Final Report - Prepared by Josephine Hutton, Shawn Boeser and Marilise Turnbull
EXECUTIVE SUMMARY SUMMARY OF THE CASE STUDY
This case study was commissioned by the Cash Learning Partnership (CaLP) as part of its programme activities on cash transfer programming (CTP) and risk, with the main aim of lowering the barriers and constraints to the systematic adoption and consideration of CTP. Building evidence and learning from specific contexts is one part of this endeavour. The purpose of this case study is to draw out learning and recommendations for humanitarian actors about risk management for CTP in complex and volatile settings, by examining closely the massive scaleup of CTP in Yemen between 2015 and 2018.
The main conclusion is that, despite seemingly enormous obstacles, primarily in the form of operational and contextual threats, humanitarian actors in Yemen were largely able to mitigate the risks this represented. This was achieved through a combination of effective and ongoing risk analysis and risk monitoring, solid collaboration, adaptation, and a high-level of risk transference to, and sharing with, the private sector. There were also specific enablers that included the historic presence of, and familiarity with, large-scale CTPs in Yemen and the infrastructure and experience to support this; supportive and encouraging institutional donors (especially for unconditional cash transfers); and, in some cases, supportive and enabling management approaches, which involved being willing to take a leap of faith to grow CTP in response to immense humanitarian need and despite the risky operating environment.
The Yemeni context is very volatile, complex and high risk, but, nevertheless, it was concluded that CTP was highly appropriate for, and suited to, the Yemeni context, and in some ways perceived as less risky than other related in-kind modalities. Historically, in Yemen, CTP has been a very common modality for some time, providing support to vulnerable populations – particularly for emergency livelihoods support – from humanitarian agencies as well as from the Yemeni government. It is well understood, accepted, and perhaps even expected, by large sections of the population, as well as by the authorities. Thanks mainly to the history of CTP in Yemen, the existing infrastructure to support and scale up CTP, and the focused attention that humanitarian actors have been giving to risk mitigation, this immense scaling up of CTP has been possible. CTP has been very effective in reaching highly vulnerable and remote populations needing emergency humanitarian assistance.
The concept of risk was approached flexibly in this study to capture all aspects of the risks identified by stakeholders. The terms ‘risk’ and ‘threat’ were used interchangeably, so the term ‘risk factor’ is mainly used here.1 Most of the risk factors highlighted affect all programmes and assistance modalities. The key risk factors that emerged from the research for CTP, the clear majority of which are not specific to CTP, are as follows:
- weaknesses or failures in the national banking system or currency
- volatile market functionality
- poor quality/limited quantity of service providers
- security issues related to the conflict
- general operational issues, e.g. technology, security and access
- political context
- aid diversion
- monitoring challenges
- challenges in ensuring programme integrity
Few of the risk factors identified are specific to CTP; most impact a wide range of programmes. Those that were very specifically relevant to CTP were related to the quality and integrity of financial service providers, the quality and value of banknotes, price volatility, the movement of money, the use of cash grants, and the impact that CTP has on the market and the conflict. While responses were not quantified, the risk factors most frequently referred to included: exchange rate fluctuations and market variations; low liquidity; fluctuations in the availability of goods in the market and price rises; the challenges faced in accessing field locations and beneficiaries; targeting; and beneficiary access issues related to security and transport costs.
Security was also cited as a major consideration, but it affects all programming in Yemen. It was clear that most threats had materialized, to some extent, in Yemen between 2015 and 2018, and were experienced across all programmes – not just CTP. The main threat that did not materialize was the collapse of the Yemeni banking sector.
Organizations reported using a wide range of mitigation measures to counter identified threats, but the most common and effective mitigation measures for CTP-specific risks included:
- using service providers enabling the transference/sharing of risk related to financial transactions, security and monitoring
- carrying out a careful assessment of banks; sharing whitelists and blacklists of banks and service providers
- varying strategies on managing the risk of bank collapse and liquidity, such as making smaller and more frequent transfers to banks
- collectively negotiating exchange rates
- conducting programme monitoring, particularly post-distribution monitoring, and using third-party monitoring and follow-up
- engagement with and support from the cash and markets working group (CMWG) and CashCap2 advisers on issues such as a common minimum expenditure basket, exchange rates and targeting criteria
- using community structures for targeting, mobilization and conflict resolution
While risk analysis was shared, to some extent, there did not appear to be a common approach to analysing risk or the consistent sharing of risk analysis; this was mainly done at agency level. And while agencies do constantly monitor threats and assess risk, using a variety of sources, and varying levels of frequency, few, if any, agencies take a structured and consistent approach to reviewing incident reports and patterns, threats, and contextual shifts against an established risk management plan. This appears to be a weakness in such a volatile context.
Geographic variation in risks and mitigation were limited, and most of the risk factors were identified as being prevalent in both north and south Yemen, to a greater or lesser degree. Some of the variation in security and access risks was reportedly linked more to specific governorates and cities, and to particular geographic pockets, rather than being more prevalent in the north or the south. The key differences highlighted were that negotiation and gaining access to field locations, along with attempts by local authorities to influence the beneficiary selection process, were more of a problem in north Yemen. Consequently, more time was spent negotiating and gaining community (and leadership) acceptance. In addition, there were reportedly fewer banks in the north and in remote areas, creating additional access issues for beneficiaries.