Food, cash aid help world's poor as prices soar

from Reuters, Africa

By Lesley Wroughton

WASHINGTON - In impoverished Haiti, the government and aid groups hand out lunches at schools in slums. In Brazil, mothers who regularly take their children to medical check-ups qualify for small cash payments.

In Mexico and Bangladesh, governments give millions of poor families cash or wheat and rice for sending their children to school and health clinics.

For more than a decade programs like these have been helping millions of the world's poor by ensuring children are educated and women have access to basic medical care.

Targeted social programs like these have been around for more than a decade but are particularly valuable now when millions of the world's poor are struggling to cope with soaring food and fuel prices.

Some programs, such as the ones in Haiti and Brazil, have been expanded to take into account rocketing prices.

Global development agencies are major supporters of the programs because they can help break the cycle of poverty. The World Bank, for example, approves $1.2 billion annually in loans for cash transfer programs in 12 countries.

Helena Ribe, sector manager for the World Bank's Human Development Network for Latin America, said the programs not only raise incomes for those below the poverty line, but also keep kids in school and help mothers have healthy children.

Ribe said the programs show impressive results not only in Mexico and Brazil, but also in poorer countries such as Honduras and Nicaragua. In Latin America, more than 100 million poor benefit from monthly or annual payments of somewhere between $10 to $70 from their governments.

"Many of these programs have been evaluated very carefully, so we know they deliver results and affect the poorest people," she said.

Ribe said the annual costs to the government of such cash transfers is small -- about 1 percent of gross domestic product -- when compared to the large benefits for helping the poor.

GLOBAL STRUGGLE

The World Bank has estimated that higher food and fuel prices are a daily struggle for more than 2 billion people and threaten to push some 100 million people into poverty.

Global prices of all major food commodities hit their highest level in 30 years this year and international agencies agree they are likely to stay high over the next 10 years.

The surge in costs has led to higher import bills and strained budgets for both poor countries and richer emerging nations.

The International Monetary Fund sees targeted cash and food programs as a "preferred" way to reach the poor and says such programs can also be linked to inflation so families are automatically compensated when prices rise.

For example, the IMF has suggested temporary subsidies on a few staple foods that are mostly consumed by the poor.

Making that type of targeting effective, however, requires thorough planning and management, both of which are lacking in most poor countries.

"The primary objective is to feed the poor and make sure people have enough food, but that confronts governments with difficult policy choices," said Mark Plant, deputy director in the IMF's Policy Development and Review Department.

"Many of these countries simply don't have the infrastructure in place to do good targeting and that complicates their tasks even more," he said. Without the capacity to target their aid effectively, Plant said they pursue more-generalized subsidies that are costly and less-effective.

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