Are cash transfers an appropriate and cost-effective alternative to food aid? Oxfam undertook cash transfer programmes in Malawi and Zambia in 2005-2006 in response to acute food insecurity. Evaluations by the Overseas Development Institute (ODI) show that cash transfers should be considered in future relief responses. However, case-by-case, context specific analysis is needed, particularly of prices and markets.
Oxfam’s cash transfers aimed to enable people to purchase the equivalent of a standard food aid ration. The programmes in both countries were effectively implemented: people received the correct cash and were able to purchase basic items, mostly food. People also made small but sometimes crucial non-food expenditures. In Zambia, spending on health and education was important; in Malawi, the cash enabled people to purchase government subsidised agricultural inputs. Neither project encountered any major security problems: the cash was delivered and spent safely.
Evaluations of the relative cost-effectiveness of cash transfers as against food aid were mixed and affected by currency appreciation, non-cash project costs and the availability of subsidised grain. The appropriateness of cash in both contexts revolved around the prices and accessibility of food in local markets:
- In Zambia prices remained relatively stable and markets were largely accessible. Unanticipated increases in food prices in Malawi reduced the amount of food people were able to access, whilst Oxfam had no coherent contingency plans in place.
- Cash transfers in Zambia had greater positive impacts on local economies than food aid through boosting the profits of traders and producers. In Malawi, the food purchased was more likely to be imported, limiting the local multiplier effects.
- Women were the main recipients of the cash transfers. There was no evidence that they were disadvantaged by the use of cash.
- Interviewees overwhelmingly expressed a preference for cash over food aid. However, people are likely to express a preference for what has previously been provided in the hope of receiving further assistance.
- Although the cash itself was seldom shared, informal sharing within the community of the food purchased was widespread.
Cash transfers are one possible response to food insecurity. Consideration of various responses should be part of the vulnerability assessment and analysis process, based on the cost-effectiveness and appropriateness of different options:
- Cash transfers, like food aid, require effective targeting and distribution skills.
- Markets and prices need to be monitored to allow for adjustments if prices rise unexpectedly, or if people are unable to buy key commodities in local markets.
- Cash programmes should be flexible, including clear contingencies if rising prices require an increase in the transfer or a switch to in-kind assistance.
- It cannot be assumed that cash transfers are necessarily appropriate or cost-effective, particularly in remote rural areas with weak markets.
- If cash was judged appropriate in a future crisis there would be a strong case for cautious expansion of cash transfers compared to food aid.
- The flexibility of cash can be useful, for example in the post-harvest rebuilding of livelihoods, or in enabling people to buy agricultural inputs.
