Empowerment through cash transfers
The World Food Programme at the World Humanitarian Summit
"Before, we had no food; we were hungry. Now I know that we can eat and I’m thanking you."
The words are those of Aisha. Sixteen years old and a refugee from Boko Haram, she lives in a temporary shelter in the Great Lakes region. Aisha has just collected her World Food Programme (WFP)-issued SIM card: over the next six months, it will give her access to $84 a month for food and other essentials.
Aisha is one of a fast-growing number of beneficiaries to receive a Cash-Based Transfer rather than in-kind food assistance. In the six years to 2015, the number of people receiving cash assistance tripled to 9.59 million. In 2015, effective cash transfers (implementation costs excluded) reached US$680 million. Nearly half of this sum was distributed under the Regional Emergency Response for Syrian Refugees.
‘Cash-Based Transfers’ is a catch-all expression: it covers a variety of ways in which funds are given out to individuals and families to meet their nutritional needs. It may take the form of physical money; bank transfers; vouchers, whether paper or electronic; or other electronic platforms, such as special SIM cards or debit cards.
Sometimes, the money can be spent freely; at other times, only on pre-approved items or at chosen retailers. Depending on the circumstances, cash may be used on its own or in conjunction with food provided in kind. Each situation is analysed to ensure that assistance reaches the beneficiary through the best possible means – or indeed, the best combination of means. And while cash does not fit every situation, it does fit an increasing number of them. This explains the strategic shift towards it: it now covers more than a quarter of WFP’s portfolio.
The system’s advantages are varied:
- It is fast, efficient, and generally secure. By reducing the cost and logistical complexity of food assistance, cash payments shorten the path to hunger relief. They also allow WFP to respond to emergencies almost immediately. When coupled with electronic identification methods such as credit card PINs or iris recognition, cash can accurately channel assistance to those most eligible.
- It offers greater choice. By giving beneficiaries like Aisha control over their spending, cash boosts individuals’ agency and morale. It also makes diets more nutritionally tailored, with food baskets that are locally rooted and seasonally appropriate. Special dietary needs can be accommodated.
- It stimulates trade. By injecting money into the local economy, cash transfers can create a virtuous circle of production and consumption. This fuels growth and, in conflict-related settings, promotes economic rebirth. By early 2016, as part of WFP’s response to the Syrian conflict, US$ 1.29 billion had been pumped into the economies of Egypt, Iraq, Jordan, Lebanon and Turkey – as well as Syria itself.
- It strengthens partnerships with governments. When offered conditionally, cash disbursements may be tied to socially desirable outcomes, such as keeping children in school or persevering with HIV treatment. This allows WFP to support national welfare policies and advance broader development goals. In the case of Aisha and others like her, cash implicitly helps empower women and girls.
Rapid growth and clear advantages aside, however, cash (or “digital” food) is not suitable in all contexts. Where markets are dysfunctional or banking services unreliable, the benefits of cash are limited. In some cases, it may also pose a risk of inflation or market distortion.
To determine whether to opt for cash over food, WFP will evaluate security conditions, possible procurement methods, the risk of political manipulation of the process and other contingencies. Often, when cash payments are combined with in-kind assistance, a ‘smart mix’ will be devised that maximizes good outcomes. This may involve dividing the type of assistance by generation (for example, giving Corn Soya Blend to the children and food vouchers to the parents) or by time of year, depending on the season and market conditions.
Cash, in other words, can be powerful, whether on its own or in combination, but ineffective or counterproductive at the wrong time or in the wrong place. Year after year, our understanding and use of it grows more sophisticated. Partnership is vital: cash payments rely both on the informed cooperation of beneficiaries like Aisha and on agreements with a range of commercial and non-profit entities. The process thus hinges on WFP’s capacity as a development actor and global service provider.