Do cash transfer programmes foster dependency?

At the FAO’s blog, Ben Davis argues that they don’t.  Some key quotes, drawing on recent research on several African projects:

Along with the increase in productive activities, the cash transfers programmes have given households more flexibility with their time. In most countries of sub-Saharan Africa, low paying casual agricultural wage labour is an activity of last resort, when households are desperate for cash.  In Zambia, women in beneficiary households reduced their participation in agricultural wage labour by 17-percentage points and 12 fewer days a year. Both men and women increased the time they spent on family agricultural and non-agricultural businesses. … As one elderly beneficiary said, “I used to be a slave to ganyu (low-paid wage labour) but now I am free.”

Cash transfer programmes also have allowed beneficiary households to better manage risk. Fieldwork in Kenya, Ghana, Lesotho, Zimbabwe, Ethiopia and Malawi has found that the programmes increased social capital and allowed beneficiaries to ’re-enter’ existing social networks and/or to strengthen informal social protection systems and risk-sharing arrangements.

One of the important points that I take from this is that the idea of “welfare dependency” as transfer-induced withdrawal from the labor market is overly simplistic.  Selecting a livelihood strategy rarely comes down to a binary decision to work or depend on the state, be it in rural sub-countries in Kenya or poor neighborhoods in Chicago.  Instead, people  choose from a portfolio of livelihood options, often combining various sources of income at the same time.  These might include agricultural production, self-employment, waged labor, salaried labor, support from family or friends, and support from the government.  Davis’ point suggests that state-provided transfers don’t substitute for all the other livelihood choices here, but rather give people enough of a buffer that they don’t have to resort to the most poorly paid or abusive options quite so often.