JOHANNESBURG , Nov 24, 2005 (IRIN) – In an innovative approach to relief assistance, the development agency, Oxfam, has opted to provide cash instead of food in two drought-affected districts in Zambia .

Cash was more cost-effective than food aid and gave beneficiaries spending choices, said Ric Goodman, Oxfam's country programme director.

He explained the grants, to help tide the families over the pre-harvest lean season, would be determined by the monthly price of maize in the local market.

This month, Oxfam is distributing the equivalent of US $23 - 90,000 kwacha in the local Zambian currency - to more than 14,000 households in Kaoma and Mongu districts in the dry Western province. The initiative is funded by the British Department for International Development.

Oxfam based its decision to go ahead with the cash programme on the success of a pilot project in Mongu district. "We found that almost all the money given to 200 people was spent on food," said Goodman, which allayed fears that nutrition requirements could take a back seat.

Cash responses have helped families to prioritize spending, assisting them to also meet non-food needs such as education, he added.

Oxfam's programme has sparked a debate in the region. Previous cash grant approaches have shown that providing financial assistance has low overhead costs and can be 10 percent cheaper than food aid, according to a discussion paper, 'Cash and vouchers in Emergencies', written by Paul Harvey, a researcher at a UK-based think-tank, the Overseas Development Institute.

Cash grants also helped maintain people's dignity by placing the choice of how to use the aid in their hands, besides saving them from the humiliation of standing in long food queues, Goodman noted.

It could also be a morale booster for governments by giving them a sense of direct ownership, commented Harvey . "Cash grants can be linked to a long-term social grant programme run by governments."

But money aid could only work in markets where food was available, Harvey said. "Cash responses may not be appropriate in the early stages of an emergency, when markets and communications are disrupted," he told IRIN.

Cash inflow via the programme into communities would boost the local economy, according to Oxfam. However, Harvey pointed out that it could also have an inflationary impact, "causing prices of key goods to rise, then recipients will get less for their money and non-recipients will be worse off."

At the moment aid agencies are "reluctant" to consider cash because they do not consider it appropriate, do not have the staff skills, or funding for the programme is not available, according to Harvey 's paper. Donor countries are more willing to provide commodities, shipping their surplus harvest rather than cash.

Moving cash around could create security risks for the staff implementing the programme and the recipients, and could also be open to abuse.

However, Goodman pointed out that they had taken precautions - "our staff is never allowed to carry cash in person", and the money was sealed in individual envelopes the night before it was distributed.

Oxfam has successfully implemented similar programmes in northern Kenya , Somaliland and Banda Aceh in Indonesia .

According to Harvey 's discussion paper, innovative ways have been found to minimize the risks of insecurity and corruption in cash-grant programmes.

For example, the UN's refugee agency, UNHCR, used iris-recognition technology when repatriating refugees from Afghanistan to Pakistan , which is thought to have greatly reduced the risk of people claiming multiple repatriation grants by moving to and fro over the border.

In Iran the government has simply set up bank accounts for all recipients and transfers cash directly.

To access Paul Harvey's report: www.odi.org

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