Covid-19 cash transfer program reduces poverty, UNDP study finds

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About 92% of households receiving cash under the Covid-19 cash transfer program in Cambodia spent it on food, a study by the United Nations Development Program (UNDP) recently undertaken jointly with the General Secretariat of the National Social Welfare Council, indicating that the program, which has been running for more than two years, has contributed significantly to the fight against poverty during the pandemic.

In the meantime, given the continued impact of the pandemic on vulnerable households, the government plans to extend the program, launched on June 24, 2020 by Prime Minister Hun Sen, beyond 2022.

According to the previous plan, the program, implemented with the support of UNDP, the Australian Department of Foreign Affairs and Trade (DFAT) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, was to end next month.

The program has supported nearly 70,000 of the poorest and most vulnerable households, according to the impact evaluation study carried out with a sample of 1,000 beneficiaries. The government distributes an average of about $35 million per month for the program.

The study’s macroeconomic modeling also suggested that the program helped boost GDP growth by 0.55% in 2020 and 0.45% in 2021, reduce the poverty rate by 2.7% in 2020 and 3.4% in 2021, and to reduce the unemployment rate by 0.57% in 2020. and 0.62% in 2021.

The study found that on average, a household received about $50 per month from the program and spent about $37 on food, meaning 92 of them spent up to three quarters of the money which they received only in food. The rest spent money on medicine, utility payments, education, clothing, savings, social or religious events, etc. in this order.

A full 99% of recipients were satisfied with the current cash transfer mechanism and, when asked about their preference, around 92% chose cash over other support.

More than 75% of respondents also indicated that women are the main decision makers of household expenses. It was also found that recipients of the cash transfer program are less likely to take out additional loans or drop out of school.

The study also recommended that financial literacy should be strengthened among cash recipients, especially regarding the relationship with financial service providers. He further suggested that the government continue the program during the Covid-19 recovery period.

UNDP Cambodia Country Manager Sonali Dayaratne highlighted the importance of the evidence presented by the new report that investments in social protection can effectively support the most vulnerable. “The impacts the program has had on their lives are essential building blocks for a more inclusive social protection system in Cambodia,” she said, according to a statement.

Phan Phalla, State Secretary of the Ministry of Economy and Finance, said the results of the study not only illustrate the efficiency and transparency of program implementation, but also crystallize the role of the intervention of social assistance in improving their livelihoods and stimulating the economy.

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