Extreme poverty remains one of the biggest challenges in the world. Although poverty declined for several decades, progress has slowed in recent years. About 800 million people were still living in extreme poverty in 2025. Therefore, new strategies are needed to reach the people who have been left behind. Digital payments and targeted cash transfers could offer a practical way to address this challenge.
The Challenge of Extreme Poverty
For many decades, economic growth helped reduce extreme poverty. Between 1960 and 2010, poor countries experienced strong economic growth. As a result, millions of people gained access to better jobs, higher wages, and improved agricultural opportunities.
However, this progress has slowed since 2015. Extreme poverty is now increasingly concentrated in fragile and low-income countries. Sub-Saharan Africa is especially affected. In 2025, the region accounted for about 67% of people living in extreme poverty.
Therefore, traditional economic growth alone may not be enough. Countries need additional tools to reach households that remain outside the benefits of economic development.
The Potential of Cash Transfers
One possible solution is the use of targeted cash transfers. These programs provide money directly to people living in poverty. In recent years, digital technology has made these transfers easier to deliver.
Mobile phones and digital payment systems can help governments and organizations reach beneficiaries more efficiently. In addition, these systems can reduce some of the costs associated with traditional aid programs.
Research has found positive effects from cash transfers. These include better food security, higher savings, greater school attendance, and improved access to health services. Moreover, studies have found that cash transfers do not generally discourage people from working.
The proposal focuses on testing cash transfers at a national level. Previous programs have often been small or limited to specific communities. Therefore, there is still limited evidence about how these programs work when implemented across an entire country.
The authors propose a large-scale program that would be closely evaluated. The goal would be to learn whether digital cash transfers can reduce extreme poverty on a much larger scale.
According to their estimates, reducing extreme poverty to below 1% in 23 countries could cost around $170 billion per year. This would represent about 0.3% of global GDP. Therefore, the authors argue that ending extreme poverty may be financially possible.
Why National Programs Matter
Scaling up cash transfers could also provide important information. Governments could learn which payment methods work best. They could also study the right amount and frequency of payments.
However, large programs create new challenges. These include inflation, administrative capacity, targeting errors, and political pressures. In addition, governments need to make sure that programs remain financially sustainable.
For this reason, the proposal emphasizes evaluation from the beginning. A national program should measure its results and identify what works. Moreover, it should be developed with government institutions rather than operating separately from them.
A Plan for Action
The proposed strategy begins with a national-scale test. The authors suggest raising around $1 billion per year in philanthropic funding for five years. A willing government would then implement the program with a strong evaluation system.
The plan also includes clear measures of success. An independent group of experts would monitor the results. This process could improve transparency and credibility.
If the program succeeds, the model could then be expanded to other countries. Therefore, the initial investment would not only provide direct support to people in poverty. It could also generate evidence for future global programs.
Limits and Risks
Cash transfers should not be viewed as a complete solution to poverty. They cannot replace roads, schools, hospitals, or other forms of public investment. Instead, they can provide immediate financial support to people who lack basic resources.
There are also important questions about long-term effects. For example, researchers still need more evidence about how large transfers affect national economies. Exchange rates, inflation, and local markets could influence the results.
Nevertheless, these uncertainties are not necessarily a reason to delay action. Instead, they show why large-scale programs should include strong evaluation and learning systems.
Overall, ending extreme poverty requires new approaches. Economic growth has reduced poverty for millions of people, but progress has slowed. Therefore, targeted cash transfers could provide an additional tool for reaching vulnerable households.
Digital technology makes these programs easier to implement and monitor. However, governments must also address financial, political, and administrative challenges.
The proposed national-scale experiment offers a practical starting point. If it produces strong results, it could provide a model for expanding cash transfers around the world. Ultimately, the goal is not only to reduce extreme poverty, but also to create stronger evidence for policies that can improve the lives of millions of people.
Reference
Kharas, H., Faye, M., Simons, B., Sembene, D., Youssoufou, Z., & Krishna, K. (2026, August 13). End of extreme poverty: A case for action and a plan to start. Brookings Institution. https://www.brookings.edu/articles/end-of-extreme-poverty-a-case-for-action-and-a-plan-to-start/