“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 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 (CBT) rather than in-kind food assistance. In the six years to 2015, the number of people assisted through CBT tripled to 9.59 million. In 2015, effective transfers (implementation costs excluded) reached US$680 million. Nearly half of this sum was distributed under the Regional Emergency Response for Syrian Refugees.
‘Cash-Based Transfers’ is a catch-all expression: it covers a variety of ways in which funds are given out to individuals and families to meet their nutritional needs. CBT may take the form of physical money; bank transfers; vouchers, whether paper or electronic; or other electronic platforms, such as special SIM cards or debit cards.
Sometimes, the money can be spent freely; at other times, only on pre-approved items or at chosen retailers. Depending on the circumstances, CBT may be used on its own or in conjunction with food provided in kind. Each situation is analysed to ensure that assistance reaches the beneficiary through the best possible means – or indeed, the best combination of means. And while CBT does not fit every situation, it does fit an increasing number of them. This explains the strategic shift towards CBT, now covering more than a quarter of WFP’s portfolio.
The system’s advantages are varied:
- It is fast, efficient, and generally secure. By reducing the cost and logistical complexity of food assistance, CBT shortens the path to hunger relief. It also allows WFP to respond to emergencies almost immediately. When coupled with electronic identification methods such as credit card PINs or iris recognition, CBT can accurately channel assistance to those most eligible.
- It offers greater choice. By giving beneficiaries like Aisha control over their spending, CBT boosts individuals’ agency and morale. It also makes diets more nutritionally tailored, with food baskets that are locally rooted and seasonally appropriate. Special dietary needs can be accommodated.
- It stimulates trade. By injecting cash into the local economy, CBT can create a virtuous circle of production and consumption. This fuels growth and, in conflict-related settings, promotes economic rebirth. By early 2016, as part of WFP’s response to the Syrian conflict, US$ 1.29 billion had been injected into the economies of Egypt, Iraq, Jordan, Lebanon and Turkey – as well as Syria itself.
- It strengthens partnerships with governments. When offered conditionally, the provision of CBT 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, CBT implicitly helps empower women and girls.
Rapid growth and clear advantages aside, however, CBT is not suitable in all contexts. Where markets are dysfunctional or banking services unreliable, the benefits of CBT are limited. In some cases, CBT may also pose a risk of inflation or market distortion.
To determine the suitability of CBT, WFP will evaluate security conditions, possible procurement methods, the risk of political manipulation of the process and other contingencies. Often, when CBT is 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.
Rather than a panacea, therefore, CBT is best thought of as a topical remedy – 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: CBT relies both on the informed cooperation of beneficiaries like Aisha and on agreements with a range of commercial and non-profit entities. The CBT process, in other words, hinges on WFP’s capacity as a global service provider and development actor.