POVERTY: Cash or Aid?

By ZARAR KHAN AND CHRIS BRUMMITT ASSOCIATED PRESS WRITERS
PESHAWAR, Pakistan -- In this July 25, 2010 photo, a Pakistani boy sells aid products from the United States in Peshawar, Pakistan. Needing cash not food, refugees in Pakistan's flood-ravaged northwest do not have to look far for buyers for their monthly rations. Outside an aid warehouse, middleman wait to buy U.S.-stamped oil, flour and biscuits to supply shops in the city. (AP Photo/Mohammad Iqbal)
Needing cash not food, refugees in Pakistan's flood-ravaged northwest do not have to look far for buyers for their rations. Outside an aid warehouse, middlemen buy U.S.-branded oil, flour and biscuits and supply shops across the city.
The trade is not illegal, but appears to strengthen arguments by aid groups who say that giving money to those recovering from disasters or war is often cheaper, more effective and efficient than doling out food or other assistance like housing materials, seeds or agricultural tools.
Some large charities have already begun handing out money to victims of this summer's devastating floods and others say they have plans to so, continuing a trend that began in earnest after the 2004 Indian Ocean tsunami and has picked up pace ever since.
But some in the humanitarian community remain resistant to the idea, especially those in the larger U.N. agencies, where there are fears that cash can cause inflation and fuel corruption. Many Pakistanis apparently share the same concern. They have preferred to give food, clothes and medicine to flood victims instead of money because of worries it could be misused.
The floods started about a month ago in the northwest after extremely heavy monsoon rains and have slowly surged south along the Indus River, devastating towns and farmland. More than 1,600 people have died and 17 million have been affected by the floods. Water levels are beginning to drop in southern Pakistan as the floodwaters flow down the Indus River into the Arabian Sea.
While giving money in environments where there is no food to buy on the market and banks and distribution networks have been damaged is clearly wrong, in many parts of Pakistan - even those affected by the floods - those conditions do not apply, aid groups say.
"We have other needs too," said Paenda Mohammad, who sold part of his rations from a World Food Programme warehouse in the northwestern city of Peshawar last week to one of several middlemen waiting outside. "Each time we get just flour and oil and this bunch of tasteless biscuits."
Mohammad is one of several hundred people who receive a sack of 180 pounds (80 kilograms) of flour, along with cooking oil, pulses, sugar and high-energy biscuits from the warehouse every month. The goods are clearly marked "Not to be Sold or Exchanged." The flour sacks have American flags emblazoned on them.
Mohammad and his family have been displaced by fighting over the last two years between the Pakistani army and the Taliban in tribal regions close to the Afghan border, not by the floods, which have hit communities elsewhere in the northwest.
Men with pushcarts then take the goods to shops around 100 yards (100 meters) away, where shopkeepers display them prominently.
"This is very fine flour and cost-effective too," said Nawab Ali, who bought a 100-pound (50-kilogram) sack and rode off with it, and his two young children, on a motorbike.
"We mix it with a little local whole-wheat flour and make good bread out of it."
The World Food Programme said it monitored markets in the northwest to see how much of its supplies were ending up for sale and that levels in Peshawar were not unusually high.
American officials said they were not so concerned about people selling the aid, but would investigate whether any supplies had been stolen from somewhere in the distribution network and then put up for sale.
While aid groups use the term "cash-based programming," actual money is rarely given because of security reasons. The assistance is mostly in the form of checks, vouchers, food stamps or remittances at banks.
Some aid experts say the resistance to cash by some aid groups is as much cultural as anything else. They say it challenges deep-seated and largely unspoken assumptions that Western countries know best what the poor in developing countries need.
Several studies have shown that a main argument once used against giving cash - that recipients would spend it on cigarettes, alcohol or drugs - is not true.
"We can trust people. They are wise enough," said Claudie Meyers from Oxfam GB, which has already given checks of around $60 to 7,000 families in the northwest and plans to give out similar amounts to 40,000 more.
"They can prioritize their needs. If I was in this situation, I would buy food. They do the same."
The WFP, which plans to be feeding 6 million people in Pakistan by the end of September, recently concluded a pilot project in Buner district in the northwest where it gave cash vouchers to people rather than food. It found that recipients spent 70 percent of the money on food and the distribution costs were around five percent cheaper than trucking in food.
The study also reported a significant boost to local shops.
Wolfgang Herbinger, WFP's country director in Pakistan, said there would likely be more cash-programming in the future in the country, but said the agency still "tended to be a bit cautious."
"Many people are fairly ideological on cash, I find, but the analysis and evidence is not there," he said. "There is currently so much hype, every donor says it stimulates the economy," he said, adding there was a risk that "if you throw the money, it does not add a kilogram of food, it only drives up prices."
Many governments around the world already give their poorest citizens cash handouts or food stamps.
Pakistan has a scheme named after the slain former prime minister Benazir Bhutto that gives out the equivalent of $24 every two months to its poorest people. The United States has donated at least $85 million dollars to that fund.
The government has also announced plans to give $250 to families affected by the floods.
Paul Harvey, an independent aid consultant who has studied the use of cash in emergency situations, said that so long as aid groups were responsible, it was a very effective response. He said that in reality a mix of food, other aid and cash was often the ideal choice.
"Cash should be part of the tool box and could be used more than it currently it is," he said. "People prefer having cash. It is a more dignified way of doing things."
Several flood victims returning to their villages in the northwest said they would prefer money.
Many people have complained over the last month of humiliation when scrounging for food thrown from a helicopter or the back of a truck.
"We prefer the cash. Because whenever this stuff comes - whether it is food or anything else - the distribution is not very good. Undeserving people get things that other people truly need," said Mirbat Khan who was looking at the remains of his village in Nowshera district.
http://www.seattlepi.com/national/1104ap_as_pakistan_floods_cash_versus_food.html