Refugee Aid Switches to Cash

The recent announcement that the United Nations Children’s Fund (Unicef) is giving cash transfers to the worst-hit families in the Philippines affected by Super Typhoon Yolanda/Haiyan is an indication of how the approach to relief is changing across the world. Direct cash payments to the afflicted are becoming much more the rule.

Five years ago, delivering food aid was all about hauling cargoes of wheat, rice and maize around the world. Today, instead of queuing for rations, recipients are quite likely to be given the means to buy their own food. Today, however, a full third of all World Food Program food assistance is now given in the form of cash or vouchers although cash transfers go beyond food to meet other needs.

“In 2009 WFP's program of working in cash or vouchers was around US$10 million, less than 1 percent of our assistance,” said Annalisa Conte, deputy director of policy in the WFP's Program and Innnovation Division. “So from 2009 until now, from US$10 million we are at US$3 billion. So it's a very short time and a very sharp increase.”

Aid organizations love the shift to cash grants because they are cheap and relatively corruption free as middlemen handing out relief supplies can’t skim aid. It also means that logistics are far simpler because it’s easier to deliver cash rather than using trucks, helicopters, airplanes and other modes of travel to deliver goods. Cash transfers let people buy their own supplies, which is more dignified for them in any case,

In Africa, where banking and other transactions by mobile phone have become ubiquitous, because of the vast network of mobile phone agents it is easy to reach scattered residents over a wide area. Most recipients find it convenient and more dignified to receive aid than having to come to a central distribution point for assistance.

Unicef’s Unconditional Cash Transfer program will benefit nearly 6.000 households in Eastern Samar. The identified beneficiaries are from vulnerable households unable to meet their food and essential nonfood needs, receiving P4,400 monthly on top of regular cash grants. The Unicef program is expanding from 10,000 households also supported by Unicef’s program in Leyte.

The current refugee operation in the Middle East is a test bed for cash assistance, for food but also for winter heating payments, help with rent and all kinds of other needs. And the beneficiaries are just as likely to get their money loaded electronically onto various kinds of plastic cards. In Turkey, Jordan and Lebanon, like other upper or middle income countries, there has been a move in recent years away from physical cash and towards different kinds of cashless, electronic payment. The world of humanitarian assistance has to keep up.

European donors in particular have embraced the change from in-kind food to cash wholeheartedly. “We no long measure food aid contributions in wheat/tons equivalent,” said EU aid body ECHO's Julia Stewart-David, “which was all about the idea of getting rid of agricultural surpluses. Our presumption now is rather, 'Explain to us why you can't do cash'.”

There obviously are still places where you can't send cash. Two of WFP's three biggest emergency operations at the moment – South Sudan and the Central African Republic – still involve trucking in physical food to relieve serious shortages. But the beneficiaries of the third largest program – refugees in Jordan, Lebanon and Turkey – are living in countries with all the attributes of a functioning modern state - banks, cash machines and supermarkets, and the ability to import food as needed to meet demand. These refugees get vouchers which can be spent in normal shops, and exchanged for any food item apart from sweets and fizzy drinks.

A review of ten years of cash transfer programming by CaLP reveals that the bulk of cash transfer programming (CTP) remains at a small-scale, the biggest barriers to scale-up being its acceptance, institutionalization and implementation across the humanitarian community. To scale up CTP meaningfully, agencies will have to change the way they go about everything from assessments to human resources, notes the review.

Scams and exclusion

There is now a bewildering range of ways to send money - by check or bank transfer, smart cards or prepaid cards, paper or electronic vouchers, or even as good, old-fashioned cash. Despite all the exciting new possibilities, 7 million of the 18.5 million people who received transfers recorded by Cash Atlas still got their money the old-fashioned way. East Africa is the region which has led the world in phone-based “mobile money” systems, and it is also the region making most use of phone transfers, with Oxfam, the International Committee of the Red Cross and Concern all using phones to get help to their beneficiaries.

Even so, it is not totally secure, says Charles Foster of Oxford Univeristy. “There's always this idea that if you use mobile transfers that there's no problem of security - it's all gone. But that's not necessarily the case. In one of the cases I've looked at, one of the problems they've had is that a lot of people gave the wrong numbers, so the money got sent to the wrong people. Also some recipients, especially more vulnerable people, had problems with scams; they got messages saying they had won the lottery, or telling them to send something to this, and they ended up sending the money on.”

Foster also worries about the more vulnerable in general. “In terms of exclusion, there are still some elderly or disabled people who can't make it to an agent, and also people like immigrants, or anyone undocumented, because these systems all require some recent form of documentation. In one of the trials, up to 26 percent of the recipients had to use nominees, other people, to collect the money for them because they couldn't access the service.” The risk is that, while phone transfers are cheap and convenient for the implementing agencies, they could just shift the costs and risks further down the chain, onto people less able to bear them.

Some banks require extensive documentation from cash recipients; others receive none... Some cash cards are one-off (e.g. for winterization or the start of the school year), while others can be topped up. Some involve cards and PIN codes, while others are based on retinal scans. Some can be used to take out cash, while others can only be used in particular shops.” This, they say, “will create confusion among the refugees, who may not be able to keep track of multiple different cash cards, PIN codes and electronic vouchers, while also creating greater opportunities for abuse.

It would make sense if all the agencies could all use the same system. The June CTP review recommended improving coordination on cash transfers by agreeing a place - an agency or network - to coordinate cash transfers in the humanitarian architecture. But as ECHO's Julia Stewart-David told IRIN, adopting one CTP system would have far-reaching implications for the way aid is delivered. The question is: is the humanitarian sector ready?

“The logical implication”, she says, “if you look at more cash-transfer programming, is that you have less specialist need to have 'x' or 'y' product-based assistance delivered. So why would you need as many actors as you have, if you can put it all on one card? Of course, you need people who are specialists in WASH [water sanitation and hygiene], or specialists in food assistance or health to do other parts of the assistance framework or the guidelines or the advocacy. But the actual delivery - you wouldn't need UNHCR [UN Refugee Agency] to do one bit and WFP to do another bit. It could all be done on one voucher, one card.”

With reporting by IRIN, a service of the United Nations Office for the Coordination of Humanitarian Affairs.