Debit Cards in Indonesia to Reduce Food Insecurity

According to the World Food Programme (WFP), 22.9 million Indonesians lack access to enough food to meet their dietary requirements in 2023. Additionally, World Bank statistics show that the poverty rate in Indonesia stood at around 9% in 2022. In order to address hunger and food insecurity in the nation, Indonesia’s government introduced special debit cards in 2018 to help individuals facing financial struggles get access to more food to meet their food needs. Although many people around the world may find themselves using personal debit cards in the traditional manner, the Indonesian government is making use of debit cards in Indonesia creatively, to address the basic food needs of the country’s most impoverished people.

Traditional Method of Distribution

Indonesia’s government developed its food aid program called Rastra in 1998 to target about 15 million families in need of food assistance. At the time, the food aid program aimed to provide each household with a 10-kilogram bag of rice. The Indonesian government would send the bags of rice to poor villages, where local leaders would be responsible for distributing the bags to impoverished residents every month. However, the distribution system was not without its flaws. According to USAID, “Under the old system… people received the full intended amount of food only 24[%] of the time, most likely because portions of the rice were given locally to many people not officially eligible for the program.” As such, the traditional method of distribution lacked effectiveness and saw success only in part.

New Method: Debit Cards

About five years ago, the government of Indonesia introduced debit cards, which work as a sort of digital food voucher and gives the impoverished the “ability to purchase food themselves rather than rely on the government to deliver rice to them,” says USAID.

An article by the Massachusetts Institute of Technology (MIT) highlights that “in 2017, the Indonesian government decided to try the debit-card system. At neighborhood shops, people could use their cards to purchase both rice and eggs, at a value level commensurate with the 10-kilo rice bag.”

This ensures that impoverished households receive the full amount of food aid that they require. In fact, according to researchers from MIT, 81% of Indonesians have been able to receive the amount of food they’re eligible for under this new debit card food provision strategy.

Positive Outcomes

Through a randomized controlled study, MIT researchers found that the debit card strategy of food provision has proved successful so far. The MIT researchers concluded that utilizing debit cards in Indonesia to address food insecurity and carry out the objective of the Rastra food aid program has helped reduce the overall poverty rate for the 15% of the most destitute households in Indonesia by about 20% over a five-year period, according to MIT News. Furthermore, according to the Global Hunger Index, between 2014 and 2022, undernourishment among the general population in Indonesia declined from 7.9% to 6.5% and stunting among children under 5 in Indonesia reduced from about 36% to 30%.

A similar innovative food distribution system in other developing countries could help boost the impacts and reach of food aid programs to reduce food insecurity nationwide.

Parth Patel

Photo: Flickr