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Cash in hand

 

A question posed to aid worker Sarah Bailey in 2005 illustrates how far the thinking about cash as aid has come in just a few short years: “If a beneficiary runs away with the cash, should we chase him?”

A local aid worker asked me the question above in 2005 as we prepared to distribute US$ 70 to people affected by disaster and fighting in Kindu, Democratic Republic of the Congo. The cash grants were part of a study to see if those affected would rather buy household goods in a local market than receive a standard package of commonly needed items. Every single person preferred the cash, and they mainly chose things it had never occurred to us to provide: bicycle parts, mattresses and radios to keep up on election news.

The ‘chasing’ question has stayed with me over the years. We laughed about it at the time, but it also embodied the scepticism and discomfort many of our team members felt about trying this new approach.

Today, cash transfers are accepted as an integral part of emergency operations and evidence is mounting that cash transfers, properly handled, work. It is simple economics and human nature. Aid agencies tend to provide people affected by disaster with the goods and services they need. But where these are available locally, why not give people money instead? From paying school fees to choosing their preferred foods, cash enables people to respond to their own priorities. For aid agencies, cash transfer programming reduces the costs and logistics of storing and transporting tents, rice and other commodities. The potential advantages are obvious.

Giving people money is a straightforward solution, but still a divisive one. Cash transfer programming challenges traditional ways of delivering and organizing humanitarian response. The inherent power associated with cash turns notions of charity on their head. Most aid agencies would not hesitate to deliver large quantities of food. However, the notion of delivering large quantities of cash raises a series of questions about the opportunities, consequences and risks of giving money to vulnerable people during times of crisis.

An (almost) new approach
Cash as a form of relief is actually not a recent innovation. Among other historical examples, Clara Barton, one of the founding figures of the American Red Cross, organized cash relief in the 1870–1871 Franco–Prussian war. Numerous governments routinely provide cash to poor people as a form of social protection and also to people affected by disasters. In 2005, the government of Pakistan gave cash to 270,000 families devastated by the Kashmir earthquake, and partnered with the credit card company Visa to reach nearly 2 million families hit by floods in 2010. The United States government provided US$ 7 billion to people affected by hurricanes Rita and Katrina to cover losses and expenses.

Cash transfer programming is, however, relatively new to most humanitarian agencies, donors and Red Cross Red Crescent societies. The response to the 2004 Indian Ocean tsunami included several small projects giving cash instead of food, sparking substantial discussion on cash in emergencies. Much of the debate focused on risks: would cash be embezzled, cause inflation and put people in danger? Some were concerned that affected people might spend cash on frivolous, and even harmful, products like alcohol and cigarettes, and that women might be disadvantaged if men controlled they money. One donor summed up fears about negative press if a cash intervention went awry: “I can just imagine the headline, ‘Aid groups throwing away cash’.”

No evidence of more corruption
These are valid worries. But in fact, numerous pilot projects, studies and evaluations since then have all generally concluded the same thing: that cash poses different — but not necessarily more or less — risks than in-kind assistance.

In Somalia and the Russian republic of Chechnya, some aid agencies found cash to be safer than food aid, as cash can be delivered more discreetly and can disappear into a person’s pocket once received. Also, there is no evidence that cash is more prone to corruption or that it results in unmanageable targeting challenges because it is so desirable. (Is it not a good thing to provide desirable assistance?)

Fears that women would be disadvantaged by cash — along with hopes that they would be empowered — have little evidence to back them up. After all, the roles of men and women are deeply embedded in our cultures, and cash alone is unlikely to change them.

People receiving money by and large spend it responsibly. Concerns that they would not reveals some troubling biases about how aid agencies perceive those they assist. There will always be a small number of people who are irresponsible; disaster does not eradicate human failings that can be found anywhere. But how can humanitarians support the dignity of vulnerable people if they do not trust them to look after their own needs?

Countless interventions have confirmed the main advantage of cash: that people affected by crisis can respond to their own priorities in a flexible and dignified way. Cash also means that people do not sell aid to buy the things that they need most.

Raising the bar
Aid agencies are using more in-depth analysis to justify cash — both to themselves and to donors — compared to other responses. They are looking at markets, what affected people prefer and how families make decisions in times of crisis. These are important issues that they do not always consider when providing other forms of aid. Responses using cash have also been subject to intensive monitoring in terms of how the money is spent and its impact. In short, cash transfers are more scrutinized than more traditional ways of helping people.

This could be seen as an ‘unfair’ double standard, but it’s a good thing. The scrutiny given to cash transfers actually might raise the bar for how humanitarians plan, implement and monitor their responses — regardless of the type of assistance provided. The very fact that cash exists as an option encourages analysis of the likely impact of different responses, rather than automatically opting for tents or food aid.

A change of mind
In-kind assistance remains by far the dominant form of humanitarian aid. However, it is difficult to find any recent major disaster response where cash transfers have not been used by aid agencies. No crystal ball is needed to know that the rapid increase in cash transfer programming will continue. Aid agencies therefore need the skills and systems to routinely consider and deliver cash responses when they are appropriate. This includes having the skills, and incentive, to better understand markets. Achieving this is not overly difficult: aid agencies have tools and experiences to share and resources on cash programming and market analysis abound. Perhaps most importantly, a change in mindset is also required, whereby those providing assistance give some of their control to people affected by disaster and crisis.

In less than ten years, humanitarians have moved far beyond ‘testing’ cash to reaching hundreds of thousands of people annually. They are even using new technologies like mobile phone transfers in places where banks do not exist. Cash programming is arguably one of the most radical, yet simple, developments in humanitarian aid in decades. Change is happening — and in this case, it’s change we should keep.

By Sarah Bailey
Sarah Bailey is an experienced humanitarian aid worker and an expert on cash transfer programming.

 


45-year-old Aurenia Bandao used a cash grant from the IFRC and Philippine Red Cross as part of a typhoon recovery programme to buy new sets of thread, which enabled her to produce and earn more. Photo: ©Afrhill Rances/IFRC



 

 

 

 

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