How does cash-based assistance work?
Over 230 million people around the world are dependent on humanitarian assistance. This is due to disasters or conflicts which cause crises where the national authorities are unable or unwilling to provide the help that is needed. To deliver rapid and efficient assistance, donors including Germany are increasingly focusing on cash-based humanitarian responses. These can involve physical cash handouts, payments via prepaid cards, or mobile money transfers that can be stored on devices such as smartphones. This approach has significant advantages.
Firstly, the recipients themselves can shop in their local area for the things they most urgently need – food, clothing, medication. Secondly, it gives recipients crucial freedom of choice and restores their agency, as well as saving them long waits at crowded distribution points.
In recent years, it has become clear that cash-based humanitarian responses are also particularly efficient. There is no need to procure bulky goods which then have to be transported and distributed, generating further costs. Donated goods can also often have a detrimental effect on local market prices, for example if grain or cereal products are suddenly available in excessive quantities for free. Cash payments, on the other hand, can go a long way towards maintaining the local economy or injecting fresh momentum.
Of course, in order for this form of humanitarian assistance to be possible, the markets in the regions affected must be functioning and must have sufficient goods available. This is checked in advance, before cash payments are issued.
More than 200 studies have now observed the remarkable efficiency and the positive impact of cash-based humanitarian assistance; one example is the Impact assessment of multi-purpose cash assistance for Syrian refugees in Lebanon.
Another concrete example is Somalia. Six million people in the country are reliant on humanitarian assistance – one third of its population. The drought in 2017 pushed many small farmers and cattle owners into poverty. The Norwegian Refugee Council (NRC) is currently providing many families there with cash. This includes Ayan Mohamed Said’s family of four. For the equivalent of 70 euro per month, she can buy bread, milk, vegetables, medicine and clothing for herself and her children.
Germany will continue to scale up cash-based assistance
In 2016, together with other donors and aid organisations, Germany committed to the voluntary Grand Bargain in order to support a major international reform process which aims to make humanitarian assistance more effective overall. One central pillar of this process is the targeted use of cash-based assistance. The Federal Foreign Office currently provides 20 percent of its humanitarian assistance in the form of cash payments and is planning to further increase this percentage in the coming years.