Cash not food – Giving choices to the Poor People

(Versión en español)

Recently I was invited to a Ted X Barcelona Change Talk, where I proposed a major disruption in the way aid is managed.  In brief I proposed that we move away from food aid and substitute food with cash. Especially in places where the markets are functioning. For obvious reasons this cannot be done in most refugee camps where there are no markets in place.  The main arguments for this shift being

  • It restores dignity and decision making to the poor;
  • It is easier to manage from the logistics point;
  • It does not disrupt markets locally.
  • It enables people to decide what they want to spend on. There is no reason to  believe that the poor cannot make good economic decisions.

You can see the talk here,

The talk has attracted a flurry of inputs and questions. This post is to try and address some of those. Interestingly the queries have been more on the mechanics of how to do it rather than questioning whether it should be done.

1.     Is there any chance of short term economic distortion in the local economy?

There is, no doubt, some danger of localised temporary inflation. This will happen when there is money in the hands of the people and no supplies in the market. The trick is to work in advance with the suppliers and ensure that there are adequate stocks. If this is done, there is little possibility of distortion. The reason is that the amounts introduced are very small. In the areas where we work in the Horn and East of Africa, the population density is not too high. In fact we expect that the infusion of cash will actually boost the economy by increasing circulation and preventing small businesses from going under. Plus the cash will also help meet other needs – social (marriages) and long term (education, health care).

2.     What sort of coverage do you hope to achieve? Some families? All families?

The coverage, normally, is very focussed and targeted to the most vulnerable families. Vulnerability is determined by the situation in the area in which you are doing cash transfers. It could be women / child headed households, aged, disabled, refugees etc.

In some cases, the best way to make this work is blanket coverage. This is not as outrageous as it may sound. For instance, in the area that was mentioned in the Ted Talk, Turkana in Kenya, 95% of the people live on less than a dollar (PPP) a day. Sifting through the whole population to identify the ‘non-eligible’ 5% would cost more than just including them. This is what the Hunger Safety Net Programme is doing too.

3.     What amounts are we looking at? Are they dependent on family size?

There are many mechanisms and this depends on the reason for the aid. Important to know that one size will not fit all situations. Some families may get one time support to last over a temporary emergency, some may get amounts for a few months to help them tide over a lean season (say during planting season up to harvest for farmers) and for the chronically poor (in a safety net context) it could be longer term.  Whatever the case, one is looking at small amounts, around 75-100US$ per tranche. Important to remember that this amount is to supplement what the HH is earning and not meant to enable them to survive on this amount. Over time, one expects that this amount will go down. This needs to be studied.

4.     Is there any possibility of leakages? 

There are always possibilities of leakages, even in food transfers. The mechanism to address this is by having strong monitoring checks and balances in place. Ensuring that people know what they are expected to get, that there are accountability and complaints mechanisms where they can register complaints if they do not get it, proactive monitoring by independent teams by visits or phones. It is realistically impossible to eliminate all leakages, one can definitely reduce them significantly.

5.     Would there be absolutely no conditionality?

There are different ways of doing this. One is with no conditionality at all – the family decides how and where to spend. Other is to do it with a conditionality related to a desired outcome. A classic and successful example of this is the PROGRESA (rechristened Oportunidades) cash transfer programme in Mexico which made it conditional for the recipient to send the children to school and get them immunised. This has enabled huge strides in education and health in Mexico.   However, what it is not supposed to be is dictate what the family uses the money for; as mentioned earlier it is not a dignified way of doing it.

6.     How would you monitor impact?

The issue is indeed tricky. It would be important to remember that the cash aid is only contributing to the overall welfare & development of the people. There are a number of factors that impact development. The monitoring & evaluation system will be a combination of qualitative and quantitative and will look at improvement in resilience. Since the metrics for resilience depends on the situation, it will have to be tweaked for each location. Normally one would pick up a representative sample of households and follow them over a period of time to see impact. It would actually be interesting to compare and contrast this approach with another similar area which is engaged in food aid. That way one would be able to get evidence of the appropriateness, or lack thereof, of this approach.

Fran Equiza & Makarand Sahasrabuddhe

This entry was posted in Aid, Cash Transfers, Entrepreunership, Food, Horn of Africa Crisis, Humanitarian, Resilience. Bookmark the permalink.

