Digitizing financial lives of the poor through G2Ps: Citizenship, behavioural fixes, and wealth extraction

Prof Solène Morvant-Roux, University of Geneva

A new approach to financialization is gaining ground in the South where the zero-cash advocates have been driving the agenda towards digital financial transactions. In that context, social payments and their millions of recipients have been identified as the perfect target to meet this agenda. Actually, while more than half of the world population still lacks any kind of social protection (International Labour Office 2017), social programmes have been strongly supported by the World Bank and other international organisations such as the ILO since the end of the 1990s. Known as government-to-people cash transfers (G2P), or conditional cash transfers (CCT), such redistribution policies aim to fight short and long-run poverty and hunger by setting up a ‘social protection floor’ (International Labour Conference 2011) for low-income population segments in the Global South (Hanlon et al 2010).

According to its promoters, digital social payments have the potential to increase the efficiency and transparency of the programmes, reduce their delivery costs, and enhance their outreach in rural and isolated areas (Klapper & Singer 2017).

Digital social payments not only allow a shift away from hand-to-hand cash distribution, but also expedite the implementation of a broad financial inclusion agenda. Indeed, in countries where fewer than 30% of the population has access to financial services (Demirguc-Kunt et al 2015), the transition to digital social payments was the first step towards introducing a wide array of banking services such as basic bank accounts (current, savings, etc), as well as credit and payment services. Under these new arrangements, social payments should no longer be delivered in cash by state employees, but the money should be deposited in individual bank accounts, which recipient would then withdraw  with banking cards.

Looking at the case of a famous social programme in Mexico (Prospera), my study seeks to uncover what is really going on behind the official discourses around efficiency and transparency. It shows that while digital payments play a key role in maintaining recipients’ access to G2P, and therefore build citizenship, they also offer a lens for studying low-income people’s cognitive dispositions (via the intricate data that financial transactions generate), as well as prospective tools for reshaping people’s ‘decision architectures’. A shift is under way: from focusing on the small money of the recipients to the perspective of big data collection, these new policies may transform previous rights to social protection into a right to consume financial services. Therefore, rather than focusing on the provision of funds to the poor, digital cash transfers open up a new zone for finance to profit from the poor. This, in turn, reshapes the relationship between the poor and the state, the poor as debtors and their creditors, and the state and financial services providers.

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