New technologies in humanitarian cash transfers – the future of aid?
Breanna Ridsdel Communications and Advocacy Officer, Cash Learning Partnership
19th Jul 2011
In a growing number of countries across Africa and Asia, mobile phone networks are providing millions of people with inexpensive cash transfer services.
In a remote village in Tharaka, in the Eastern province of Kenya, severe drought has caused subsistence crops to fail and food prices have skyrocketed, leaving the poorest families hungry.
Mbaka Kathiga is one of about 150 people in her village who is now receiving a monthly cash transfer, roughly the equivalent of US $20, enabling her to buy food on the local market.
Each month, a humanitarian agency automatically credits her bank account with the money, the amount of which varies based on an assessment of local food prices. Bringing her ID to a local trader, she can use a bank card to withdraw money from her account - as much or as little as she likes, at any time she chooses.
It is a far cry from the past, when Mbaka had to wait for hours to receive food aid, and then carry a month's worth of food to her home a few kilometres outside the village centre.
And - although she is advised to spend the majority of the money on food - she can also use it to meet other needs such as transport, buying medicine, or paying school fees - all of which may help her become more resilient in the face of chronic crises.
The majority of humanitarian cash transfer programmes to date have relied on aid agencies and local partners to distribute cash or vouchers directly to beneficiaries - involving time and labour-intensive processes. In many places affected by disaster, getting cash to communities can be as logistically complex as delivering aid in kind.
However, a growing understanding of market systems and cash flows in disaster-prone countries, combined with the use of innovative new technologies, is enabling us to explore the possibility of delivering money faster, more efficiently, more securely and to greater numbers of people than ever before.
Many remote communities have access to informal but reliable remittance systems such as the Hawaala network in Kenya and Somalia, and market systems, even in remote areas, are more resilient and responsive than previously thought.
In a growing number of countries across Africa and Asia, mobile phone networks are providing millions of people with inexpensive cash transfer services. In Kenya alone, over 15 million people already use mobile money transfer services on four mobile networks, and there is talk of developing a cross-network platform.
In Mbaka's village in Kenya, a local trader uses a wireless point-of-sale terminal that transmits data to a bank over the mobile phone network, enabling banking transactions to happen hours away from the nearest branch or ATM. This trader is one of thousands of 'banking agents' that bring access to financial services to Kenyans in remote locations.
Of course, cash transfers are only appropriate where goods are available in local markets, or where market systems can provide them rapidly. But as populations continue to concentrate in urban areas and even rural economies are more and more monetised, cash transfer programming is set to become an increasingly relevant method of disaster relief.
While in many places traditional ways of delivering money will still prevail for the near future, technology is evolving and spreading in the developing world at a rapid pace. While still growing and developing today, new technologies and financial innovations have the potential to enable aid organisations to deliver money to unprecedented numbers of people, with record efficiency and speed.
The Cash Learning Partnership (CaLP) works to raise awareness of the potential of cash transfer programming as a mechanism for humanitarian response, and to build capacity, generate evidence and encourage learning and cooperation among humanitarian actors. The CaLP works in partnership with the IFRC and is supported by ECHO. Find out more at http://www.cashlearning.org