4 Responses to Cash not food – Giving choices to the Poor People

  1. Jane says:

    Excellent stuff! Well done! You did well Fran. So Can we do a comparative analysis of the food aid and cash transfer? This would help progress the issue.

  2. Oscar Samsó says:

    There is Development Aid and Humanitarian Aid, the last being driven by the need of saving lives. This approach that you are mentioning is a well studied / practiced one. It has its advantages and inconveniences depending on the type of context in which operates. About the different approaches of transferring cash there is extensive information regarding methodologies, advantages, inconveniences, contexts, etc. Disadvantages could be the amount of people that can be reached or working on insecure and volatile crisis. One useful document is in the following DG ECHO Guidelines: http://ec.europa.eu/echo/files/policies/sectoral/ECHO_Cash_Vouchers_Guidelines.pdf

  3. Oscar Samsó says:

    Upcoming training sessions
    Classical training:
    Ndjamena (FR): 9-15 May
    Kinshasa (FR): 23- 29 May
    Geneva (EN): 4-7 June
    http://www.dgecho-partners-helpdesk.eu/training/start
    Distance learning training:
    http://www.dgecho-partners-helpdesk.eu/dl/start
    The new DG ECHO funding guidelines on cash and vouchers are now available!
    An increasing number of humanitarian projects funded by DG ECHO include the
    distribution of cash and vouchers to beneficiaries. This trend is based on increased
    acknowledgement of the efficiency and effectiveness of this modality when used in the
    right context, and on increased evidence based on when and how cash and vouchers
    can be used. Cash and vouchers offer greater choice to beneficiaries and help to foster
    dignity for those receiving assistance. DG ECHO is supporting the use of conditional or unconditional vouchers or cash transfers whenever it is more appropriate to the
    specific context of the Action. The DG ECHO Partners’ Helpdesk has recently been
    updated in this respect and now includes three new sections: cash transfers, which
    provides useful descriptions and examples of cash transfers; voucher transfers, which
    describes the most innovative ways of distributing vouchers to beneficiaries; cash and
    voucher distribution through the project cycle, a specific section to support Partners in all stages of cash and voucher programmes. What are the standards expected from Partners? Cash and voucher transfers can be used to respond to the range of assessed
    humanitarian needs, enabling disaster-affected people to meet their minimum
    requirements for food and non-food items; to provide access to basic services; or to
    support emergency livelihood recovery. The first step in any humanitarian intervention is to assess the humanitarian needs, the context and the vulnerable population that may require assistance. When needs have been identified and can be
    met through resource transfers, an analysis must be conducted to evaluate the most effective, efficient and safe modality of assistance: in-kind distribution, and/or cash or voucher transfer. Alternative response options should be compared on the basis of the context and the desired project outcome. The targeting procedures for C&V
    programmes are the same as those for in-kind and should attract considerable attention. All types of transfer modalities, either cash based or in-kind, present potential risks of inclusion and exclusion errors. Security issues maydiffer from one context to another and must be taken into account based on the specific context of each action and its monitoring. A wide number of cash distribution mechanisms exists; all these systems come with their own preconditions, advantages, and limitations. Possible examples include direct cash distributions, cash through
    traders, cards, cheques, voucher fairs, mobile money. Monitoring and control mechanism must be ensured for any kind of transfer modality. This implies the monitoring of markets for the potential risk of market deflation for in-kind
    transfers and inflation with cash based transfers. Evaluation of cash and voucher activities can play a vital part in the learning process for both DG ECHO and its Partners. This knowledge can contribute directly to refining and validating the use of cash and voucher actions and their accountability systems. Where can I find more information?
    Please visit the DG ECHO Partners’ Helpdesk where new pages on cash and vouchers can be found:
    http://www.dgecho-partners-helpdesk.eu/implementing_an_action/cash_and_vouchers/start
    And also on the ECHO’s website:
    http://ec.europa.eu/echo/policies/sectoral/cash_en.htm

    Good Luck for the ones interested in the topic!

    Oscar.

  4. Gezahegn Kebede says:

    That was great Fran. You did fantastically well. I am glad to learn that one of the long debated issues around cash versus food has taken shape within Oxfam. No amount of aid will change the status of the poor without letting themselves having the opportunity to choose what is good for them.

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