Can Digital G2P Payments Increase Financial Inclusion and Empower Women? Evidence from PESP in Bangladesh

Bangladesh’s Primary Education Stipend Program (PESP) provides stipends for 13 million primary schoolchildren to 10 million mothers. In 2017 the method of payment changed from cash to mobile money. This study considers the experience of the mothers with the shift to mobile money, and to the change in payments service provider that took place in 2019, through a survey of recipients and a control group. We explore the experience and perception of beneficiaries vis-a-vis the receipt of digital transfers, convenience of transactions and ability to use digital payment systems. We also consider spillovers onto financial inclusion and use, and whether the stipend and the method of payment, has increased women’s economic empowerment. Our analysis indicates that PESP beneficiaries overwhelmingly support the transition to digital payments. While a modest number think that cash-out points are too far away, they are in general, satisfied with the convenience of making withdrawals. We find positive perception of women in terms of their degree of control over the use of the funds following the shift to digital payment, particularly for those who have their own phone. Taking account of the views of the beneficiaries themselves, our survey provides support to the proposition that digital G2P payments have contributed to an improvement in women’s sense of empowerment and their ability to make independent decisions on matters relating to household finances and specifically, for their children. The study also finds positive spillover effects onto financial competition and inclusion more generally, with the rapid growth of the new payment service provider for PESP stipends. Finally, digital transfer of stipends through mobile phone wallets can provide a “nudge” towards the use of digital transactions for other purposes, but this is conditional on personal attributes of beneficiaries. For many mothers, limited digital literacy and capacity to read and write SMS presents a serious barrier to greater uptake of digital financial services, an issue that needs to be addressed by policymakers in Bangladesh as well as globally.