POWER TO THE PEOPLE

November 11, 2008

One of the most confounding global problems today is the skyrocketing cost of food. Prices for staple crops such as rice and wheat have more than doubled since 2006, putting an enormous strain on the 1.2 billion people living on a dollar a day or less.  Non-governmental organizations (NGOs) and relief agencies are on the front lines of this global crisis, distributing food and other forms of assistance to the hardest-hit victims.  But food handouts may be the last thing that poor countries need right now. Instead of more advice or another bag of rice, the poor should be given relief vouchers, says Eric Werker, assistant professor at Harvard University Business School.

The basic premise is simple: give poor people a choice about what type of assistance they receive.  For example:

  • Relief vouchers, backed by major donor countries, could be distributed to needy recipients in the areas hardest hit by the food crisis and redeemed for approved goods (food or fertilizer) or services (healthcare or job training).
  • They would also allow families to meet their most pressing needs without harming the very markets that can bring about permanent solutions.

And they have already shown promise, explains Werker:

  • Catholic Relief Services pioneered their use in 2000 by setting up "seed fairs" for farmers.
  • In Ethiopia in 2004, the organization successfully introduced livestock vouchers for sheep, goats and even veterinary services.
  • The Red Cross distributed vouchers to vulnerable families in the West Bank in 2002 and 2003; the program was only discontinued for political reasons.
  • Governments have long used other types of vouchers on larger scales: for schools in many developing countries, and in the form of food stamps in the United States.

Moreover, relief vouchers could also save NGOs millions of dollars that victims never see and could solve the problem of accountability, says Werker.  Today, most NGOs only answer to the donors who fund their operations, donors can't anticipate the exact needs of so many different communities.   A system of relief vouchers could make nonprofits and their donors more accountable to their clients. 

Source: Eric Werker, "Power to the People," Foreign Policy, November/December 2008.

 

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