Norad recommends 20% budget allocation for cash transfers

On September 11, 2022, Bård Vegard Solhjell, Director General at the Norwegian Agency for Development Cooperation (Norad), recommended a considerable increase in the proportion of cash transfers to 20% of Norway's ODA budget, up from its current 2%.

Solhjell said that Norad`s recommendation to the Ministry of International Development would be implemented gradually, allowing Norway to test and slowly increase the prominence of cash transfers over time.

Over the past decade, Norad has conducted several studies on the long-term effects of direct transfers to poor households in India, finding positive outcomes related to food security, consumption, health, and income. One key finding also suggests that the additional income from cash transfers increases recipients' mobility, helping individuals secure employment that offers stable income.

However, the drastic proposed increase in cash transfers could reduce funding for other priorities. Solhjell declined to comment on the exact reallocations, saying the responsibility rested with Parliament and the government. As it is, much of Norway`s international development funding could be deployed as transfers, allowing Norway to retain the same thematic priorities while utilizing cash transfers as a mechanism. 

Anne Beathe Tvinnereim, Minister of International Development supported Solhjell`s recommendation to use cash transfers, citing the potential for positive externalities in food markets and production caused by low-income consumer spending.

News article - Dagens Næringsliv (in Norwegian)