Challenging the Efficiency of Mixed Payment Methods: Insights from the Universal Pension Pilot in Northwestern Tanzania

Abstract

This study critically examines the cost-efficiency of three cash transfer delivery models in Tanzania’s Social Cash Transfer Programmes (SCTPs): the digital and physical payments in this context referred to as a mixed-method approach used by the government-run Productive Social Safety Net (PSSN) programme in an urban setting, and the community-led physical payment employed by the non-state Universal Pension Pilot (UPP) programme in rural areas. Using the Cost Transfer Ratio (CTR) as a measure of administrative efficiency, the analysis reveals that despite relying on low-tech physical payment, the UPP’s community-led physical payment outperforms the PSSN’s mixed approach. While electronic transfers under the PSSN account for only 5 per cent of administrative costs, their overall efficiency is weakened by the inclusion of physical payments, resulting in a combined CTR of 12 per cent. In contrast, UPP’s streamlined physical payment achieves a lower CTR of 9.8 per cent, illustrating that locally adapted models can outperform mixed approaches in certain contexts. Furthermore, cost projections indicate that fully digitising payments in urban PSSN areas could generate substantial savings and expand programme coverage, suggesting that digital delivery mechanisms are most viable in settings with robust financial infrastructure and widespread digital access. This study contributes to the literature by demonstrating that delivery efficiency depends on contextual fit rather than on digitalisation alone.