In recent years, unconditional digital cash transfers (DCTs) have gained significant attention as a powerful tool for reducing extreme poverty. This interest is driven by the potential of DCTs to leverage new technologies and deliver direct financial aid to those in need. The global landscape of development policies and practices has seen substantial disruptions, making it crucial to explore innovative solutions like DCTs. The 17 Rooms initiative, in 2023, drafted a plan for a potential global fund to scale up DCTs, aiming to end extreme poverty by leveraging digital infrastructure.
Introduction
The efficacy of unconditional cash transfers, including DCTs, has been well-documented. Studies have shown that these transfers can dramatically reduce extreme poverty. For instance, a meta-analysis of 72 randomized evaluations of unconditional cash transfer programs across 34 low- and middle-income countries indicates a positive and persistent impact on alleviating multiple dimensions of poverty. Practical examples, such as Togo’s Novissi program, demonstrate the feasibility of rapidly delivering contactless mobile money during crises like the COVID-19 pandemic. These findings are particularly relevant given international pledges to end extreme poverty by 2030. The World Bank and the United Nations have both adopted this goal, but progress has stalled, with around 600 million people still living in extreme poverty.
To reinvigorate global efforts, a proposal has been put forward to create a new international fund, dubbed the Digital Fund for Ending Extreme Poverty (D-FEEP). The initial design of the Fund suggests that operations at a scale of $6-7 billion per year for ten years, matched by domestic resources, could potentially eradicate extreme poverty in countries with a poverty gap of over 1% of GDP. This amount represents less than 5% of global aid budgets, even after recent reductions.
The Role of Digital Public Infrastructure for Digital Cash Transfers
Digital infrastructure is critical for the successful scale-up of DCTs. Efficient mechanisms for targeting beneficiaries and ensuring accurate financial transfers at low cost are essential. At the country level, this requires at least four preconditions:
These components can vary in implementation difficulty depending on local conditions. For example, in Nigeria, the lack of a unified legal or operational mandate for the National Social Registry results in patchy coverage and inconsistent data quality, complicating DCT scale-up.
Digital Public Infrastructure (DPI)
Digital Public Infrastructure (DPI) has emerged as a concept that prioritizes a publicly managed or governed country-level backbone for digital identification, payments, and data exchange. Countries like India and Estonia are often cited as leading examples of DPI, although many others are advancing key dimensions of it. The common backbone nature of DPI contrasts with countries where private entities offer independent competing infrastructures or where each government ministry builds its own digital infrastructure systems.
The proposed D-FEEP must address several issues related to digital infrastructure. Should the Fund support DCTs only in countries with DPI already in place? Should it help countries build DPI to deliver DCTs? Would external support for DCTs incentivize countries to build DPI faster? Does it matter if a country has adequate digital infrastructure that doesn’t qualify as DPI?
Assessing Infrastructure Readiness for Digital Cash Transfers
Until recently, a lack of systematic cross-country information on digital infrastructure readiness has hindered the assessment of practical options for global scale-up of DCTs. To address this, a new data source, the March 2025 edition of the global DPI Map, has been utilized to present an initial estimate of digital infrastructure status for 72 countries grappling with substantial extreme poverty.
These countries are defined as having at least 3% of their population living on less than $2.15 per day using 2017 purchasing power parity prices.
Core Results on DCT Readiness
The analysis reveals that:
TEXTO FORMATEADO PARA WORDPRESS: 1. The analysis focuses on country-level digital ID and digital payment systems, cross-referenced with poverty estimates from the World Bank’s World Development Indicators. The DPI Map data emphasizes DPI forms of digital infrastructure, which is assumed to be the highest standard of relevant digital infrastructure.
2. Countries are segmented into three categories based on their digital infrastructure readiness:
- DPI in motion: Countries with both a DPI-caliber ID system and real-time payment system, either operating at national scale or in the process of national scale-up.
- DPI in pilot or planning: Countries with at least partially developed DPI-caliber digital ID or digital payment systems, including in pilot or planning phases.
