Giving people cash is usually better than sending them food

Today, about 866 million people are starving – a staggering figure that represents an increase of about 100-200 million from before the pandemic. It’s been under-discussed, but hunger and malnutrition remain some of the world’s most pressing humanitarian problems, which have only exacerbated two years of the pandemic.

Historically, organizations such as the United Nations World Food Program and the United States Agency for International Development have typically acted to help people at risk of starvation by only shipping food — a form of aid known as “food aid in kind” — to regions around the world that need it. But in the last decade there has been an interesting shift. Aid agencies around the world, along with governments, have increasingly used another tool to fight hunger: they give people money or vouchers

That shift represents a major shift in approaches to global development — and a sign of the growing evidence behind the power of money transfers to help the world’s poorest.

WFP and USAID’s Bureau for Humanitarian Assistance (BHA), two of the largest aid agencies dedicated to fighting hunger, have both significantly increased cash (instant cash or vouchers recipients can use to purchase food) as a percentage of their aid portfolios over the past decade. Cash is now more than 30 percent of WFP’s $6.8 billion and USAID’s $4.4 billion recent annual food aid budgets.

What we see from WFP and USAID is just a representative tip of the iceberg for government-sponsored social protection policies and programs to reduce poverty along several dimensions. While the roughly $11 billion they spend on food aid sounds like a lot, it’s only 0.3 percent of the more than… $3 trillion spent by governments on social protection and work programs in the period 2020-2021.

Cash transfers had already been made more and more adopted by governments around the world before the pandemic, and the number of money transfer programs globally nearly doubled during the pandemic.

However, for governments, money transfers often target multiple levels of well-being. One of the good things about cash is that people can choose to spend it on what they need, be that food, a new roof, medicine, or school books. To show the growth of cash transfers as a tool to fight hunger, it’s helpful to look at programs like WFP or USAID that are specifically designed to keep people fed.

Why use cash to avoid hunger?

The The shift to cash as a percentage of humanitarian food aid has happened for two main reasons, Ugo Gentilini, a social protection expert at the World Bank, told me.

The first is a reflection of changes within the recipient countries themselves, as greater urbanization, for example, means that even the poorest countries have more stable markets for converting cash into food. According to Gentilini, the 2004 Tsunami in the Indian Ocean was crucial to the use of remittances for humanitarian aid. Cash allowed people to buy what they needed locally in markets relatively unaffected by the crisis, and the trend towards cash for humanitarian aid has continued ever since.

The second is growing evidence that cash helps to prevent hunger, and in most cases it does more cost effective than food aid in kind. In-kind food aid, while saving lives, often involves sending food from far away and wasting money on transport and other delivery costs† In some cases it can even disrupt local markets and farm production.

Cash transfers to fight hunger — be it cash or food stamps — also mean people can make their own decisions about nutritionally, culturally appropriate foods for their families. Cash-based programming introduces a “sense of agency that comes with it at a time of a lot of volatility and uncertainty; that feeling of being able to make decisions about what’s best in terms of your kids’ diets and your household feels real.” very important,” said Saul Guerrero, senior nutrition advisor for UNICEF. “Food aid doesn’t always provide those choices.”

Finally, direct cash assistance allows people to make choices about what to spend their money on outside of food. In all but the most extreme crises, people’s lives — and their problems — don’t stop because they’re hungry. They have to take care of the education of their children, do house repairs, get seeds and fertilizer for their farms, and more.

Enock Wangila, economic development coordinator at Mercy Corps, a humanitarian aid agency, told me: “There is overwhelming evidence to show that unconditional money transfers are the best way to provide aid to the most vulnerable because they are best placed to meet the needs. understanding what they are experiencing and meeting that need. So giving the power to the people, whether they are individuals or households, to make that decision about what to buy.”

When Mercy Corps delivered aid, including food stamps and instant cash, to an urban area in Kenya, Wangila said, some people felt they would rather have received the full amount in cash to cover rental costs.

While cash is ideal, in-kind food aid may be needed, Guerrero said, “when there are no functioning markets or when the functioning markets cannot meet the minimum nutritional diversity we need to see available to women and children” — that is, , when people don’t have access to the nutritious food they need at somewhat affordable prices.

As climate change affects the stability of food markets and global agriculturegovernments and aid organizations must prioritize social protection to address the looming risk of famine.

It is likely that cash will play an increasingly important role in this. The evidence to date suggests it is the best, in cost effectiveness and choice.

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