Cash transfers and response analysis in humanitarian crises

Identifying the most appropriate response from the wide range of available options requires a response analysis. The growing use of cash transfer programming in emergencies has made us more conscious of how important this step is, primarily as a result of the broader analysis necessary to ensure that markets can be used to support humanitarian response. Use of cash transfers as a response option has shifted programming logic from a focus on the distribution of outputs to defining the objectives of a programme in relation to needs and intended outcomes at the beneficiary level. The tools developed to guide modality selection have highlighted the importance of conducting a better analysis of needs, context, markets and household preferences than is usually done by aid agencies.

What is response analysis?

HPN’s Good Practice Review on cash transfer programming defines response analysis as ‘a crucial but commonly neglected step between assessing needs and planning an emergency response. Response analysis involves analysing the likely impact of alternative responses, such as in-kind aid, cash and vouchers, and deciding on the type of intervention to be pursued in a given context’. However, deciding whether to choose cash or provide in-kind assistance is only one step in the response analysis process, which must examine a broad range of factors: needs assessments must explicitly take into account markets and socio-economic factors, and must be designed to generate an understanding of community and household dynamics, gender and protection concerns and household preferences. This information must feed into the planning of the emergency response, including the modality (e.g. cash or in-kind), the relevance of conditionality (e.g. Cash for Work), a risk analysis and an evaluation of both internal (agency) and external programming constraints. Good response analysis helps us to determine whether we are doing the right thing, for the right people, in the right way and at the right time.

During orientations I give on cash transfer programming I provide a simple scenario of a disaster, which includes an overview of needs, livelihood and gender dynamics, market characteristics, seasonal calendars, the activities of other actors and the agency profile. Participants (usually highly experienced) are then asked to use DG ECHO’s decision tree to decide on the most appropriate, effective and efficient humanitarian response for that scenario. See The Use of Cash and Vouchers in Humanitarian Crises, DG ECHO Funding Guidelines, March 2009.  While it is assumed that humanitarian workers routinely conduct such analyses, groups often find this exercise challenging. Analysis of who needs what, where, when and how differs amongst individuals, and each group usually proposes a different response to the same scenario.

The first time I conducted the exercise the objective was to illustrate the process of response analysis. I now also use it to demonstrate the multitude of factors that must be taken into account when designing an appropriate response, the variety of response options possible and how rarely we systematically conduct a thorough response analysis when we make programming decisions.

Normative frameworks

Key humanitarian texts, charters and standards provide the framework and principles that underpin response. The Humanitarian Charter, for example, emphasises the principle of impartiality and commits us to implementing ‘effective, appropriate and accountable’ responses. The Sphere Project, Humanitarian Charter and Minimum Standards in Humanitarian Response, 2011 Edition, p. 24.  Sphere Common Standard III underscores the importance of identifying the priority needs of disaster-affected people. Sphere Common Standard IV requires that the response meets those needs in relation to the context, the risk and the capacities of the population and the government.

These principles and standards suggest that humanitarian actors should respond to priority needs in the most appropriate way possible. However, the humanitarian architecture has evolved such that aid agencies tend to select responses and modalities that reflect their specific mandates. This in turn has promoted internal technical expertise and the development of systems that are tailored for a particular type of response. This agency specialisation tends to lead to formulaic response choices that focus on outputs and resource delivery, rather than on the outcomes for beneficiaries.

Cash transfer programming shifts decision-making power and responsibility to the beneficiary, who decides how and what resources and services will be accessed. This offers exciting new opportunities, but also raises challenges for specialised agencies. A clear analysis of beneficiary needs and priorities is essential to understanding how cash transfers will be used. In other words, programme outcomes are dependent on the extent to which agencies understand and support beneficiary priorities. While programming options exist to constrain how cash transfers are used (such as commodity coupons), a truly people-centred programme should aim to enable recipients to meet their priority needs. A proper needs and response analysis will identify the priority needs, the best modality to meet them and the best programming model to ensure that needs are met.

Challenges

The increased use of cash transfers at scale requires the humanitarian community to improve response analysis. At global and national levels, coordinated needs analysis and prioritisation is usually done through the annual Consolidated Appeal Process, which prioritises humanitarian action by geographic area, population group and sector, and the Cluster coordination mechanism, which seeks to ensure that there is a cross-sectoral humanitarian response plan, high-priority needs and gaps are identified and filled and resources are appropriately prioritised and allocated across clusters. Prioritisation of needs is less systematic at the agency or project level, however, and determining appropriate response modalities is weak at all levels.

