Unleashing the multi-purpose power of cash

Iraq is an upper middle-income country with high literacy rates, sound infrastructure, functioning markets and a comprehensive hawala cash transfer network covering all 18 governorates, making it an appropriate context for cash transfer programmes. Despite this, cash transfers have been on the periphery of the Iraq humanitarian response. As of the last Humanitarian Response Plan in June 2015, cash transfer programmes (both conditional and unconditional) constituted only 3% of the total funding appeal of $497.9 million. Iraq Humanitarian Response Plan, June 2015. This figure does not include vouchers for food distribution.

Despite a large body of evidence to the contrary, including a recent report by the High Level Panel on Humanitarian Cash Transfers, Doing Cash Differently: How Cash Transfers Can Transform Humanitarian Aid, September 2015. a combination of institutional inertia and concerns around diversion, corruption and anti-social spending have prevented the large-scale adoption of unconditional cash transfers. ‘Unconditional’ cash in particular is perceived as ‘free money’, diverting the debate into what ‘conditions’ (or lack thereof) make a household eligible for assistance, adding to the resistance to adopting cash. For that reason, Mercy Corps and other cash actors use the term Multi-Purpose Cash Assistance (MPCA) to shift the focus to the diverse uses of cash and away from a ‘conditionality’ debate.

We argue that the wider adoption of MPCA over multiple rounds of assistance can support more effective humanitarian intervention in Iraq and prepare the ground for a viable exit from the humanitarian response. The Iraq displacement crisis activated a full cluster response based primarily on the provision of goods and services, with cash transfer programmes interlaced to fill gaps. But consider the reverse: MPCA as a first-line response addressing basic needs across sectors. The provision of multiple rounds of assistance and the collection of household expenditure data though post-distribution monitoring (PDM) provides a more realistic understanding of households’ priorities and unaddressed needs to inform a more coherent and data-driven cluster response. Expanding the evidence base around household expenditure can also help in understanding expenditure patterns and trends, and how these link to household vulnerability. This is particularly relevant now, as the World Bank works with the Iraqi government to transform its costly blanket food-based Public Distribution System (PDS) into a targeted, vulnerability-based social protection system.

Background

From the outset, Mercy Corps based its humanitarian res-ponse strategy on providing MPCA. The agency also argued for moving beyond one-time emergency assistance to newly displaced households, to multi-month assistance for conflict-affected households. Market assessments in January 2014 demonstrated that markets were resilient: traders had found new and alternative supply routes and reported no difficulty in absorbing increases in demand. Using hawalas in marketplaces where programme participants normally procured their household needs, Mercy Corps has to date transferred over $6.2m to 8,500 households in Diyala, Kirkuk, Salah ad-Din and Sulaymaniyah governorates.

While Mercy Corp’s decision to provide multiple rounds of assistance to vulnerable households, not just newly displaced families, limited the number of households the agency was able to reach, it offered two key advantages. First, providing multiple rounds of cash assistance enabled a more comprehensive response. Mercy Corps’ PDMs indicated an over 50% fall in the use of negative coping mechanisms, such as reducing the number of meals, taking children out of school or sending children to work. Second, this approach allowed Mercy Corps to collect PDM data over a prolonged period, gaining valuable insights into monthly household expenditure patterns and priorities to inform subsequent programming.

How the cash was used

MPCA is a dignified and accountable response mechanism: 99% of Mercy Corps’ PDM respondents preferred cash for its flexibility and because it allowed them to decide for themselves what to buy. Expenditure data demonstrated that households used MPCA to meet 16 different needs (see Figure 1). In winter 2014, Mercy Corps provided cash assistance to 5,400 households, expecting them to use the money to meet winter-specific needs, such as shelter improvements and heating. While the PDM data indicates that households did allocate additional funds towards winter expenses, food, rent and health remained the highest monthly expenditure priorities even in the middle of winter. This is a stark reminder that what we think households need may not be what they actually choose to buy. It also highlights the freedom MPCA embodies.

Spending on education and transport was also consistently high. In an independent rapid assessment among displaced households in Kirkuk, Diyala and Baghdad in February and April 2015, Mercy Corps teams found that the lack of funds to cover transport was consistently cited as the biggest impediment to accessing education, and a higher priority than educational supplies and uniforms. This is an example of how PDM data from MPCA can provide deeper insights to refine interventions, in this case around education.

