A New Aid Modality for Africa: Old Age Cash Transfers
19 Pages Posted: 11 Jan 2011
Date Written: June 2010
This paper examines the issue of foreign aid and cash transfers to individuals in low-income economies typically found in Africa. Old-age conditional cash transfers and new mobile banking technology can cope with the well-documented problems related to moral hazard and high transaction costs with such policy interactions. Cash transfers can stimulate old and retired individuals’ demand for the consumption goods and services, and thereby affect product prices and wages. Developing economies being characterised by underemployment and gross substitution between consumption and leisure, these transfers can stimulate the labour supply and increase capacity utilisation and the production of labour-intensive goods and services, triggering economic growth.
Keywords: mobile banking, foreign aid, economic growth, age-conditional transfers, overlapping generations
JEL Classification: D69, E29
Suggested Citation: Suggested Citation