MICROFINANCE PAPER WRAP-UP: “COVID-19: Crisis as an Opportunity for Urban Cash Transfers?”; by Keetie Roelen, Edward Archibald, Christina Lowe; Published by ODI

Urban areas in developing countries were especially hard-hit by the COVID-19 pandemic due to a range of issues including “overcrowding, poor hygiene and sanitation, and widespread informal employment.” To support urban dwellers and others, many governments across the world implemented cash-transfer programs in response to COVID-19. However, just 16 percent of the poorest quintile of urban citizens in low-income countries received social assistance. Utilizing a literature review and case studies on the implementation of urban social assistance programs in various developing countries, the authors explore the successes and challenges of direct income support in alleviating socioeconomic shocks.

There was a wide range of response times among countries, with some programs being implemented in as quickly as one week and others still not active as of November 2020, when the authors conducted the interviews for this study. The prime predictors of the speed of rolling out income support to urban citizens were availability of funding – particularly from any contingency funds that may have been set aside before the pandemic – and degree of coordination among government agencies. Meanwhile, the scope of coverage varied, as some governments provided income support for all citizens, while others sought to target groups that were hit harder by the pandemic. Near the beginning of the pandemic, many governments attempted precise calculations of citizens’ lost income to reimburse, but these calculations became more difficult as the pandemic progressed. Although innovative uses of technology enabled governments to reach beneficiaries who may not have otherwise been served, certain demographics remained excluded.

To improve the ability of social protection programs to handle future shocks in urban areas, the authors’ suggestions include: 1) creating a coherent “strategy, institutional framework and partnerships” to support urban areas in times of need; 2) considering data on the level of poverty and vulnerability of various urban populations to target aid more specifically based on need; and 3) expanding coverage of urban social assistance by enhancing outreach, especially for populations at greater risk of hardship.

Regarding the provision of routine urban social assistance, the authors offer eight suggestions, including: 1) widening coverage of urban social assistance on a regular basis rather than solely in times of great shocks; 2) using accountability mechanisms designed to ensure no eligible recipients are denied social assistance; and 3) ensuring that income support is tailored to the needs of various types of households, including those in different neighborhoods.

This is a summary of a working paper by Keetie Roelen, Edward Archibald and Christina Lowe; published by the Overseas Development Institute (ODI); June 2021; 43 pages; available at https://cdn.odi.org/media/documents/ODI_Urban_cash_transfer_final_BnD1aaz.pdf.

By Bradley Shulman, Research Associate

Additional Resources

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