- Digital infrastructure to be built: Countries with no (or unknown) evidence of digital ID or digital payment systems.
3. Of the 72 countries, 59 are eligible for concessional financing through the World Bank’s International Development Association (IDA). These countries are home to roughly 550 million extremely poor people and represent an indicative group that could be initially eligible for potential D-FEEP support. The other 13 non-IDA countries have a total of around 70 million people in extreme poverty and could potentially be eligible for technical support from the Fund, but not likely for direct funding.
Nine countries with a total of roughly 205 million people in extreme poverty have DPI in motion: Bangladesh, Ethiopia, Ghana, Nigeria, Pakistan, Rwanda, Uganda, Tanzania, and Zambia.
Thirty-eight countries with a total of roughly 204 million people in extreme poverty have DPI in pilot or planning phases. This includes Kenya, Madagascar, Malawi, Mozambique, Niger, Sudan, Togo, and 31 other countries.
Twelve countries with a total of roughly 140 million people in extreme poverty have digital infrastructure yet to be built or not enough is known to comment on their digital infrastructure readiness for DCTs: Central African Republic, Chad, DR Congo, Eritrea, Guinea-Bissau, Lao PDR, Mali, Nicaragua, Senegal, South Sudan, Tuvalu, and Yemen.
At least 39 of the 59 IDA-eligible countries have recent experience with unconditional cash transfers, including all the countries with DPI in motion and a majority of those with DPI in pilot or planning phases. This suggests that both infrastructure and policy preconditions for DCT scale-up are increasingly present for countries that are home to roughly two-thirds of the world’s extremely poor people.
Non-IDA Eligible Countries
For the 13 non-IDA eligible countries:
Five countries with a total of roughly 28 million people in extreme poverty have DPI in motion: Brazil, El Salvador, Colombia, India, and the Philippines.
Six countries with a total of around 27 million people in extreme poverty have DPI in pilot or planning: Angola, Ecuador, Georgia, Guatemala, Namibia, and South Africa.
Two countries still need digital infrastructure to be built, or not enough is known to comment on their digital infrastructure readiness for DCTs: Venezuela and Botswana.
Practical Implications and Considerations
The diagnostics offer empirical contours to inform policy debates regarding the proposed D-FEEP and which countries could potentially scale up DCTs to make rapid and decisive reductions in extreme poverty. While it might seem logical to prioritize DCT expansion in IDA-eligible countries within the “DPI in motion” category, there are several considerations:
Innovation and Success Stories: The case of Togo, a prominent DCT success story, falls under the “DPI in pilot or planning” category. This suggests that achieving the full DPI standard might not be a precondition for DCT scale-up success. Many other countries in the pilot-planning category might be ready for similarly rapid DCT results.
Coverage Gaps: The cross-country infrastructure assessments do not include information on how many people in extreme poverty within each country still lack access to digital IDs or payment systems. A more complete country-by-country assessment needs to assess each country’s coverage gaps. For example, Nigeria’s National Social Safety Nets Project has faced challenges in reaching the poorest potential recipients due to lack of penetration of national digital ID efforts and data gaps on coverage of banked/unbanked people.
Political Economy: Unconditional cash transfers require public or political support. A society’s implicit social contract needs to be conducive to giving unconditional grants to extremely poor people. A D-FEEP would need to have a foundation-type model whereby only interested countries apply for funding. The large number of countries with at least some policy experience with unconditional cash transfers suggests widespread opportunities for DCT expansion.
Conclusion
The infrastructure conditions for DCT scale-up are both promising and rapidly improving. Evolving technologies and policy experience suggest it is increasingly feasible to reach all extremely poor people, even if concerted efforts to expand digital access are still needed within many countries. A new mix of evolving digital tools, frontier evidence, and goal-oriented policy efforts could empower DCTs to unlock decisive gains on the world’s otherwise-stalled progress toward ending extreme poverty.