The data presented in this section, even given limitations of scale, highlights that PDM data collected over multiple rounds of cash assistance may well provide a more reliable picture of needs to inform targeted interventions. Currently, PDM data gathered by cash actors in Iraq is collected from a single round of cash assistance. While this is a useful starting point, it prevents us from seeing recurring monthly expenditure patterns for vulnerable households.

PDM and PDS

The Iraqi government is currently overhauling its Public Distribution System (PDS). Housed within the Ministry of Trade, the PDS is one of the world’s largest and costliest government social welfare distributions, with over 95% of the Iraqi population, irrespective of income, eligible for monthly food rations. The PDS accounts for a large proportion of government spending and one that it can hardly afford in the current fiscal climate, with large-scale displacement, the mounting cost of the ‘Islamic State crisis’ and falling oil prices. Concurrently, the Ministry of Displacement and Migration (MoDM) also provided a one-time cash package of IQD 1 million ($843) for households displaced in 2014.

With technical inputs from the World Bank, the government is exploring various options for moving from a blanket food-based PDS towards a more targeted social protection scheme predicated on household expenditure and vulnerability indicators. Furthermore, there is a push towards streamlining the various forms of government assistance from the various line ministries involved. It is important to acknowledge here that any transition out of the PDS is likely to be met with resistance, and have a negative impact on the economy, even if only temporarily.

Mercy Corps and other key cash actors argue that the systematic and wider collection of household expenditure data through PDMs can help refine household vulnerability criteria for this initiative. For example, in reviewing expenditure data, particularly the ratio of food to non-food spending, cash actors are starting to debate what vulnerability means in the Iraq context. If a displaced household consistently spends on both food and non-food expenses such as education, does this mean it is not vulnerable? Or does vulnerability in the Iraq context look different, and if so, what are those characteristics?

The Humanitarian Response Plan in Iraq has identified the government’s social protection scheme as a viable exit strategy from humanitarian response. MPCA has the potential to do more than simply hand over Iraq’s 3m displaced people to the government’s social protection plan. Cash actors’ learning and understanding of vulnerability criteria in Iraq, based on monthly expense patterns, can help to identify unique vulnerability markers in the Iraq context, to support the government’s efforts in this transition to a targeted social protection scheme.

All roads lead to cash

To encourage the use of MPCA, cash actors in Iraq undertook two key initiatives. First, a Cash Working Group (CWG) was formed in August 2014. With UNHCR and Mercy Corps as the current co-leads, the CWG functions as an advisory and coordination body to promote wider understanding and adoption of all types of cash and voucher interventions among humanitarian actors. Second, in March 2015 Mercy Corps, the Danish Refugee Council (DRC), the Norwegian Refugee Council (NRC) and the International Rescue Committee (IRC) formed the Cash Consortium of Iraq (CCI), with the express purpose of increasing the impact of MPCA. The consortium approach is helping cash actors provide a coordinated cash response across Iraq’s fractured displacement context, move to multiple rounds of cash assistance and build a more nuanced understanding of the crisis by harmonising targeting and data collection. The CCI is an active member of the CWG and shares lessons and tools with cash actors more widely.

Together, the CCI and the CWG took the opportunity of a revision of the Humanitarian Response Plan in April 2015 to push for and gain a standalone chapter within the Plan for MPCA. This effectively means that cash actors will, for the first time, be able to account for and measure the geographical spread, implementation and impact of MPCA, separately from other forms of conditional cash and vouchers, and in kind aid. This is also a key recommendation of the High Level Panel report on cash cited above. While not recognised as a full cluster, the CWG is gaining momentum, most recently by obtaining a seat at the Inter- Agency Cluster Coordination Group (ICCG). As of August 2015, cash actors including CCI partners had supported over 117,000 households with MPCA – the majority in the form of one-time emergency cash to newly displaced households. As cash actors assimilate their learning from this single round of MPCA, Mercy Corps is continuing to advocate for multiple rounds of monthly cash assistance for all vulnerable households, and for all cash actors (outside of the CCI) to harmonise data collection and analysis in order to gain a much broader picture of households’ monthly expenditure patterns in Iraq.

While not a blueprint in itself, the use of MPCA in Iraq can serve to spark a debate on how cash assistance can be better utilised within humanitarian response. Unless we push for the wider adoption of MPCA and multiple rounds of assistance in Iraq, we will not be able to capitalise on this opportunity. The opportunity is there; it simply needs to be seized.

Su’ad Jarbawi has been working with Mercy Corps in humanitarian crises since 2003, including in Sudan, Haiti, Yemen, Mali, the Central African Republic, Syria and Iraq. Her involvement in cash programming began with the Haiti earthquake response.