Humanitarian groups struggling to keep up with growing humanitarian needs are turning to cash as a way to make every dollar count. Faced with funding shortfalls, U.N. agencies are using more cash-based programs.
The World Food Program (WFP) grew its cash-based program from 19 countries in 2010 to 54 countries in 2016. Roughly one-quarter of its budget goes to direct cash payments for more than 9.6 million people. The U.N. Refugee Agency (UNHCR) pledged to double its cash-based assistance to refugees by 2020, citing growing evidence of its impact.
“The use of cash-based assistance has been a real game changer in the way we help refugees and we have now decided to make it a worldwide policy and expand it to all our operations, where feasible,” said High Commissioner on Refugees Filippo Grandi in late October. “Refugees know best what they need. The broader use of cash-based assistance means that many more will be able to decide how to manage their family’s budget. This will help them lead more dignified and normal lives.”
Cash is effective in humanitarian emergencies because it is easy to distribute at the onset of a crisis. Roughly a half million people received cash in the aftermath of Typhoon Haiyan in the Philippines. WFP worked with the government to extend its already-existing cash transfer program targeting poor households.
It also allows aid groups to reach more people and hard-to-reach communities. Humanitarians are working to avert emerging hunger crises in the Lake Chad region of West Africa and the Horn of Africa. Cash is a part of the response. In Nigeria, WFP provides seeds to farmers, food aid and cash to more than 600,000 internally displaced people.
However, when cash programs lack centralized coordination, there can be duplication and fragmentation of services, dulling the impact, according to an Overseas Development Institute report. That proved true in Lebanon, where at least 30 aid groups in Lebanon provided cash transfers and vouchers to the more than 1 million Syrian refugees in 2014.
Cash programs are effective when targeted and coordinated appropriately. WFP favors cash when working in places where food is available in local markets but too expensive for some people to buy. A program in eastern Democratic Republic of the Congo reached more than 90,000 people. The partnership with UNICEF, Mercy Corps and a local NGO gave between $92 and $185 to each household.
“Winning the fight against hunger requires flexibility and innovation,” said Philippe Martou, WFP’s head of office in North Kivu, in a statement. “Cash transfers have many benefits. Not only do they allow vulnerable families to buy the food of their choice. They also help the local economy. Finally for WFP, this type of assistance eliminates storage and transportation costs associated with the traditional food distributions. This way of doing things makes sense for everyone.”
Aid groups point to the efficiency of cash as a leading reason for its use. However, cash is not replacing core programs. WFP continues to distribute food aid and UNHCR still manages refugee camps and provides shelters.
Syrian refugees in Jordan benefiting from cash transfers use the money to help pay for rent and assist in paying for health care and education, according to new research. That money helps reduce some of the financial stress on the refugees, but does not solve all of their problems. Barriers to employment set up by the Jordanian government and the short-term nature of the payments make it hard for refugees to generate income on their own.
“Cash can be powerful, whether on its own or in combination, but ineffective or counterproductive at the wrong time or in the wrong place,” stated WFP’s cash assistance website. “Year after year, our understanding and use of it grows more sophisticated.”