Issue 51 - Article 8

What cash transfers tell us about the international humanitarian community

September 27, 2011
Sarah Bailey, HPG
Jacinta runs a trader shop in the village of Nachukui, Kenya

Cash transfers have often been described as key recent innovation in humanitarian response. Providing cash or vouchers in the aftermath of a crisis can be an appropriate alternative or complement to in-kind assistance, such as food aid. Many aid agencies and donors highlight their use of cash transfers as evidence that they are providing flexible, and even potentially empowering, assistance. There is also an undertone of caution. What if cash transfers cause inflation? What if the money is not spent on the ‘right’ things? Many studies and guidelines have looked at what we know about cash transfers and how we should programme them, including walking practitioners and policy-makers through the potential risks, and how to address them. For more about those issues, see Cash Transfer Programming in Emergencies, Good Practice Review 11 (London: HPN and the Cash Learning Partnership, June 2011).

Instead of asking what the humanitarian community knows about cash, this article discusses what the debate on cash says about the humanitarian community. It argues that the way that humanitarians have discussed and debated cash transfers exposes many or our weaknesses and biases. The fact that one often sees ‘cash transfers’ and ‘innovation’ in the same sentence begs the question, ‘what is so innovative about understanding markets and providing appropriate responses?’.

Cash: a potted history

Cash as a form of assistance is not new: Clara Barton, one of the founding figures of the American Red Cross, helped to organise cash relief following the Franco-Prussian War of 1870-71 and in response to the Galveston floods in Texas in 1900. In nineteenth century India, famine responses included what we would today call cash for work programmes. Following the Indian Ocean Tsunami in 2004, there was an explosion of small-scale projects and pilots using cash transfers. Within a few years, the ‘case’ for cash was made through evaluations and research, and no less than seven guidelines were published. Now the question is no longer whether cash is an appropriate tool, but rather how aid agencies, donors and governments can best use cash and vouchers in disaster response. There is still more knowledge to be gleaned, but gaps in evidence are relatively small. Nonetheless, even though cash transfer programme continues to increase, it is still a small proportion of overall humanitarian aid.

Cash transfers are a source of pride in an industry dominated by supply-driven programming; they are evidence that we are innovating and learning, and increasing the range of ways to provide assistance to disaster-affected populations. However, the questions that have been asked along the way also reveal some of contradictions and biases within the humanitarian enterprise. If an anthropologist based their knowledge of the international humanitarian community solely on the debates and discussions around cash transfer programming, a different picture would emerge – one that shows our weaknesses more than our strengths. Some of these weaknesses are sketched out below.

We aren’t good at understanding markets

Cash transfers have raised the bar for market analysis – and revealed that it has been far too low for far too long. Determining the appropriateness of cash transfers requires understanding markets: distances to markets, goods available to people, supply chains and how the market will likely respond to an injection of cash. As cash transfers have become a more accepted tool, so too has understanding markets become a more pressing priority for the humanitarian community. Understanding markets, however, is not specific to cash transfers. Any injection of resources can affect markets. Moreover, understanding markets is central to understanding the livelihoods and coping strategies of affected populations; we should always know if and how they can access what they need.

We are less comfortable with empowerment than we would like to believe

‘Will people spend money responsibly?’ has been a common refrain in discussions about cash transfers. The notion of empowering disaster-affected and vulnerable populations, and ensuring that they participate actively in determining how assistance is provided to them, has become an increasingly important objective in humanitarian assistance. Whether distributing cash in and of itself leads to empowerment is up for debate, but it does offer choice in a way that in-kind assistance often cannot. The fact that we continue to ask whether people will spend money responsibly is completely at odds with ambitions to empower people, and certainly implies distrust.

We use the term ‘innovation’ loosely

The use of cash transfers should be the result of clear, sound reasoning (which is the definition of ‘logical’). By treating cash transfers as an innovation, we do two things. The first is provide an opportunity to be proud of what amounts to a better way of providing assistance in many contexts – a benefit that should not be easily written off. The second is less beneficial: the ‘innovation’ label implies that cash is cutting-edge and exceptional, when in fact cash and vouchers should be considered as part of the standard set of tools available to aid agencies.

