Can cash lead the revolution that the humanitarian system so badly needs?

by Garry Conille, Under Secretary General, IFRC | International Federation of Red Cross and Red Crescent Societies (IFRC) - Switzerland
Saturday, 21 May 2016 12:37 GMT

A woman counts Ethiopian birr notes, after selling a cabbage at the Mercato market in Addis Ababa, Nov. 14, 2015. REUTERS/Tiksa Negeri

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* Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.

Cash is a sophisticated way of giving people in crisis the power to make their own choices

Recently, in a Liberian refugee camp, I met Christelle, a young mother who was recovering from the violence and insecurity in her home country of Côte d'Ivoire. In our discussions, she didn`t want to talk about her needs for shelter, psychosocial support, or the any of the humanitarian challenges I had come prepared to discuss. Instead, Christelle spoke of the unfamiliar food she had been given during an aid distribution, and the lack of options to feed her children. “My children are getting sick. I don’t know how to cook this, I need rice - please,” she said.

This encounter was a stark reminder that, in spite of many successful efforts to improve its efficiency, the international humanitarian system is still not good enough at anticipating or supporting the many different decisions and choices that individuals in crisis need to make every day.

As the world’s humanitarian needs continue to grow, so do the number of humanitarians criticising the traditional model that aid is built on. There are suggestions that the current relief system is outdated, perhaps even obsolete.

We need to do better. Is it possible for us to improve our ability to meet current and future demands, and do so in a way that both empowers people and also reduces costs and layers of bureaucracy? One possible solution gaining momentum is cold, hard cash.

Imagine if Christelle had been given money instead of bags of unfamiliar food. She could have used the cash to buy what she knew was best for her children. She would have been empowered to make her own choice.

Giving choice and dignity

Cash transfer programming – where people affected by disasters or crises receive direct transfer payments that can either be spent where, how, and when the recipient chooses, or are tied to specific conditions such as food or shelter - has gone through something of a revolution over the past decade. It has moved from its origins in cash-for-work schemes and vouchers to a sophisticated way of giving people the power to make their own choices about how to meet their immediate relief and recovery needs. But it still represents just six per cent of humanitarian aid, despite the growing calls for cash to replace the costly and inefficient commodities-based approach to disaster response and relief.

The International Federation of Red Cross and Red Crescent Societies (IFRC) views cash transfer as an opportunity for the humanitarian sector to reach more people, improve its own internal systems, and decrease its need for donor money.

More importantly, it is an opportunity to put disaster-affected people back in control of their own lives, and allow them to exercise the choices we all take for granted.

For example, the Canadian Red Cross will give cash transfer grants worth 50 million Canadian dollars to evacuees displaced by the Fort McMurray wildfire. Jenn McManus, vice-president of the Canadian Red Cross for Alberta, observes that “[Cash transfers] allow those evacuees to be empowered, to have their own assistance in their hands, and to be able to make decisions for their own emerging needs." 

In Myanmar, the Myanmar Red Cross Society has given an unconditional cash grant of 500,000 MMK (around 385 US dollars) to around 18,800 people severely affected by floods. With that money, many of the affected people were able to buy a new plot of land in a safer area and rebuild their lives.

But isn’t cash more risky?

Debates around cash are often accompanied by anxieties that cash will encourage irresponsible spending. But the evidence shows that when cash transfer programmes are well designed, concerns about abuse, corruption, diversion, misappropriation and inflation are unfounded. Cash grants are no more risky or difficult than providing goods or commodities, and the additional benefits make it a more attractive solution.

Cash transfer programming is often held to higher standards of risk management and quality assurance, with a greater focus on monitoring and evaluation. These standards are not always applied to commodities-based assistance, which is fraught with similar risks at multiple points in the supply chain.

Cash can be delivered faster than traditional relief and is often more efficient and cost-effective. Cash also reinvigorates local markets and local economies. Cash can be economically transformational in a way that assistance based on in-kind goods or commodities cannot be.

In a world where the funding gap for humanitarian action is already at an estimated 15 billion US dollars, the delivery of cash to disaster-affected communities can reach more people while decreasing the system’s need for donor money.

How will cash improve the system?

The cash transfer agenda is not just about replacing commodities with cash. It is a new way of working directly with disaster-affected populations. Cash is an equalizer, putting power in the hands of the people who need it most, and removing or reducing the role of many intermediaries in the current bureaucratic system.

Ultimately, cash transfer programming is about choice, respect and trust in addressing needs and ensuring the best long-term outcomes. It puts decision-making into the hands of people most affected by a crisis, helps to restore their dignity, and supports personal responsibility

A shift towards cash is a shift towards recognizing that ultimately humanitarian solutions start and end with local people and local communities. Cash transfer programming is about local solutions to local challenges, giving people the resources they need to make the right choices to respond to their circumstances.

In the current system, all the financial resources and decision-making power is concentrated in a complex web of Governments and donor institutions, UN agencies and international organizations. Too few national and community-based local organizations receive too small a portion of the resources - determined in part by demanding donor-driven requirements for accountability and reporting - and too few resources for building the capacities of local civil society organizations.

How will we transform the system?

The cash programming transformation supports the goals of the Grand Bargain – the humanitarian financing discussions that followed the publication of the UN High-Level Panel on Financing report, which have intensified in the lead up to next week’s World Humanitarian Summit. These goals include reducing duplication and management costs; joining the participation revolution; providing greater support to local and national frontline responders, and expanding the use of cash transfer programmes where appropriate.

Transformational change towards cash requires strong leadership and a commitment to letting the people affected by disasters and crises make their own decisions about how best to recover and become more resilient.

To do this, the humanitarian sector, donors and implementers will need to transform their approaches to programming, and make full use of the unparalleled value for money and enhanced accountability that cash and digital payments are already delivering. Internal systems and support services will need to be realigned to support cash in operational contexts. Multi-sectoral teams and approaches will have to be introduced to achieve collective outcomes instead of sector-based targets. It will also require greater investment in global payment and information management technologies, as this is the only way to bypass bureaucracy and put resources in the hands of local organizations and communities.

If these changes are not made, the humanitarian world will only achieve incremental increases in the use of cash transfer programming, not the transformational change that we all seek, and we all need.  

For our part, the IFRC expects to significantly increase our cash-based programmes by 2020, when and where the context allows, including in recovery and resilience-building or rehabilitation programmes. We are confident that improving our work in this area will lead to a significant increase in the cost-efficiency of our operations, and enhance the quality of the support we provide.

For the humanitarian sector at large, the question is no longer whether or not to use cash in emergencies, but rather how quickly such programming can be brought to scale. With the number of disasters and protracted crises increasing worldwide, cash is not a question - it is the answer.