Hello, money: the impact of technology and e-money in the Nepal earthquake response

On 30 April 2015, five days after the massive earthquake in Nepal, the UN Office for the Coordination of Humanitarian Affairs (OCHA) hosted humanitarian agencies in the UN compound to start what came to be known as the Cash Coordination Group (CCG). Four working groups were established, focusing on geographical mapping of which agencies were doing cash and where; market analysis; analysis and comparison of financial service providers; and standardising transfer amounts. This article, written by three members of the CCG, highlights learning on market analysis through the use of a mobile application, the identification and use of financial service providers and e-cash.

Mobile market analysis

ACT Alliance agencies DanChurchAid (DCA) and ICCO led the initiative within the CCG to conduct market analysis via a mobile app on a system powered by software from the non-profit organisation AKVO. The initial template for the survey was based on one previously developed by the IFRC (Rapid Assessment of Markets, or RAM), which had been translated into Nepali prior to the earthquake. Indeed, a key ingredient in the success of cash transfer coordination in the early days was the degree of knowledge and prior relationships amongst those present, despite the lack of a formal cluster.

The app-based survey provided a quick first analysis of whether cash was a feasible intervention. DCA’s partners completed 83 market surveys with traders and consumers in three districts over a week, rapidly providing a map of market conditions for these areas. This would not have been possible with pen and paper. However, despite making the app free and offering training via the CCG, few agencies took advantage of it in the first couple of days, and it took two and a half weeks before enough data was generated to enable comparisons between different geographical areas. Interviews with other agencies indicate that the lack of access to the online platform to view the information collected was a crucial missing ingredient in motivating organisations to use the market assessment app. This is a key lesson for the use of mobile apps for market assessment, as well as other needs and capacity mapping functions: the same solution should be used by all agencies, and everyone should have access to the dataset, mapping and dashboard functions to enable quick, data-driven decision-making.

Although most agencies used the RAM tool, there were different views regarding how much market analysis was needed. For example, one agency moved extremely fast after the earthquake to distribute unconditional cash to elderly people in Gorkha district without any formal market assessment data. The distributions were based on beneficiaries’ own reports that what they needed could be obtained on the market, which post-distribution monitoring later substantiated. Other agencies used their own assessment formats, but none implemented the more thorough – but also more time- and labour-intensive – Emergency Market Mapping and Analysis (EMMA) surveys in the first month after the earthquake.

Financial service providers

As of April 2013, there were 291 providers of various types (see Tables 1 and 2). Many were affected first by the earthquake itself, and then by mass cash withdrawals as households tried to meet their emergency needs. As a result, delivering cash through existing financial services after the emergency was likely to be complex, constrained by coverage and liquidity problems (i.e. having cash available in each branch/location), and because of issues associated with payment verification, regulation and ‘Know Your Customer’ (KYC) requirements. However, a large number of financial service providers were interested in working with humanitarian agencies following the earthquake, both to gain access to humanitarian customers and to get market penetration into rural areas. Going forward, as more and more financial service providers seek to expand into rural areas, agencies should anticipate the possibility of leveraging this to negotiate favourable agreements, both for themselves and for affected people.

Nepal also highlighted that compliance with KYC (Know Your Customer) requirements is likely to become a growing issue affecting cash transfer programming. These policies are designed to ensure that the cash is going to the right person, that the financial service provider is abiding by banking regulations and that the payment is not fraudulent (i.e. being used for illegal activities such as terrorism, money laundering or tax evasion). In line with this, Nepal’s Central Bank requires anyone collecting a cash transfer to present an official government ID card, which is normally obtained through the local government administration. However, following the earthquake many people had either lost their ID cards or had not received one. Dalits, widows and other vulnerable groups were especially associated with problems obtaining ID cards. To overcome these obstacles, the government provided disaster-affected households with a temporary ID, while aid agencies worked with financial service providers to find ways of relaxing KYC requirements. In general, Nepal, like other emergencies, reinforced the need to better understand what being compliant means in humanitarian settings. Preparedness activities should take place with the government prior to a disaster, to develop plans that enable payments to be made quickly and at scale.

Recommendations

• Payment IDs: ‘Create specific humanitarian KYC standards, in collaboration with governments and international organisations (preferably before the emergency as part of the cash preparedness process).
• Know Your Customer: Ensure that aid agencies, rather than beneficiaries, are treated as customers by the service provider for KYC purposes.
• Tools: Develop simplified KYC forms for humanitarian purposes.
• Privacy and data protection: Limit the disclosure of information on refugees, IDPs and other beneficiaries with potential protection concerns.
• Mandate: Leverage the status of NGOs when negotiating contracts with service providers’. Avner Levin, Anupa Varghuese and Michelle Chibba, Humanitarian Cash Transfer Programs and Beneficiaries: Know Your Customer Standards and Privacy Recommendations, Ryerson University Privacy and Big Data Institute.

Delivering cash through existing financial channels in Nepal was constrained primarily by the geographical remoteness of affected communities and the lack of preparedness by humanitarian agencies, both in laying the groundwork with the Nepali government and in making agreements to address the details, requirements and coverage of financial service providers. While research indicates that the preference for formal providers has grown over the last ten years, more time and effort needs to be invested (particularly in the preparedness stage) to understand and mitigate issues associated with transferring cash after major sudden-onset emergencies.

