Show me the money – when is cash more appropriate than food aid?

19 February 2007

As floods continue to displace thousands of people in central Mozambique, Save the Children UK has urged that cash grants should be considered rather than food aid for long term recovery.* A new report from the Humanitarian Policy Group addresses the question 'When is cash appropriate?'

Agencies have traditionally provided humanitarian assistance in-kind - in the form of food aid, seeds, blankets and building materials - so have tended to be slow to explore the option of giving people money to buy what they most need themselves. A recent report by HPG argues that whenever in-kind assistance is provided, the alternative, of providing funds to enable people to decide for themselves what they most need and buy it in local markets, should be considered.

The basic criteria for cash transfers to be appropriate are that markets are functioning so that people can buy what they need locally and that cash can be delivered securely. Evaluations have found that not only is it possible to target and distribute cash safely, but that people spend money sensibly on basic essentials and rebuilding livelihoods.

Cash transfers, the report argues, should be seen as part of the toolbox of humanitarian response: as a complement to in-kind assistance, as well as an alternative to it. These findings have important implications, not just for food aid responses but also for shelter, non-food items, agriculture and wider livelihood responses.

The report highlights recent evaluations of cash based responses which strongly suggest that providing people with money can be an effective and appropriate response in a wide variety of contexts. Cash has been provided to people to rebuild homes in Sri Lanka, to restore livelihoods in Pakistan, to enable access to food in response to drought in Malawi, Zambia and Niger and successfully delivered in conflicts such as Somalia and Afghanistan. Cash transfers can provide a stimulus to local economies and have in some contexts been more cost-effective than commodity-based alternatives.

This does not mean that cash should be seen as universally appropriate. Cash responses may not be advisable in the early stages of an emergency if markets are disrupted, or in very remote areas where markets are particularly weak. Cash transfers can be delivered successfully even in conflict environments, but concerns about security and diversion will be particularly pressing in unstable contexts. Questions also remain over the inflationary potential of large-scale cash programmes, and how quickly and effectively markets would be able to respond to increased demand. However, none of these concerns should detract from the clear conclusion that there is scope for significantly increasing the use of cash and vouchers as an instrument in humanitarian response, in a wide range of contexts

* ReliefWeb update 16 February 2007: 'Mozambique: Cash not food needed to help flood evacuees recovery, says NGO'