The dominance of in-kind resource transfers in emergency response is to some extent linked to the fact that existing agency systems and procedures were developed in the 1980s and 1990s, when in-kind donations were the only response considered. The International Federation of the Red Cross (IFRC) global logistics hubs, for example, still maintain stocks sufficient to distribute basic relief items to 320,000 people, and at present agencies only have the capacity to implement in-kind assistance at scale in rapid-onset crises. Initiatives such as the Cash Learning Partnership (CaLP) and the World Food Programme (WFP)’s Cash 4 Change are working to support NGOs and WFP to adapt their systems to allow all options to be considered in a rapid-onset/large-scale response, but changes to large bureaucratic systems are complex and take time and management commitment.

Over the last few years many NGOs have embraced and mainstreamed cash transfer programming. However, while this is a positive development, some NGOs and most UN agencies use more rigorous analytical and decision-making criteria to justify a decision to use cash-based programming than they do for in-kind interventions. This ‘double standard’ is also evident in the imposition of conditionality, which is rarely supported or justified programmatically. Conversely, some agencies that have embraced cash programming are tending not to give due consideration to in-kind assistance. All agencies should be aiming for a systematic, impartial analysis of all response options.

Potential

Response analysis begins when needs are being identified and the context defined, is further informed by market analysis and ends in the programme design process, where agency capacities and contextual realities are considered in relation to possible response options. Good response analysis ensures that institutional biases and formulaic responses do not dominate interventions.

There are a number of complementary resources and tools to help agencies identify the most suitable response. Some are sector-specific (food assistance, livelihoods, water and sanitation and health), others are cross-sectoral and some focus on modality selection. Donors are increasingly pushing for more and better response analysis. The principles on which the European Commission Communication on Humanitarian Food Assistance are based include that EC support should be flexible so that the most appropriate response can be delivered using the most effective tool. ECHO’s Cash and Voucher funding guidelines insist on a thorough response analysis. USAID supported the development of Market Information for Food Insecurity Response Analysis (MIFIRA) to assist decision-makers in deciding between food aid, cash/vouchers and local, regional or global procurement of food in response to food insecurity. The EMMA tool, also supported by USAID, was developed to improve analysis of markets and the identification of the most appropriate response.

The push for more response analysis is consistent with efforts to improve the quality of programming overall. The only ‘new’ information that needs to be collected is more systematic market analysis. Yet the increased use of market analysis in humanitarian programming – necessitated by the increased use of cash transfers – has made it clear that understanding markets and how people use them is critical to a thorough understanding of the context and needs. A better understanding of markets is critical to programme design and has the potential to support market recovery, which in turn can promote early recovery and minimise harm to market systems and people’s livelihoods. An EMMA conducted in Haiti following the 2010 earthquake, for example, clearly demonstrated that continued free bean distributions were likely to lead to decreased demand for beans, thus depressing the bean market, and recommended decreasing free food distributions and increasing demand through cash transfers.

Increased use of response analysis in humanitarian programming requires the collection and analysis of baseline information before a disaster strikes, covering a range of issues including political and social dynamics, access to water and health, infrastructure, financial institutions, potential assistance delivery mechanisms and information on livelihoods and markets. All of this data should be collected, analysed and incorporated into contingency plans. Conducting this type of analysis as part of disaster preparedness can help to speed up the response and ensure that humanitarian assistance does not undermine local markets and local economies.

Increased use of good response analysis should also lead to more innovation as it steers agencies away from default programming modalities. When cash programming became a genuine option in humanitarian response with the publication of Oxfam GB’s manual Cash-Transfer Programming in Emergencies in 2006 it was considered innovative. P Creti and S. Jaspars, Cash Transfer Programming in Emergencies, Oxfam GB, 2006.  Since then, cash transfer programming has been added to the response portfolios of many agencies, and is increasingly being used at scale. It is important to remember that response analysis may not always result in a programming choice that provides cash or in-kind support directly to beneficiaries. In some cases, the analysis may suggest alternative forms of assistance, such as a road-rehabilitation programme to ensure market access.

Conclusion

Good response analysis ensures that institutional biases and formulaic responses do not dominate interventions, and that all possible options, including cash, are considered. It must be a distinct step, focused on needs and project objectives, and not biased by mandates, systems, funding or profile opportunities or political considerations. Aid agencies need to routinely undertake response analysis to ensure that responses are effective, appropriate and relevant. Contingency planning must be improved to ensure that the right response is delivered in the right way at the right time. While increased adoption of cash programming is pushing us in this direction by breaking down the silos in which we work, a range of response options should be considered when planning any humanitarian response.

The humanitarian sector is a reflective one: we evaluate responses, share lessons learned and aim to monitor our programmes. But for the sector to continue to evolve and innovate in the interests of beneficiaries and communities there must be a real commitment to seek out and implement the most appropriate responses in each context. While cash has introduced a paradigm shift in the way we programme, we need to examine the full potential of this shift, focusing on outcomes for beneficiaries.

Sara McHattie is Regional Food Assistance Expert, DG Humanitarian Aid and Civil Protection (ECHO).