We can be self-centred

For all of the selflessness inherent in the humanitarian mission, we can be quite self-centred when it comes to learning: the vast majority of the research and evaluations that humanitarians commission and consult comes from our own peer group of international humanitarian aid agencies. A striking example is the commonly accepted belief that cash transfers have not been implemented on a large scale. In fact, they have been. The US government distributed $7 billion following Hurricanes Rita and Katrina. The Pakistan government has given cash to nearly two million households following flooding in 2010. Social protection mechanisms in numerous contexts, from Mexico to Brazil to Ethiopia, provide cash transfers on a large scale. The failure to learn from government initiatives is not specific to cash transfers, but we risk doing ourselves a disservice by not taking into account experiences from governments and other actors.

Personality matters

Within aid agencies, donors and field offices, the decision to support and programme cash transfers has largely been driven by individuals. This is hardly unique to cash transfers; personality has often been cited as an important trait for successful coordination and leadership, as well as a driving force behind innovation. Recognising the importance of personality and leadership is fundamental in the drive to deliver better-quality responses.

We are risk-averse

Humanitarian actors are generally perceived as risk-tolerant: we operate in settings characterised by physical insecurity, poor governance, weak rule of law and complex political and conflict dynamics. Yet debates on cash transfers have been dominated by the idea of risk aversion: the risk that cash will cause inflation, disadvantage women, be wasted, be prone to corruption and put people in danger. In many cases, agencies continue to opt for a ‘better safe than sorry’ approach and deliver in-kind assistance, in the belief that it is better to use in-kind aid modalities that are well understood rather than take a chance on cash assistance, even when cash is more appropriate. Agencies must understand that cash transfers present different – and not necessarily lesser or greater – risks than in-kind assistance. Only by understanding the context, including gender relations in communities and households, can agencies truly understand risk and use this understanding to make informed decisions.

We don’t think ahead

A common question asked about cash transfer programmes relates to systems: whether aid agency systems and local financial systems (e.g. banks) are appropriate for delivering cash or vouchers. This information could be obtained well in advance of a disaster. Cash transfer programming is often only considered once a disaster, such as a drought, hurricane or increase in conflict, has occurred or is well under way. Contingency planning and disaster preparedness remain woefully low on the humanitarian agenda.

We are territorial

Agencies often ask how cash transfers fit with their particular mandate and mission. This is understandable from the agency viewpoint, but risks undermining the very benefits of unconditional cash transfers, namely that they allow people to meet a variety of needs that inevitably cut across agency mandates. There is a very simple solution, particularly for the large UN aid agencies that are most affected by the constraints posed by mandates: work together. For example, UNICEF, WFP and FAO could get together to deliver unconditional transfers that enable people to meet food and non-food needs, access basic services and recover their livelihoods.

As Voltaire put it, ‘with great power comes great responsibility’. The humanitarian community has a responsibility to look hard at the obstacles to better humanitarian programming, many of which are apparent in the ways that cash transfer programming has been debated and adopted. We need to understand tendencies towards risk aversion and replace these with ways to understand and manage risk. We need to think ahead, and embed within all major aid agencies and donors the capacity to make informed choices. This requires understanding markets, political economies and household and society dynamics, determining the most appropriate responses and delivering these responses. We must work together where mandates divide us. We need to be able to justify to donors where their money went, without undermining the flexibility that cash transfers offer by being overly prescriptive. We need to become more comfortable with transferring a small amount of our power to recipients, by giving them more choice. When it comes to cash transfers, there will always be room for more learning and evidence. Ultimately, however, we also need a change in mindset.

Sarah Bailey is a Research Officer in the Humanitarian Policy Group (HPG). She is the co-author of Cash Transfer Programming in Emergencies, Good Practice Review 11 (London: HPN and the Cash Learning Partnership, June 2011).


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