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Demystifying Cash Transfer Programs in Humanitarian Emergencies

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Many times, when a disaster strikes, people find themselves with an immediate problem of food and how to feed their families. In many cases there is food available in the local market so the problem is more about a families ability to buy or pay for food than that there isn’t any at all. In this case, the best solution to help families meet their food needs is to give them money to buy it.

The other advantage of cash (over direct food aid) is that disaster affected people can choose what food or other items (soap, clothes or other needed items) they need most and buy those. Finally, the logistics of delivering cash are usually easier than transporting food, which is very bulky and can spoil. Cash distributions can be done directly (by distributing actual money) or (more frequently) using technology such as cell phones or smart cards to transfer the cash electronically.

Can you explain how relief agencies and local partners collaborate to implement Cash Transfer Programs ?

International relief agencies often work with local partners to carry out such projects. The local agency will be familiar with the population and the context and will be able to gather market information to inform the design of the project. The local agency can also help to ‘target’ or choose which are the most affected, or most vulnerable households who need international life saving assistance. Private sector or local business partners are also often very important in cash transfer interventions. Often banks are sub-contracted to manage the cash distribution as they are better able to manage the risks associated with payments and moving cash around.

What potential risks must be taken into account when introducing such a program?

It is important to carefully monitor local markets when carrying out a cash transfer project – as large injections of cash could cause inflation. Security is also a risk as women who receive cash could be robbed or violated by thugs. Unsociable spending of the cash might seem to be a risk but evaluations of many different projects shows that this is rarely the case, that disaster affected people know what they need and almost always spend the money wisely.

What category(ies) of people benefit the most from cash transfers?

The intervention benefits families who have been affected by a disaster in a way that leaves them without any income earning ability in the short or medium term. For example, families affected by a drought might lose their harvest and not have any food or income until the next one later in the year or families displaced from their homes by floods or conflict might have left quickly and have no access to land to grow food. In these cases markets might still be functioning or if they aren’t might resume functioning more quickly if people have cash and demand for food increases.

In many cash transfer programmes agencies specifically target or give the money to women because in most cultures (even Canadian!) women are the ones who buy, prepare and store food. In this way women are often empowered by the cash as it gives them the dignity to walk into a shop and purchase what they want with dignity, instead of being treated like a helpless victim. Evaluations of cash projects have also found that the cash can help promote equality at home and give women more ability to discuss and make decisions with their husbands

Can you give examples of places where this type of program was especially effective at alleviating the suffering of people affected by a disaster or crisis?

One example is a Cash Transfer project carried out in Somalia and funded by the HC Appeal for east Africa in 2011. Households affected by prolonged drought and conflict were each given $75 per month for a period of five months after they were displaced by conflict. See the graph below that shows what people spent the money on.

From this you can see that the cash was used for a variety of items. Compared to just receiving food, a sack of cornmeal or rice for example, this means that people have choice to buy the items they most need, including things an outside aid agency might not have thought of. For example, you can see the spend on debt repayment. In Somali society borrowing and lending is common and helps people manage when something goes wrong or they need some quick cash (a sick family member, funeral, no money for food on a particular day etc.) Paying back a debt means they can borrow money again in the future and so contributes to their future feelings of security and promotes community harmony.