NAIROBI — In 2013, Typhoon Haiyan hit the Philippines, causing floods, landslides, and widespread destruction. Some 40 percent of the humanitarian response constituted cash transfers, totaling $845 million, and at least 45 agencies were involved in providing cash.
But the bulk of the responders were hesitant to inject cash, worried about whether the market could absorb it. The intuition was to respond with in-kind aid first and then later transition to cash.
Not every market is appropriate for cash transfers. Markets can be severely disrupted by natural disaster or conflict, creating a situation where, even if a beneficiary receives cash, they will have limited options on where to spend it — or beneficiaries may live in remote areas where functional markets are out of reach.