Global development institutions focusing on the development potential of financial technology frequently cite M-Pesa as a major success story in poverty-reduction.
There is no doubt that the digitalisation of finance offers new possibilities for greater financial inclusion. More, unconditional direct transfers through electronic payments solutions are credited to be more efficient and cost-effective at reducing poverty than traditional approaches.
Nevertheless, in the context of a post war region like the East DR Congo where unemployment among the youth is very high and children exploited by their household and syndicate to work in clandestine mining, the provision of unconditional cash has the potential to produce the following unintended effects: First, alike the free education policy promulgated by the current President of the DR Congo, there may be fear that cash transfer to targeted households may not take the children out of child labour in the mines. Rather, the unconditional transfer may lead to an increase in fertility due to better access to cash. Secondly, there is potential for free cash transfers to generate work disincentive effects especially among the youth with a reduction in labour supply and job seeking efforts.
Having said that, it is important that evidences from organisations working in the sphere in East Dr Congo be closely reviewed to make sure that their impact and legacy do not support these potential claims.
