COVID-19: Using cash payments to protect the poor in Pakistan

Daily wage laborers, wait for work as they sit outside closed shops, during lockdown amid the outbreak of coronavirus disease (COVID-19), at a market in Karachi, Pakistan April 14, 2020. REUTERS/Akhtar Soomro - RC2C4G9PM4NR
Nearly one-third of Pakistan’s population live on daily, piece-rate wages.
Image: REUTERS/Akhtar Soomro
  • A cash payment programme will provide financial support to over 80 million people in Pakistan during the coronavirus crisis.
  • Unconditional cash transfers have been found to be effective and efficient ways to provide humanitarian assistance.
  • Initial reports indicate that the cash has provided some security to these vulnerable families.

With a population of over 210 million, Pakistan is the fifth most populous country in the world. With nearly one third of the population subsisting from daily and piece-rate wages, the COVID-19 response has necessitated an urgent and immediate strategy to protect those living in extreme poverty.

For this reason, at the same time as our government launched its efforts to control the spread of SARS-CoV-2, it also allocated $900 million to deliver emergency cash to the extremely poor. This programme is administered through Ehsaas, the federal government’s new poverty alleviation programme, in partnership with all the federating units of Pakistan – provinces and territories.

The programme delivers one-time financial assistance to the 12 million families, which given the household size in Pakistan, represents over 80 million people in the country. Each eligible family receives approximately $75, which is enough to provide subsistence nutrition for four months. Within two weeks of launch, the programme has already reached 7 million of the nation’s poorest people, representing the largest and most extensive social protection intervention in the history of the country.

The system is simple to access and employs a “rule-based” analytic system to determine eligibility. Those individuals and families wishing to benefit from an emergency cash grant were asked to send an SMS with their identity card number to a special call line. This ID number – linked to the National Socioeconomic Database, the National Database Registration Authority, and also used for travel, taxes, billing, assets ownership, government employment status, amongst other things – is used to ascertain poverty and wealth status. Those meeting pre-determined eligibility criteria receive a confirmatory SMS. Payments are conducted through two commercial banks that competed through a tender process in 2019 to service Ehsaas’ biometrically-enabled cash transfer programmes. Both banks have branchless banking retail agents in small shops. The ATM machines used also have a biometric verification system. In the majority of the cases to date, cash has been delivered to the women in the family.

Ehsaas Emergency Cash disbursement presented unprecedented challenges, in terms of its scale, the needed speed of deployment, and the milieu in which disbursement was to happen. The government was in lockdown, markets where retailers operated were closed, and bank staff were meant to work from home.

With lockdowns in effect and physical distancing measures mandatory, there were concerns about the spread of COVID-19, given the fact that people would have to queue for disbursement and use biometric identification (fingerprints on machines). Other concerns included the availability of liquidity, connectivity (as thumb impressions are verified in real-time by banks), cybersecurity, limitations of data-driven messaging (such as authorizing payment to someone who is deceased, if records are not updated), and the potential for overloading helpline numbers.

For the beneficiary there were concerns that they might be victims of crime leaving the point of service with cash. There were also concerns regarding low levels of financial and digital literacy, and that people might need transportation in some cities to reach a payment site, while intercity transport is shut down.

Addressing these challenges required a “whole of government” approach, involving provincial governments, various ministries, the Cabinet, security agencies, the COVID-19 National Command and Control Center, as well as daily coordination meetings with banks and ground staff to refine standard operating procedures in real-time, including around infection prevention and security. Interaction on the ground enabled us to make policy interventions in real-time to facilitate implementation.

Given the risks involved in social protection targeting, transparency was hardwired into the programme through a number of measures: the process was made public; the initiative was widely announced nationwide, so that the entire population would be we aware of it and have access to it; payments were contingent on biometric verification of beneficiaries and the SMS system, tied to the national ID, meaning that there is data-driven identification (using data analytics and survey data) of beneficiaries, with no space for human interference. Any reports of abuse are swiftly acted upon. Furthermore, an information portal has been made public to track details about payments.

What is the World Economic Forum doing about the coronavirus outbreak?

Responding to the COVID-19 pandemic requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.

Since its launch on 11 March, the Forum’s COVID Action Platform has brought together 1,667 stakeholders from 1,106 businesses and organizations to mitigate the risk and impact of the unprecedented global health emergency that is COVID-19.

The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.

As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.

It is clear already that COVID-19 will have lasting health and economic effects beyond the effects of damage caused directly by the virus itself. The poorest will be hardest hit. While the suffering will be difficult to quantify, measures like this may help alleviate at least some of the damage caused by the pandemic.

Cash payment programmes have been put in use during humanitarian emergencies in the past by organizations such as UNICEF. Unconditional cash transfers have been found to be effective and efficient ways to provide humanitarian assistance. They have a lower cost per beneficiary than vouchers which, in turn, have a lower cost per beneficiary than in-kind food distribution. They can also benefit the local economy. Voucher programmes generated up to $1.50 of indirect market benefits for each $1 equivalent provided to beneficiaries; and unconditional cash transfer programmes generated more than $2 of indirect market benefits for each $1 provided to beneficiaries.

Initial reports indicate that the cash has provided some stability and security to these vulnerable families in a time of extreme crisis. While the programme is in its early days and will only be properly evaluated in the weeks ahead, there are many reasons for optimism that this type of approach may help to alleviate at least some of the expected damage from COVID-19.

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