Network Paper 35: Cash Transfers in Emergencies

This paper reviews the theoretical underpinnings of a cash-based approach to food emergencies, and presents case-studies of cash distribution. These examples, which

are drawn from Africa, South Asia and the Balkans, highlight both the risks and the benefits of cash-based responses as against traditional food aid. On the one hand, cash is more cost-effective because its transaction costs are lower; it is more easily convertible, allows for greater beneficiary choice and can stimulate local markets. On the other hand, cash can be used in ways not intended by the donor, can contribute to local inflation and poses security risks not normally associated with food aid. The paper concludes by setting out the conditions under which cash aid might be an appropriate response, and highlights how

its associated risks can be minimised. There can be no ‘blueprint’ for the use of cash

across all emergencies and in all circumstances; instead, agencies need to weigh the benefits against the risks on a case-by-case basis.