Aid With Less Baggage; Cash is replacing food, water and medicine as the newest form of emergency relief to troubled nations.

Byline: Silvia Spring

The last thing you'd probably expect to see a Malawian drought victim do is whip out her ATM card and pull cash out of a machine. But that's exactly how some aid recipients in this beleaguered African nation now receive their monthly entitlements. As part of a relief experiment, the British government is handing out [pounds sterling]750,000 of aid in the form of cash rather than food. Instead of standing in line for hours waiting for a sack of rice, Malawians simply swipe a card in one of several special mobile ATM machines located in pick-up trucks, then use the local currency to buy food, medicines, fertilizer or even pay for housing or school fees for their children. "Often, people affected by disasters are the ones who know best what they need," says Chris Leather, an adviser for Oxfam, the nonprofit group carrying out the program.

It's a novel development idea that's catching on around the world. Until recently, most of the world's relief aid came in the form of material goods like food, water, blankets, medicines or building materials, delivered by international staff that parachute into disaster areas, or local NGOs funded by rich donors. But in recent years, as the nonprofit world has increasingly come under fire for inefficiency, mismanagement and even corruption, there has been a push for new strategies. Cash aid, which has been delivered to about 100,000 aid recipients in countries like Bangladesh, Pakistan, and Ethiopia via pilot programs, is one of them.

The idea behind cash aid is to cut the cost of aid delivery, reduce opportunities for corruption and theft of goods, and empower aid recipients by giving them more control over their own well-being. So far, cash-aid programs represent only about 10 percent of the $3.2 billion yearly international food-aid spending. But experts expect the figures to rise sharply this year, as the U.S. government (the world's single largest aid donor) has thrown its support behind the strategy, following an April report showing that 65 percent of the country's $2 billion food-aid budget is eaten up by red tape and logistical costs.

Cash aid, which is typically delivered via ATMs with special biometric scanners or in local banks, offers several key advantages. First, cash programs cost about half as much to run as traditional emergency-aid programs--that's a huge savings considering the multi-millions of dollars spent on food relief delivery each year. Second, cash is more discreetly doled out, a big advantage in war-torn areas where humanitarian workers don't want to attract attention (aid distribution can turn violent: a British humanitarian taskforce saw its first attempt to hand out food and water in Basra in 2003 end in gunfire). Unlike food aid, cash won't create unfair competition for local farmers. ...