November 18, 2016

Could cash be the answer? Credit: Al Jazeera English / Flickr Creative Commons

The old saying goes: “Give someone a fish, they’ll eat for a day. Teach someone to fish, they’ll eat for a lifetime.” But how about giving that person - in this case, a refugee - the money to buy the food, water, and shelter they need? Radha Rajkotia, the Director of Economic Recovery at the International Rescue Committee, thinks this approach - giving refugees cash instead of supplies like food, blankets and clothing - could be a more effective model for foreign aid in many places.

Three Takeaways:

  • Historically, the assumption among most humanitarian agencies was that the best way to help refugees was to give them supplies like food, blankets, and clothing. (After all, cash might be squandered on unnecessary purchases.) However, Rajkotia says research has overwhelmingly shown that most refugees will spend donated cash on the things they really need. 
  • Giving supplies to refugees can cause trouble for the local economy. “In those places in Africa or Asia where there may be local producers, those people are that much more disadvantaged,” Rajkotia says. “Because they're competing with essentially free food that’s being delivered from elsewhere.” Cash aid, on the other hand, creates incentives for people to contribute to local businesses.  
  • Cash can also help deal with the debt that refugees often face. “They’re getting food on credit, they’re perhaps renting accommodation, but without having resources to pay for it upfront,” Rajkotia says. “The parents will work in whatever kind of illegal fashion they can and the children are sent out to work. We found that just by giving small amounts of cash - $100, $130 a month for maybe two months, three months... there were half the number of children being sent out.” 

More Reading:

  • Radha Rajkotia argues that we shouldn’t worry about refugees misusing donations in The Independent
  • Foreign Affairs details how giving cash can help alleviate poverty. 
  • Poverty INC is a documentary that explains how companies can profit off the traditional model of foreign aid.

innovation hub, NPR, pri, Kara Miller, WGBH

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