However, a new approach has the ability to leapfrog over these impediments. Pakistan has launched a system to provide direct payments to two million flood-affected households to pay for them to rebuild their homes and replace lost property. The system uses machine-readable smartcards called Watan Cards that use modern biometric technology to ensure a unique identity for each recipient and reduce fraud. The cards are issued by major banks, meaning that recipients can receive cash from existing networks of local agents as well as branch offices. The program is scaling up rapidly, with nearly one million cards issued in the last 45 days.
Similar systems have been used in a number of developing country contexts. Starting off from pension payments in KwaZulu-Natal province, South Africa has almost two decades of experience. Biometric and card-based systems have been used in Malawi to provide emergency support to drought-stricken farmers, in the DRC to provide demobilization payments to ex-combatants, and in Andhra Pradesh, India to provide employment guarantee and social payments to some 5 million people. Globally, systems differ in a number of dimensions, whether in the mechanism of identification (fingerprinting, iris recognition etc.) and in the mechanism of delivering transfers (electronically into bank accounts, cash payments at mobile points-of-service with biometric or pin-based smartcard systems, etc). But the basic principles are similar – unique identity, and secure, direct, and verifiable payment to the designated recipient.
While there are no guarantees of success, Pakistan has the technology, expertise, and experience in place to implement the Watan Card program well. It is well into the rollout of an even larger program, the Benazir Bhutto Income Support Program, which aims to support 5 million poor families by next summer and has delivered payments to those displaced by fighting in the country’s northwest. Pakistan has already built a national biometric identity database with 96 million citizens registered through fingerprints.
These systems have worked well even in extremely difficult conditions. Especially for large programs, their setup costs are modest, and they economize on delivery costs. Technology allows the transfer system to bypass layers of entrenched bureaucracy, eliminating opportunities for extortion. Finding and training suitable operators has not been a problem, even in conflict-torn central Africa. And these programs have often produced striking side benefits. The program in Andhra Pradesh, India empowered female recipients by offering them a source of income independent from male relatives (many of those employed by the program were also women). The South African transfers program opened up a whole range of financial services to beneficiaries—households can now purchase insurance plans directly from their new savings accounts. In Malawi, a study found that cash transfers to drought-affected farmers were highly effective at restarting local economies, spurring demand and in turn creating jobs. Each dollar spent through the program drove more than two dollars in new economic activity, researchers concluded.
As a tool for flood reconstruction, the Watan Card program could be invaluable. Given the promise of this program, the United States could usefully offer up to $500 million to help households from flood-affected areas to reconstruct homes and recapitalize farms. It should challenge other donors to join in, and should work with the Pakistani government to ensure that allocations go only to those in the flood areas. It could also ensure the publication of accurate information on donations to the program and its disbursements, all the way down to the district level. If the United States wants to demonstrate its support directly to the people of Pakistan, U.S. funded cards could easily be marked with an American flag. Aid contractors have engaged in a spirited debate with the U.S. government over the branding of aid projects. Stamping cards to be distributed through Pakistani channels might be an effective, low-risk way to symbolize the U.S. commitment while using and strengthening local capacity.
This sort of biometrics-driven cash transfer program is not science fiction. It is technology proven in cases around the world—including in Pakistan itself. Now, facing a disaster that could set Pakistan’s long-term economic prospects back by years, policymakers are looking for a way to deliver aid quickly and securely to those who need it most. The Watan Card fits the bill.
Caroline Decker is a research assistant and Alan Gelb is a Senior Fellow at the Center for Global Development. Alan is a member of the CGD study group on a U.S. development strategy in Pakistan.