Where markets and financial sector are functioning, cash transfers can be an effective path to achieve food security and nutrition outcomes.
The World Food Programme (WFP) uses cash transfers to empower people with choice to address their essential needs in local markets, while also helping to boost these markets. In 2019, WFP transferred a record-high US$2.1 billion of purchasing power to people in 64 countries. This represented 38 percent of WFP’s total assistance portfolio for the year.
Cash transfers include assistance distributed as physical bank notes, e-money, mobile money, through debit cards or value vouchers which are redeemable at locally-contracted shops.
Findings show that the element of choice is critical: vulnerable households which are empowered to decide about their lives make choices that improve their food security and wellbeing.
For instance, in Lebanon, 91 percent of families receiving multipurpose cash in 2018 prioritized food in their household expenditure, followed by rent and medical fees. In the Democratic Republic of the Congo,where cash transfers were being used the prevalence of households with acceptable food consumption score increased in 2018.
Cash transfers have multiplier effects on the local economy. By enabling people to purchase food and other items locally, cash can help strengthen local markets, encourage smallholders to be more productive and build national capacities. Between 2009 and 2019 WFP cash transfers injected around US$ 6.8 billion into national economies.
In striving to reach the ambitious Sustainable Development Goals (SDGs) of ending poverty and hunger by 2030, WFP aims to empower local governments and organizations to be self-reliant in the face of a crisis. As WFP provides an increasing portion of its assistance in cash, it is able to align with national social protection systems and support Governments in designing, delivering, and enhancing cash-based interventions.
In Ecuador, WFP’s emergency cash programme in response to the 2016 earthquake was instrumental in strengthening the national safety net system.
WFP designs programmes that integrate cash, voucher and in-kind assistance to maximize impact on households and markets, and increase vulnerable people’s choice on how to receive and use the assistance.
Depending on the context, WFP chooses the transfer modality, or combination of modalities, to achieve the best food and nutrition outcomes. WFP also has the flexibility to sequence and switch between modalities across time and geography in a given country, increasing the organization’s ability to respond contextually and swiftly to people’s needs. For example, WFP can use in- kind food during the lean season and cash after the harvest.
WFP integrated programmes include closely linked activities and coordination with partners to ensure greater synergy, effectiveness and efficiency in achieving goals. For instance, cash is integrated in broader food assistance programmes with intended outcomes around market, financial sector and retailer strengthening, financial inclusion, gender-equality – outcomes which also contribute to improved food security. As part of the retail strengthening component of cash programming, the purchasing power of recipients increased by US$27 million in Bangladesh, Kenya, Lebanon Jordan and Iraq between January 2017 and June 2018.