Towards a Leakage-Free Social Safety Net Distribution
Towards a Leakage-Free Social Safety Net Distribution
Digitizing social safety net programmes in Bangladesh to deliver affordable, effective and leakage-free digital payments to those unreached


Social safety net programmes help the Government to alleviate poverty and reduce inequality in Bangladesh. Budgetary allocations have grown in absolute terms, from 1.3percent of gross domestic product in 1998 to 2.58percent in the fiscal year2019–2020. Total government spending has increased to 14.21 percent. There are currently over 140 social safety net programmes being administrated in the country by 23ministries and divisions. 


Social safety net payments are heavily reliant on cash. The inherent costs associated with direct cash payments, such as the administrative cost of payment and the risk of leakage, are significantly higher. Studies indicate that leakage in social safety net programmes often constitutes a significant hurdle. Reducing leakage from the system could save a significant amount of money, which could eventually allow for a higher number of beneficiaries to be enrolled 


Moreover, considering that beneficiary groups are extremely poor and marginalized, recipients spend excessive time and money to travel to the payment location to collect their allowance. They also frequently experience aggravation at the point of payment collection. 

Towards a Solution

In light of the challenges of direct cash transfers, the Aspire to Innovate(a2i) Programme, with support from the Bill and Melinda Gates Foundation, partnered with various government departments, ministries and financial service providers in Bangladesh to digitize social safety net payments as part of the Government’s overarching plan to digitize all Government-to-person (G2P) payments in order to provide affordable, efficient financial services to marginalized people in Bangladesh. 


Digital payments have the potential to promote financial inclusion in underserved communities, and the Government has made digitizing G2P payments a priority. G2P digitization was piloted in 2018, and countrywide scale-up is currently underway. 


In the past, beneficiaries would receive their quarterly allowance in cash at bank branch, once their identity was validated by the bank staff. Under the new system, beneficiaries can choose their financial service provider, and the money is credited directly from the Treasury account to individual beneficiary accounts. Beneficiaries can withdraw the money at any time from any banking agent point around the country or with any mobile financial service. Beneficiary validation using national identity cards is an integral part of the architecture. Over 25million beneficiaries of various cash transfer programmes will benefit from the new system, which will ensure that beneficiaries have ownership of their money and eliminate ghost beneficiaries from the programmes. The system also eliminated several middle tiers, which reduced inefficiencies, delays and leakages. Beneficiaries now have the ultimate freedom to choose their financial service provider, thereby laying the foundation for financial inclusion. 


When compared to traditional programmes, a properly digitized social safety net programme could potentially reduce the number of visits to collect allowances by 80 percent, the time spent by 58 percent and the costs incurred by 32 percent. Moreover, the Government could save 10 percent of its social safety net budget, resulting in possible savings of over US$14million annually.  


Overall, the new system creates several benefits. The cash transfer programme allows for easier and faster delivery. Digital payments reduce the cost of collecting benefits; they save hours and, in some cases, days. In addition, a digital ecosystem ensures efficient service delivery for beneficiaries at the union level, the lowest tier of the Bangladeshi Government. 


The programme allows for leakage-free distribution. The digitization of government payments ensures transparency, accountability and traceability. It also lessenthe risk of corruption and leakage. As part of the digitization process, an awareness-raising programme was designed for beneficiaries to increase their ownership and reduce dependency on others in collecting their allowance. 


The cash transfer programme increases efficiency in government operations. Given the nature of transactional anonymity, cash-based transactions are inconvenient, inefficient and lack transparency and accountability for government organizations. Digital payment methods are quicker and more efficient, which decreases overall cost and increases the efficiency of government officials. 


The programme promotes the adoption of other digital financial servicesDigitizing social safety net payments provides mobility, enabling citizens to receive their allowance by visiting the nearest cash point. It also creates an enabling environment for accessing more advanced digital financial services. To date, this initiative has reached 2.5million beneficiaries. 


The G2P payment architecture allows the Government to initiate digital payments in other sectors by leveraging fintech at a much lower cost and promoting digital financial services. This significant payment stream was digitized using an innovative model that ensured affordable and effective service delivery. Digital payments also have the capacity to promote the inclusion of women and serve the bottom of the pyramid. The infrastructure required to roll out G2P digital payments already exists in Bangladesh. Bangladesh Bank, the Finance Division of the Ministry of Financethe Office of the Controller General of Accounts and a2i collaborated to integrate the various systems and adopt the necessary policy reform. Effective partnerships have been made among financial service providers and government institutions, including the Department of Social Service, the Ministry of Liberation War Affairs, the Department of Disaster Management and the Department of Women Affairs. The Government also approved new guidelines for the ministries and agencies implementing the payment system. 


This model can easily be replicated in countries similar to Bangladesh, as well as in the private sector. Bangladesh has taken inspiration from the direct benefit transfer programme of India to develop this inclusive payment architecture. The Bill and Melinda Gates Foundation aided a2i in implementing this innovative approach to bolster South-South cooperation. 

Contact Information

Name: Md. Tohurul Hasan, Title: Programme Manager, Organization: Aspire to Innovate (a2i) Programme

Countries involved


Supported by

Bangladesh - Aspire to Innovate (a2i) Programme

Implementing Entities

a2i Programme, Government of Bangladesh; UNDP Bangladesh

Project Status


Project Period

2017 - 2020

Primary SDG

08 - Decent Work and Economic Growth

Primary SDG Targets


Secondary SDGs

01 - No Poverty

Secondary SDG Targets


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