The food subsidy scheme announced on Tuesday could help create demand for farm produce and offer a lifeline to smallholder farmers who form a large pool of food suppliers to the poor.

The scheme also means Kenya is now in the league of some of her African peers who have implemented such plans to create social equity and cushion the poorest of the poor against hunger.

In Egypt, a food subsidy system has been the mainstay of the government's 50-year policy of promoting social equity and political stability.

In South Africa, support of vulnerable groups through monthly cash is at the core of a government social equity policy.

And in Mozambique, the government funds monthly cash transfers to the poor.

Research by the German Development Institute last year showed that across the world, countries are preferring cash transfers to blanket subsidy offer to a sector.

The advantages are that administrative costs are often lower than subsidy payments and when targeted correctly, transfers help redistribute income to the poor without distorting market prices.

For Kenya, 10 per cent for the Sh600 million that will be used in the pilot programme where households will receive Sh1,500 every month will be taken up by administration, with the rest going directly to beneficiaries.

Food aid

Ms Phillipa Crosland-Taylor, the country director of British aid group Oxfam, said cash transfers were better than actual food aid.

"The best option is to give them money to buy from that market and strengthen it," she said.

The scheme could create an incentive to smallholder farmers whose principal clients; the poor, will have their purchasing power enhanced by the cash.

The scheme comes in handy at a time when commercialisation of small holder farming has become popular in Kenya.

The idea of food subsidies to the poorest of the poor in Kenya gained prominence earlier this year when several non-profit groups started monthly transfers of Sh2,200 to households in Nairobi slums.

Mr John Akoten of the Institute of Policy Analysis and Research said earlier that while the idea was a good step in taking short term care of vulnerable people, a long term solution was necessary.

He said on long term, the subsidy money should be used to fund projects where the poor participate and profits generated from those projects can be used to buy food.

Other analysts say that one of the major shortcomings of subsidy schemes of any nature is ensuring that those who deserve the subsidies receive them.

Last May, humanitarian groups Concern Worldwide, Oxfam, and Care International started a cash transfer scheme for several Nairobi slums.

A similar project was earlier this year started in northern Kenya through the Hunger and Safety Net (HSN) project mooted by the Ministry of Northern Kenya and Other Arid Lands and the Britain's Department for International Development.

Estimates show that 3.8 million people in rural areas are extremely food insecure.

These include pastoralists in Marsabit, Isiolo, Samburu, and Tana River districts, and marginal agricultural farm households in parts of Mwingi and Kitui districts.

Selected families receive Sh2,150 every month.

More than 60,000 homes will receive monthly cash transfers to buy food.

The project will go on until 2017.

Proponents of the system say not everyone who is able to survive in any given economy.

"It happens even in the developed world. It is part of the social welfare system," said Ms Anne O'Mahony, the country director of humanitarian group Concern Worldwide.

The subsidies are however not entirely used to buy food as demonstrated by the case of Mrs Lucie Atieno, a widow and mother of four who lives in Nairobi's Kibera slums.

As a beneficiary of the scheme, she receives Sh2,200 through her mobile phone account every month.

"I have invested some in a vegetable vending business. The business is doing well and I hope to raise money to rent my own house," she said.

Invest money

In North Eastern's Marsabit District for instance, some women are already using the money to set up paraffin selling businesses and snack shops.

"We are encouraging them to invest the money wisely not just on food," an official of the project who has since left the government service said.

The Nairobi initiative was based on a research commissioned by humanitarian groups that revealed post election violence related effects caused household incomes to drop by 21 per cent, the cost of water to increase by 114 per cent, oil to rise by 77 per cent and that of vegetables by 55 per cent.

The report found that economic necessity had pushed some poor families to desperate measures like commercial sex, crime, making illegal brews and engaging in child labour.

"Up to 60 per cent of families in Mathare, for example, skip meals while 30 per cent of children have been removed from school because their parents want to reduce on expenses," said the groups in a joint statement.

The money given is based on the cost of nutritional needs for a family for a month, estimated at Sh4,400, the Sh2,200 is supposed to be a halfway subsidy.

"There are issues of sustainability. But we are doing what we are doing now towards graduating people into more sustainable activities. One of the plans is to partner with micro-finance institutions to see how they can help with small loans to beneficiaries to set up income generating businesses," Ms Crosland-Taylor said.