Cash and Vouchers in Emergencies

Summary of published paper¹

Women have not been found to be disadvantaged by cash for work programmes

A recently published discussion paper examines the use of cash and vouchers to provide people with assistance in emergency situations. It is based on a critical review of existing published and grey literature, discussions with aid agency staff and a survey of project documentation from recent and ongoing cash- and voucherbased responses.

The literature review threw up two principal findings. While cash and voucher approaches remain largely under-utilised in the humanitarian sector, there is a growing amount of experience with cash and voucher approaches, and a sense that the absolute dominance of commodity- based approaches is beginning to erode.

The paper focuses on cash grants, cash for work and voucher programmes, where the cash or voucher is given to individual households, not to communities or governments. The study attempts to address the question of where cash and vouchers are suitable in the full range of emergency contexts. The main findings of the review are as follows;

Some of the theoretical fears about the drawbacks of cash have not been borne out in practice, for example, people rarely use cash for anti-social purposes, and women are not necessarily particularly disadvantaged by the use of cash rather than in-kind approaches.

Vouchers can be exchanged to purchase commodities from traders, at distribution outlets, markets or special relief shops. Voucher programmes may require more planning and preparation than the distribution of cash (agreements need to be reached with local traders, for example, and 'seed fairs' at which vouchers can be exchanged take time to set up). If vouchers are not providing goods that people see as priorities, then a parallel market may well develop, with vouchers being traded for cash at a discounted price. Evaluations comparing vouchers and commodity approaches have been broadly positive, emphasising that vouchers give people more choice and can have positive effects on local markets. Where voucher approaches have been compared to cash, however, questions have been raised about whether the additional administrative burden that managing a voucher programme imposes for the implementing agency is worthwhile. Donor constraints and reservations about cash seem to play an important role in discouraging agencies from switching from vouchers to cash, even where this might be appropriate.

There may, however, be situations in which voucher approaches are more appropriate than cash, such as when cash raises particular security difficulties which vouchers would not, where there is a need to restrict support to a particular type of commodity, or where markets have been weakened and need revitalising.

It often seems that aid agencies are reluctant to consider cash because of concerns about its appropriateness, because agency policies or staff skills preclude it or because funding for cash or voucher approaches is not available. Getting cash and vouchers onto the humanitarian agenda and into the humanitarian toolbox would mean moving away from resource-driven assessments. As a first step, it would be encouraging to see agencies explicitly considering a range of intervention options as part of the assessment process. Issues around the appropriateness of cash divide fairly neatly into two categories: practical questions around its feasibility and economic questions around the ability of local markets to respond. In order to make judgements about the economics of cash and voucher responses, agencies therefore need to improve their capacity to assess local markets. The tools to do this already exist, the challenge is getting these tools into manuals and standard assessment checklists, and making market analysis a routine part of the assessment process.

The existing documentation of cash- and voucher-based responses shows that they are overwhelmingly successful in terms of their impact. People spend the money they are given sensibly, cash projects have not generally resulted in sustained price rises and women have been able to participate and have a say in how cash is spent. Cash responses have usually been found to be more cost-effective than commodity- based alternatives.

The body of experience that these conclusions are drawn from is still small and there is a need for caution. There is still only limited evidence about the likelihood of inflationary impacts if cash and voucher projects were to be implemented on a larger scale. There is also only limited evidence about their feasibility in complex emergencies. What experience there is strongly suggests, however, a case for the further develdevelopment of cash- and voucher-based approaches and for piloting their application on a larger scale.

A woman receives cash for gully control work in Somaliland

In many of the contexts in which humanitarian agencies work, there are clear concerns about putting cash into conflicts and predatory political economies. However, evidence from existing projects suggests that ways can be found to deliver and distribute cash safely, even in conflict environments. Indeed, in some situations, cash has been less prone to diversion than alternatives. Cash is both highly portable and not necessarily as visible as large-scale commodity distributions. Innovative ways have been found to minimise the risks of insecurity and corruption, and evaluations have found little evidence of insecurity or corruption relating to cashbased approaches. Since much of this evidence is context-specific, one of the generic lessons is probably the unsurprising point that there is a need for a locally nuanced understanding of particular security risks. For example, in Afghanistan and Somalia, it has been possible to use the local hawala (money transfer) system to distribute cash. In Ethiopia, Save the Children take out insurance coverage against losses in transporting cash to projects in areas where there are no banks.

Proponents of cash and voucher-based responses also argue that cash can be an intrinsically more dignified way to provide assistance. Recipients of cash tend to prefer it to alternatives because of the greater flexibility and choice that it provides.

The way in which the architecture of the humanitarian system is currently structured seems to inhibit consideration of cash and voucher responses. There is a wider debate about the dominance of food aid in current humanitarian responses and the extent to which this is due to the continued tying of aid to food surpluses in donor countries. Outside of the UN system, there seem to be fewer barriers to considering cash and voucher responses, and NGOs and the Red Cross have led the way in their increasing use.

Conclusions

There is a strong case for investing further in the rigorous evaluation and documentation of cash and voucher based responses, in order to be able to make better informed judgements about their impact. There is also a need for humanitarian practitioners to develop the skills and capacities they need to implement cash and voucher interventions, and for the development of a body of practice and guidelines.

¹Harvey P (2005). Cash and vouchers in emergencies. HPG Discussion paper, February 2005