Crisis-ridden countries demand aid in cash

3rd June 2016 Jack Aldane

Victims of conflict and natural disaster benefit more from cash transfers than traditional aid work, says the Overseas Development Institute (ODI) in the wake of the World Humanitarian Summit (WHS) held in Istanbul between 23rd and 24th May.

Cash remittances account for only 6 percent of humanitarian expenditure, according to an ODI report, yet enable those living with the aftermath of disaster to independently purchase goods, creating longer-lasting aid, local markets, and advanced payments systems.

The issue was discussed at the WHS, which drew in more than 6000 delegates, including political leaders, business people, aid organisations and civil society groups.

Christina Bennett, a research fellow at ODI who attended the WHS, believes the traditional charity model is failing to meet the needs of crisis-stricken parts of the world today. She said four years of research into changes to who is funding crisis response at the institute suggests demand is rising for Western charities to hand control over where money goes to local governments and communities.

“People don’t want Western intervention anymore. They want to be able to do things for themselves. If they feel like they’re receiving funds from within their own community or from donors that are sympathetic to their values, its much more palatable for them to accept,” she said.

The ODI links poverty to a lack of currency needed to buy essentials, rather than a lack of resources. Niger is one example of a country that has a vibrant cross-border local market with neighbouring states, although inhabitants remain unable to pay for food, making vouchers a good option.

According to the United Nation’s Office for the Coordination of Humanitarian Affairs (OCHA), around US$692 million was spent on cash transfers and vouchers between 2009 and 2013, while online mapping tool reports a bigger sum of around US$1.5 billion for the same period.

The humanitarian practice of sending money to afflicted parts of the world goes as far back as the 1870s, when it was used during the Franco-Prussian War, and in nineteenth century India, where it helped to alleviate famine.

A scalable transition to cash-based aid can only happen if fundamental reforms are made to the current mandates of aid organisations, Bennett said. Aid groups often define themselves by the provision of material goods, such as tents, toothbrushes, socks, and sanitary towels. Sending cash would require large actors to let go of control and minimise their on-the-ground presence in affected regions.
UN Secretary-General Ban Ki-moon said the WHS would open up a time and place for the humanitarian community to share knowledge and establish “common best practices”. But while mandate reform was expected to be a key focus at the summit, major non-government organisations (NGOs) were not sufficiently challenged to change their approach.

“By keeping internal reform off the table, [the summit] avoided discussions on some of the thornier issues of how to get the large global humanitarian organisations to relinquish some power and control and change their operating model to allow innovations such as cash assistance to take hold,” Bennett said.

One challenge to reform remains the funding crisis humanitarian aid currently faces. An expected 125 million people will need humanitarian assistance in 2016, according to the United Nation’s Central Emergency Response Fund (CERF). CERF has said it needs to double its size to US$1 billion to close the sector’s huge US$15 billion financing gap. This requires an increase of US$450 million each year for humanitarian response. The question of how to mobilise funding however is more complex that simply divvying among donors.

An initiative known as the “grand bargain” aims to make spending among the five biggest donors more flexible, efficient and transparent. The aim is to set a high standard of spend strategy among other aid organisations. Devolving power to governments and local organisations that are willing to respond to crises on their own however remains the most progressive way forward, according to Bennett.

“Remittances account for a larger amount of money than official development assistance (ODA) or foreign direct investment (FDI). It’s also a more stable form of money because families and interest groups outside of these countries will provide financial and in-kind assistance to their communities, and in ways that are much more consistent and longer term,” she concluded.

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