The Nepali government’s concerns around unconditional cash transfers by international NGOs led to delays in project approval at the district level, though to that extent cash transfers were not unlike other sectors, which also suffered from the effects of unclear government coordination under an unstable, temporary constitution and fragmented system of coordination and leadership at village and district levels.

Recommendations

• Technology: ‘Use technology-driven alternative delivery channels to improve the accessibility of financial services and to reach out to more people’.
• Products: ‘Develop need-based, innovative financial products to attract more customers’.
• Awareness: ‘Focus on improving financial literacy and awareness of financial products’. Understanding the Demand for Financial Services in Nepal, November 2014.
• Preparedness: Work closely with the government prior to a disaster to ensure that it understands unconditional cash transfer programming, and that any concerns it may have are addressed. Together with the government, identify focal points in each financial service provider, and work with them to develop national cash preparedness plans and policy enabling humanitarian agencies to deliver faster payments at scale (focusing on coverage, readiness and requirements).

Hello Paisa

DCA used Hello Paisa (‘Hello Money’) mobile e-vouchers to deliver cash quickly to beneficiaries in remote locations. Given that the system is new in Nepal, there was a steep learning curve, for DCA, its implementing partners and Hello Paisa, in establishing the operating procedures for the payment system, informing people of their entitlements and ensuring that banks were ready to collaborate and understood their obligations. The e-voucher platform was used to transmit mass SMS messages via mobile phone, including the recipient’s unique identifier code (to enable receipt of the cash transfer), the amount they would receive and contact numbers for complaints and inquiries. For people who owned a mobile phone, the SMS notifications worked quite well, though only three-quarters of the 10,780 targeted beneficiaries had a phone. For people who did not, efforts were made to ensure that they received the message through in-person contact with the implementing partner. Hello Paisa also provided beneficiaries who did not have mobile phones with ‘peel away’ paper vouchers with a hidden identifier code.

The lack of banking services and other financial institutions in rural Nepal made the delivery of cash a challenge. Hello Paisa, as an intermediary service provider, was able to circumvent some of the problems through its network of financial service contacts – including national market leaders Prabhu Bank and Civil Bank – which delivered the cash in communities. Accountability for the funds lay with Hello Paisa and its banking partners. This enabled DCA to focus on preparedness: planning with the Nepali organisations implementing the project, as well as familiarising communities with the project by explaining how it would help them. Once an effective plan was in place and beneficiaries were registered and verified, cash transfers moved quite efficiently. At its fastest, DCA assisted as many as 976 beneficiaries in one day’s distribution with an average of one transfer every 28 seconds.

Recommendations

• Preparedness. As with all aspects of cash transfer programming (and indeed emergency assistance more generally), it is important to get to know financial service providers, and potentially negotiate agreements with them, prior to a disaster. In contexts with recurring or chronic disasters, this could include small pilot projects to test delivery mechanisms.
• Groups of agencies should be able to negotiate better agreements with financial service providers by working together, especially prior to a disaster. Whilst some efforts were made to enhance the collective bargaining power of NGOs by sharing information on contracts and prices, parallel steps should have been taken to establish relationships with financial service providers, such as developing multiagency cash preparedness plans linking recipients to stored savings accounts to promote financial inclusion, and facilitating further access to rural communities.
• There is a need for global coordination and documentation of learning on the use of financial service providers in humanitarian assistance. The Electronic Cash Transfer Learning Action Network and the Better than Cash Alliance are two leading fora for gathering and disseminating learning on e-cash. Agencies should engage with these networks and share lessons and evaluations.
• E-cash and e-vouchers are no longer ‘nice to have’: they need to be part of every agency’s cash programming toolkit. While not applicable in every circumstance, e-cash and e-vouchers offer many potential advantages, both for agencies and for disaster- and conflict-affected people. Agencies doing cash transfer programming have a responsibility to learn how to use e-cash flexibly and adaptively.

Conclusion

The increasing prominence of cash transfers, technology and the private sector is bringing about changes that were unanticipated even five years ago. A new hybrid model may be emerging whereby aid agencies are responsible for designing the response and ensuring local ownership and the fulfilment of cross-cutting commitments and links to other activities, financial service providers are responsible for getting the cash into people’s hands (and where possible linking the payment to formal saving accounts) and governments are responsible for regulating, coordinating and linking short-term cash transfers to social welfare payments. Fully harnessing the power of information and communications technology will require greater investment during the preparedness phase so that coordinated payments can be delivered consistently at scale and on time. This isn’t a straightforward task, particularly when the primary motive of financial service providers is to make a profit, and in post-conflict or unstable settings governments may have complicated relationships with their people. However, failing to invest in this discussion will mean failing to capture the potential to deliver faster, more efficient and more effective assistance to those who need it most.

Erik Johnson is Head of Humanitarian Response for DanChurchAid (DCA), and Glenn Hughson is DCA’s Global Cash Transfer Adviser. Alesh Brown leads World Vision’s Cash and Markets Learning Lab.