanently. But providing a large lump sum which could
be immediately used, though perhaps more risky, was also deemed to have greater
transformative potential, enabling households to make a significant, potentially life changing
one-off investment. Whilst there is considerable evidence already of the impact of regular,
smaller unconditional cash transfers (through pensions for example) there appears to be little
experience with large one-off cash payments. The project will therefore be somewhat unique

Peter Chaudhry                                                                            Page 7
Oxfam Great Britain

Chronic Poverty Conference                                    Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

in this regard. Of course the poor are still free to decide how to use the money as they see
fit, and so can use the cash in small tranches, or in one go, according to their need.

Is a ‘control’ group, against which to measure change, necessary?
The methodological issue that was perhaps most intensively discussed was over whether or
not to have a survey ‘control’ group to test against in the research. This would have required
identifying a commune similar, as far as possible, in every way to An Loc commune, but
where villagers would not receive the cash transfer. By carrying out a survey in a control
location, the project would be able to compare ‘with’ and without’ project scenarios, and
distinguish to a degree impacts that could be attributed to the project, from those that would
have taken place anyway. This was deemed particularly important in the Vietnamese
context, where economic and social change in the countryside is already widespread and
dynamic.

In the event, it was decided that a control sample wouldn’t be taken, primarily for two
reasons. Firstly, finding a suitable location as similar as possible to An Loc, without any form
of current or planned development assistance project, was considered too difficult. Secondly,
concern was raised over the ethics of running a survey in a community where we did not plan
to provide assistance. Instead of a control community, data from the bi-annual national
household survey (the Vietnam Household Living Standards Survey – VHLSS) will be used
for comparison purposes, so that project community trends can be compared against district,
provincial and national trends. The possibility of having the VHLSS ‘over-sample’ in Can Loc
district will also be explored, to provide a larger data set against which to make comparisons.
The baseline survey tool has been developed to fit, as closely as possible, VHLSS modules.

The Research in the Context of Vietnam’s Emerging Policy Debate on ‘Social
Protection’
Through the close association of the commune and district People’s Committees in the
project, it is hoped that project experience will feed into wider policy discussions within the
Government of Vietnam around appropriate modalities for supporting the poor in the future,
particularly in the context of the emerging policy discussion in Vietnam over the necessity of
providing ‘social protection’ for the poor and vulnerable. Social protection, broadly defined,
refers to income or consumption transfers that protect the weak against shocks and risks.
(Adapted from IDS 0.1.1, 2006). Examples of unconditional cash transfer mechanisms as
social protection measures include pensions, social and disaster insurance payments, and

Peter Chaudhry                                                                           Page 8
Oxfam Great Britain

Chronic Poverty Conference                                         Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

child and family support grants.9 Devereux and Sabates-Wheeler have taken this on a stage,
to talk about ‘transformative social protection’ (IDS 0.1.3, 2006); interventions that also
address problems of social exclusion and marginalisation, for the chronically, structurally
poor particularly. As they note:

    ‘Vulnerable people need protection not only against obvious livelihood shocks such
    as illness or drought, but also against exploitation, discrimination and abuse…. By
    challenging power hierarchies and inequitable social relations, social protection can
    contribute to social transformation, which in turn will reduce economic vulnerabilities’
    (Devereux & Sabates-Wheeler, IDS 0.1.3, 2006).

Devereux and Sabates-Wheeler provide a useful typology of different kinds of social
protection: Protective (social assistance); preventive (insurance and diversification
mechanisms); promotive (economic opportunities) and transformative. This project
undoubtedly has potential in reducing vulnerability to shocks, and improving economic
opportunities. But it is the transformative potential of unconditional cash transfers that is most
intriguing. Oxfam hopes the project will generate evidence of this, as a contribution to global
learning in this important policy arena.

9
  It is worth noting that these kinds of payments made to the poor are well established in most western
European countries, and are considered essential ‘rights’ that guarantee a minimum standard of living
for those least well-off.

Peter Chaudhry                                                                                Page 9
Oxfam Great Britain

Chronic Poverty Conference                                 Why Oxfam is ‘just giving the cash’
December 2006: Dhaka

References & Select Bibliography

Baulch, B. and Scott, L. (2006). Report on CPRC Workshop on Panel Surveys and Life
History Methods. http://www.chronicpoverty.org/CPToolbox/images_and_files/CPRC_2006-
Q2-Workshop_Report.pdf

Cambodia Development Resource Institute (CDRI) (2006). Moving Out of Poverty: Cambodia
National Synthesis Report (Draft)

Department for International Development (DFID) (2005). Social Transfers and Chronic
Poverty: Emerging Evidence and the Challenges Ahead. A DFID Practice Paper.

Devereux, S (2006). Looking at Social Protection Through a Livelihoods Lens. IDS in Focus:
Issue 01.1

Devereux, S. and Sabates-Wheeler, R. (2006) Transformative Social Protection. IDS in
Focus: Issue 01.3

Farrington, J., Harvey, P., Slater, R. (2005). Cash Transfers in the Context of Pro-poor
Growth. Hot topic paper for OECD/DAC Povnet Risk & Vulnerability Task Group (ODI).

Farrington, J. and Slater, R. (2006). Cash Transfers: Panacea for Poverty Reduction or
Money Down the Drain? Development Policy Review, 24 (5): 499-511

Hanlon, J. (2004). It is Possible to Just Give Money to the Poor. Development and
Change 35 (2), 375-383.

Harriss, J. (2006). Why Understanding of Social Relations Matters More for Policy on
Chronic Poverty than Measurement. http://www.eldis.org/cf/rdr/rdr.cfm?doc=DOC11754

Mukherjee, N., Hardjono, J., Carriere, E. (2002). People, Poverty and Livelihoods: Links for
Sustainable Poverty Reduction in Indonesia. Department for International Development
(DFID).

Pincus, J. and Sender, J (2006). Quantifying Poverty in Vietnam: Who Counts? Paper
delivered at the annual meeting of the Association for Asian Studies.

SMERU Research Institute (2006). The Implementation of Direct Cash Transfer in Indonesia.
SMERU Bulletin No. 17.

Peter Chaudhry                                                                       Page 10
Oxfam Great Britain