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Giving people cash is usually better than shipping them food

Another thing cash can do: fight global hunger.

Potatoes on sale in the open-air market of Bati, Ethiopia.
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Today, approximately 866 million people are going hungry — a staggering figure that represented an increase of about 100-200 million from before the pandemic. It’s underdiscussed, but starvation and malnutrition continue to be some of the most pressing humanitarian problems in the world, which two years of a pandemic have only exacerbated.

Historically, agencies like the United Nations’ World Food Programme and the United States Agency for International Development have typically acted to help people at risk of starving by just shipping food — a form of assistance known as “in-kind food aid” — to regions around the world that need it. But the last decade or so has seen an interesting shift. The world’s aid groups, along with governments, have increasingly turned to a different tool to fight hunger: They’ve been giving people money or vouchers.

That shift represents a major change in approach in the field of global development — and a sign of the growing evidence behind the power of cash transfers to help out the world’s poorest.

WFP and USAID’s Bureau for Humanitarian Assistance (BHA), two of the largest aid entities focused on combating hunger, have both greatly increased cash (either direct cash or vouchers that recipients can use to purchase food) as a percentage of their assistance portfolios over the past decade. Cash is now over 30 percent of WFP’s $6.8 billion and USAID’s $4.4 billion recent annual budgets for food assistance.

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

Cash transfers had already been increasingly adopted by governments around the world before the pandemic, and the number of cash transfer programs worldwide almost doubled during the pandemic.

For governments, though, cash transfers are often aimed at multiple levels of well-being. One of the good things about cash is people can choose to spend it on what they need, whether that’s food, a new roof, medicine, or school books. To show the growth of cash transfers as an instrument for fighting hunger, it’s useful to look at programs like WFP or USAID that are specifically meant to keep people fed.

Why use cash to prevent hunger?

The shift toward 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 levels of urbanization, for example, mean that more stable markets exist even in the poorest nations for turning cash into food. According to Gentilini, the 2004 Indian Ocean tsunami was pivotal for using cash transfers for humanitarian assistance. Cash allowed people to source what they needed locally from markets that were relatively unaffected by the crisis, and the trend toward cash in humanitarian assistance has continued since then.

The second is the growing evidence that cash works at preventing hunger, and in most cases is more cost-effective than in-kind food assistance. In-kind food assistance, while it does save lives, often involves shipping food from far away and wastes money on transportation and other delivery costs. In some cases, it may even disrupt local markets and farmer production.

Cash transfers to fight hunger — whether actual cash or food vouchers — also mean people can make their own decisions about nutritionally, culturally appropriate food for their families. Cash-based programming introduces a “sense of agency that it brings at a time of a lot of volatility and uncertainty; that sense that you can make decisions about what is best in terms of your children’s and your household’s diets, feels really really important,” said Saul Guerrero, senior nutrition adviser for UNICEF. “Food assistance doesn’t always offer those choices.”

Finally, direct cash assistance ensures people can make choices on where to spend their money beyond food. In all but the most extreme crises, people’s lives — and their problems — don’t stop just because they’re hungry. They need to ensure their children’s education, do home repair, get seeds and fertilizer for their farms, and more.

Enock Wangila, economic development coordinator at Mercy Corps, a humanitarian aid group, told me, “There is overwhelming evidence that shows that unconditional cash transfers are the best mode of providing assistance to the most vulnerable, because they are best placed to understand the needs that they’re experiencing and meet that need. So giving power to the people, be it individuals or households, to make that decision on what they need to purchase.”

When Mercy Corps provided assistance, including both food vouchers and direct cash, in an urban area in Kenya, Wangila said, some people felt they would have preferred receiving the entire amount in cash to cover rent costs.

While cash is ideal, in-kind food assistance may be necessary, said Guerrero, “when there’s no functioning markets or when the functioning markets are unable to meet the minimum dietary diversity that we need to see available to women and children” — that is, when people aren’t able to access the nutritious food they need at somewhat affordable prices.

As climate change threatens the stability of food markets and global agriculture, governments and aid organizations need to foreground social protection to address the looming risk of starvation.

It’s likely that cash will play an increasingly important role in that effort. The evidence thus far suggests that’s for the best, in cost-effectiveness and choice.

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