UNHCR and WFP are implementing a joint project to identify and mitigate risks of abuse by private sector service providers in their delivery of cash assistance to vulnerable populations. The project involves work with financial service providers, traders and other private sector stakeholders, as well as awareness raising of cash recipients about their rights and capacity-building on basic digital, numeric and financial literacy.
WHAT IS THE ISSUE?
The increasing reliance on cash as a transfer modality to refugees and other vulnerable populations potentially exposes them to higher risks of abuse of power by Financial Service Providers (FSP) in such programmes.
Regular customers can usually choose between several providers. People assisted by humanitarian agencies do not have this freedom of choice and cannot use this as a leverage to improve service provision.
Such imbalance of power can lead to abuse of power.
Many also use financial services for the first time, making them particularly vulnerable to potential abuse through the cash transaction.
Risks for consumers with lower income and less experience in digital finance have already been documented by several institutions working on financial inclusion. The project, which started in July 2018 has collected anecdotal evidence related to risks that may emerge when channeling humanitarian cash through the private sector.