WFP Cash Assistance has Big Potential for Boosting Local Economy

Millions of hungry people in the world require food assistance each year. Crisis such as war, conflict and natural disasters can uproot families and destroy livelihoods, often disproportionately affecting the world’s most vulnerable.

At the forefront in many of these disasters is the United Nations World Food Programme (WFP), the leading humanitarian organization providing food assistance and promoting food security.

Typically, WFP food assistance is provided in the form of a food basket containing locally consumed foods that meet minimum daily calorie requirements. For example, in Tanzania, WFP provides 300,000 refugees in Kasulu and Kibondo Districts with monthly supplies of maize meal, pulses, vegetable oil, salt and fortified porridge blend.

Refugees tend to favour specific foods that, for logistical or storage reasons, are difficult to provide on a large scale including, fruits, fresh vegetables, sardines, meat and cassava flour.

Since the late 2000s, cash assistance has emerged not only as of the preferred means for refugees to receive food assistance, but also a safe and efficient method that boosts local economies.

For WFP and its donors, cash-based transfers are cost-efficient and reduce the lead time required in providing assistance, helping WFP serve a greater number of beneficiaries while experiencing fewer supply chain challenges.

In 2015, WFP provided food assistance worth US$680 million to 9.6 million beneficiaries globally via cash-based transfers. Currently, around 24 per cent of WFP’s 80 million beneficiaries worldwide receives cash assistance.

With its experience globally and in the region, WFP is well-equipped to work with cash-based transfers in Tanzania. In Uganda and Rwanda, where Burundian and Congolese refugees are similarly hosted, WFP already reaches almost 200,000 refugees with cash assistance, providing a significant, reliable boost to the local economies.

This experience guided WFP Tanzania throughout 2016 as it worked with the Government of Tanzania and the United Nations High Commissioner for Refugees (UNHCR) in the development of a cash-based transfer pilot for 10,000 refugees at Nyarugusu Refugee Camp. The pilot started in December 2016 with WFP providing TShs 10,000 (US$4.50) twice monthly for each household member.

A recent study* of Congolese refugees receiving cash assistance from WFP in Rwanda has shown that for each US dollar received in cash, the impact translated into a US$1.50 to US$1.95 boost to the local economy. In Uganda, a similar study highlighted an even greater boost of US$2.00 to US$2.50 for each dollar received.

This increase is due to the “multiplier effect,” which is the circular flow of cash once injected into an economy. For example, the additional employment opportunities from WFP’s cash programme result in increased earnings for local traders and farmers.

WFP Tanzania’s current cash programme adds TShs 200 million each month into the local economy. Using the studies in Rwanda and Uganda as guides, this translates into potentially unlocking TShs 300-500 million in business for local traders and the host community on a monthly basis.

WFP is committed to a continued partnership with the Government of Tanzania and donors which will help maximize the benefits of cash programming to the country, while at the same time improving refugees’ dietary diversity and access to fresh foods.