Afghanistan experiences chronically high poverty, a vulnerable labor market, low levels of educational
attainment, and low resilience to shocks. The World Bank has asked us to determine the best method of
providing income support to the most vulnerable Afghans. However, in light of the state’s weak institutional
capacity, limited infrastructure, and insufficient funds, poverty relief presents a formidable challenge.
Public works and cash transfers are both means of providing a social safety net, a non-contributory form of
income support that aims to reduce poverty among the most vulnerable. Public works deliver needed jobs and
valuable infrastructure, but given the current conditions in Afghanistan, there are significant risks of graft and
project inefficiencies. Project failure could exacerbate the country’s persistent governance problems. In
contrast, cash transfers provide a more direct method of income support that is easier to administer and is thus
less susceptible to graft and mistargeting. Unconditional cash transfers are the easiest to implement; however,
conditional cash transfers rationally incentivize positive behavior. A gradual transition from unconditional to
conditional cash transfers would increase human development outcomes, such as health and education, in the
long-term.
The budget constraint of approximately $100 million per year will not support a national safety net. Even if
funding were sufficient, Afghanistan currently lacks the required state capacity and technological infrastructure
to administer a national program. We therefore recommend a cash transfer program run within high-poverty
provinces that have adequate cell phone infrastructure and access to electricity, specifically: Laghman, Sar-ePul,
Ghor, Badahkshan, Takhar, and Zabul. Given the lack of reliable data on household income, we
recommend utilizing a poverty scorecard in order to determine the target population – villages with households
that are uniformly poor and have the highest probability of being below 200 percent of the poverty line, living
on about $2.50 or less per day. All households in the selected poor villages would then receive income support
equal to 50 percent of the poverty gap. Distributing cash payments via mobile phones and utilizing a
transparent contracting process would further minimize the risk of graft and misappropriation. A rigorous
evaluation of this program should be conducted based on consumption and quantifiable human development
outcomes, such as literacy or infant mortality. Proven success would provide the basis for a scaled-up social
safety net program with national coverage of poor households, which would cost approximately $750 million
annually within the same programmatic parameters.