Oxfam’s response to predictions of acute food insecurity in Malawi and Zambia in 2005–2006 included cash transfers as an alternative to emergency food aid. Recipients were able to purchase the equivalent of a standard food aid ration. Should cash transfers become a standard tool in the responses to hunger?

A report from the Overseas Development Institute, UK, assesses the experiment and compares the cost-effectiveness of cash transfers and food aid. 

Six thousand households in Malawi and 13,500 in Zambia received cash for the four months between the height of the hungry season and the harvest. In Zambia cash was delivered by a local bank and a security company while in Malawi Oxfam distributed the cash itself, using mechanisms similar those used to pay rural civil servants. In both countries people received the money that they were meant to. Women were the main recipients.

The bulk of the cash was spent on maize. People also made small, but sometimes crucial, non-food expenditures. In Zambia spending on health and education was important. Malawian beneficiaries often purchased subsidised inputs provided through a government agricultural scheme. Cash transfers in Zambia probably had greater positive impacts on local economies than food aid through boosting the profits of local traders and increasing purchasing from local producers.

Cash transfers appear to have allowed people to buy amounts of food roughly comparable to a standard food aid ration and therefore of similar nutritional value. However, as with all emergency responses, difficulties were encountered:

• A lack of maize grain in remote areas of Zambia forced people to buy more expensive maize meal: some households therefore purchased less food than they would have received in a typical food aid ration.
• Some Zambians had difficulties reaching markets and had to walk long distances to buy food.
• The price of maize in Malawian local markets rose more steeply than anticipated, reducing the amount of food that people were able to access.
• In Zambia there were fears about village elites getting a disproportionate share of assistance and in Malawi concerns about uneven coverage between villages.

The authors warn against assuming that cash transfers are necessarily appropriate or cost-effective. In Zambia non-cash costs of the project (staff, transport and support) were unacceptably high – over 30 percent of the value of the cash distributed. Cash transfers, just like food aid, require effective targeting and distribution skills. Planning for cash projects needs to be integrated into disaster preparedness and contingency planning processes.

Researchers recommend:

• working with civil society organisations to investigate whether purchased maize is used to brew beer, to understand the gender impact of cash transfers and to investigate whether beneficiaries prefer cash or food
• participatory vulnerability assessment processes with frank discussions about the relative cost and impact of different options
• accurate monitoring of markets and prices
• considering earlier starts to cash distributions in order to enable people to buy agricultural inputs
• considering how long-term cash transfers could help to alleviate poverty and make it easier for households to deal with periodic shocks.

Source(s):
‘No Small Change. Oxfam GB Malawi and Zambia Emergency Cash Transfer Projects: A Synthesis of Key Learning’, Overseas Development Institute, by Paul Harvey and Kevin Savage, June 2006 (PDF) Full document.

Funded by: Oxfam GB

id21 Research Highlight: 24 January 2007

Further Information:
Paul Harvey and Kevin Savage
Humanitarian Policy Group
Overseas Development Institute
111 Westminster Bridge Road
London SE1 7JD, UK

Tel: +44 (0)20 7922 0335
Fax: +44 (0)20 7922 0399
Contact the contributor: p.harvey@odi.org.uk, k.savage@odi.org.uk

Humanitarian Policy Group, ODI, UK

Other related links:
'Is cash the best way to assist poor and vulnerable people?'

'Famine in Ethiopia: is food aid the answer?'

'Food aid that supports development: searching for appropriate policies'

'An alternative approach to food aid from the Sudan conflict'

'Cash relief in Somalia: an alternative emergency response'

Eldis Food Security Resource Guide

Cash or Food?