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Cash instead of food to address hunger?
04 June 2007
Lesotho and Swaziland: Isn't it time we used cash instead of food to address hunger?
Reduced domestic harvests and high regional prices have adversely affected food security in Lesotho and Swaziland this year. A recent FAO/WFP assessment indicates that over 400,000 people in Swaziland are food insecure and will need 40,000 tonnes of food aid during the coming year. The FAO/WFP assessment for Lesotho has yet to be released.
But is food aid the right response to this year's crisis? Both countries border South Africa, are traditionally net food importers and have strong market ties with their larger neighbour. Internally, both Lesotho and Swaziland have relatively good communication systems and extensive networks of retailers. Most, if not all, households, even in the remotest parts of the two countries, are reliant on the market to meet a large part of their staple food and other basic needs.
Why provide food aid in such circumstances? Surely it would be as cheap, quicker and more market and producer friendly to look for a cash solution?
One option that the Governments of the two kingdoms might be tempted to consider is the introduction of a general price subsidy which would lower the cost of maize and perhaps other staple foods. But universal subsidies are not pro-poor and they would probably also lead to large outflows of maize to neighbouring South Africa as consumers took advantage of the price differential to buy subsidised maize and sell it at the full market price across the border. With extremely porous borders it would be difficult to stop this movement of maize and as a result the cost of the subsidy in each country would rapidly escalate.
But there is another cash based option which could quickly and simply be implemented in both countries. Both countries already run cash transfer schemes in the form of old age pensions which provide regular cash payments to the elderly. Both schemes have well functioning delivery systems with national coverage and they are both relatively cheap to operate (the Lesotho Old Age Pension costs just 6% of the total value of the transfers to deliver, while the Swazi Old Age Grant costs about 15%). The fact that they are fully operational and have functioning and cost efficient delivery systems gives them a considerable advantage, negating the need to pilot. It would be relatively quick and simple to scale up and/or expand the scope of these schemes. There are a number of ways in which coverage to vulnerable groups could be extended:
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Temporarily reducing the pensionable age would widen their coverage and expand their impact: e.g. lowering the eligible age in Lesotho from 70 to 60 years would ensure that 50% of all households in the country were covered;
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Bearing in mind that a large proportion of orphans are cared for by the elderly, the value of this year's old age pension could be adjusted to reflect the number of Orphans and Vulnerable Children (OVC) cared for by each pensioner; or
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The existing delivery systems could be used to provide regular cash payments to other vulnerable categories or groups, such as female headed households, young children, the chronically ill and disabled, etc.
As an example, using the current retail price of mealie meal in Swaziland (E4.40/kg) the total cost of providing cash transfers to 400,000 beneficiaries to purchase 34,000 tonnes of mealie meal (equivalent to 40,000 tonnes of unmilled maize) through the retail system would be E172 million (US$25 million) or E430 (US$61) per beneficiary or E5.06 (US$0.72) per kilogram (including 15% for delivery and management).
Scaling up and modifying existing social transfer programmes such as the old age pension schemes is not only efficient but also more effective than either providing people with food aid or introducing a general subsidy. It would be important, of course, to make beneficiaries appreciate that these are exceptional measures for exceptional times and that the duration of the social assistance is limited but then the same would be true of food aid.
The Governments of Lesotho and Swaziland have both voiced concerns about their dependency on food aid and have expressed their desire to look at alternative ways of addressing food insecurity. A number of donors, notably DFID, have been championing the role of cash in both emergency and more chronic food insecurity situations; and some implementing agencies, notably WFP, have increasingly recognised the role of cash transfers as an alternative to food aid distributions in the right circumstances. Isn't it about time that the international community "put its money where its mouth is" and supported sensible national cash transfer programmes? Or will we simply continue to tinker with the use of cash in small pilot schemes which make little difference to the overall situation?
Image Credit: Curt Carnemark/The World Bank
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