Just Give them the Money: why are cash transfers only 6% of humanitarian aid?

Guest post from ODI’s Paul Harvey

Giving people cash in emergencies makes sense and more of it is starting to happen.  A recent high level panel report found that cash should radically disrupt the humanitarian system and that it’s use should grow dramatically from the current guesstimate of 6% of humanitarian spend.  And the Secretary General’s report for the World Humanitarian Summit calls for using ‘cash-based programming as the preferred and default method of support’.

But 6% is much less than it should be. Given the strong case for cash transfers, what’s the hold-up in getting to 30%, 50% or even 70%? The hold-up isn’t the strength of the evidence, which is increasingly clear and compelling. Cash transfers are among the most rigorously evaluated and researched humanitarian tools of the last decade. In most contexts, humanitarian cash transfers can be provided to people safely, efficiently and accountably. People spend cash sensibly: they are not likely to spend it anti-socially (for example, on alcohol) and cash is no more prone to diversion than in-kind assistance. Local markets from Somalia to the Philippines have responded to cash injections without causing inflation (a concern often raised by cash transfer sceptics). Cash supports livelihoods by enabling investment and builds markets through increasing demand for goods and services. And with the growth of digital payments systems, cash can be delivered in increasingly affordable, secure and transparent ways.

People usually prefer receiving cash because it gives them greater choice and control over how best to meet their own needs, and a greater sense of dignity. And if people receive in-kind aid that doesn’t reflect their priorities they often have to sell it to buy what they really need as, for example, 70% of Syrian refugees in Iraq have done. The difference in what they can sell food or other goods for and what it costs to provide is a pure waste of limited resources. Unsurprisingly people are better than aid agencies at deciding what they most need.

It’s taken a long time for the international aid system to accept and embrace the use of cash because it challenges all sorts of deep seated attitudes about how best to help people and how the system is structured.  The aid sector in general is bad at trusting people and reluctant to hand-over power and control. It’s fundamentally premised on the idea of the external experts deciding what is needed and providing it. Cash challenges that and so creates a series of professional insecurities. What will happen to logisticians and food aid professionals? And if it makes sense to deliver one cash grant to meet a range of basic needs, do we need so many organisations focused on delivering humanitarian assistance? In Lebanon in 2014, 30 aid agencies provided cash transfers and vouchers for 14 different objectives such as winterisation, legal assistance and food. It’s the very simplicity of cash that is threatening to current models for delivering and financing humanitarian assistance.

So what will humanitarian action look like in 2030 and will aid agencies have embraced the disruptive potential of cash to dramatically change how humanitarian action happens?

Being an optimistic soul I think we’ll have made some serious progress on SDG goal 1 on ending poverty. Richer people and wealthier states will be more resilient in the face of growing numbers of climate change-related natural disasters and investing more in being prepared for them. Progress on SDG 1 will have in part been achieved by a huge expansion in social assistance programmes. So, more of the world will look like 2015 in northern Kenya where, in response to drought and floods, the Kenya Hunger Safety Net has been able to automatically expand payments to more of the population because it had pre-registered everyone and had defined triggers for expanding the programme.

Across most of the world international humanitarian actors won’t be focussed on delivering assistance (whether cash or in-kind). They’ll be supporting the non-governmental action of southern civil society which will be lobbying their own governments to include those wrongly excluded from government-run cash assistance and engaged in the sort of voluntary responses and advocacy we’ve seen in response to recent floods in the UK.

International humanitarian action will be much more narrowly focussed on conflicts. The wars in Syria, CAR and Yemen will tragically be entering their third decade. Rolling five year funding windows will at last have allowed aid agencies to move from annual appeals to longer-term responses to long-running wars. At the core of these five year plans will be a basic income grant provided to all those registered as having war disrupted livelihoods.  In each context, delivery of the basic income grant will be competitively tendered and generally won by consortia of local and international payment companies, UN agencies, the Red Cross and local and international NGOs. They’ll be hitting and usually exceeding a benchmark of getting 75 cents of every dollar directly onto disaster affected peoples’ payment cards.

Of course, some natural disasters will still overwhelm local and national capacities, leading to appeals for international help, and new wars will generate humanitarian needs. Cash-based responses will be at the core of rapid humanitarian responses with better contingency planning and preparedness in partnership with the private sector enabling payments to start within days of the onset of a crisis.

Freed from the constraints of delivery, organisations will have had to focus much harder on where and how they add value to humanitarian action. Some such as Oxfam with its specialism in water and sanitation will have re-focussed on technical expertise. Others will disappear, shrink radically or move to supporting southern organisational networks without directly implementing. There will be a much greater focus on assessment, analysis, targeting and monitoring. Deciding what’s needed, who should get it, how much they should get and whether or not the right people are getting it is where the really difficult challenges of humanitarian action have always been and will remain.

And they’ll be much more of a focus on the social and political dimensions of humanitarian crises. Aid agencies have tended to focus on being deliverers of stuff – a humanitarian version of DHL. That mind-set will have shifted to being more like social workers – working with local people and local organisations to better understand how to help them deal with the traumas and consequences of conflict. That will involve more negotiation and advocacy with parties to the conflict and on the mental health impacts of war and more of a brokering and facilitating local solutions approach in line with current thinking about how to do development differently. The question humanitarian organisations ask will have shifted from ‘what do we need to deliver?’ to ‘how can we help people to maintain their dignity and live safely in the midst of conflict? ‘

Giving people cash still won’t always be the best option. Sometimes markets will be too weak for people to be able to buy what they need and sometimes government policies will make it impossible to provide cash. Cash transfers will still need to be complemented by the provision of public goods that markets will not provide efficiently, such as clean water, sanitation or immunisation. The use of cash transfers does not mean that humanitarian actors will give up their key roles of proximity, presence and bearing witness to the suffering of crisis-affected populations. It’s the spirit of solidarity in the face of unacceptable suffering that will remain core to humanitarian action and that better use of cash will enable a greater focus on.