In the aftermath of Cyclone Giovanna in Madagascar, ECHO and Medair gave over 2,000 households unconditional cash grants, which many used to rebuild their houses. Photo by: Malini Morzaria / ECHO / CC BY-NC-ND

BANGKOK — As part of the “Grand Bargain launched at the World Humanitarian Summit in 2016, donors committed to increasing the use of cash-based programming. While cash cannot meet all needs on the ground, it helps empower disaster-affected families by giving them the resources and choice about how to rebuild their lives.

But using cash has its own risks and benefits. Striking the balance between the two, and ensuring its effectiveness, are issues the aid community continues to grapple with. That includes those working on housing.

At the 7th Asia-Pacific Housing Forum in Bangkok, several questions emerged about using cash-based programming in the sector.

Should the focus be on structural safety alone?

Unconditional cash empowers families to make their own choices in rebuilding their homes, but it comes with the risk of families using it for purposes other than shelter.

Conditional cash transfers or vouchers could help to ensure they use the money for housing. This can be done in tranches, for example, families would only receive the next batch of money for their home reconstruction once the foundation of the house has been completed.

But Bill Flinn, senior shelter advisor for Care International U.K., stated that aid organizations can approach cash transfers by considering other issues at play. He said families are also exposed to health risks such as waterborne and respiratory diseases associated with poor housing quality.

“It's not our job to tell people how to make their choices. It's our job to provide the best possible information so people make good choices on the basis of that information,” he said.

How to address inflation?

Injecting large amounts of cash can have its drawbacks, and one of them is the risk of inflation. This happens when there’s a surge in demand for shelter materials and builders that outstrips supply. This can often be the case in disaster-affected communities, where there’s already limited material and construction work available before a disaster. In some cases, the goods and services need to be imported from elsewhere.

There are several ways organizations can prevent this from happening, but one ground rule is never to do a cash voucher program without conducting market analysis, said Indra Puspasari, global advisor for cash and market-based programming, World Vision Philippines.

“When I first did my cash voucher program in 2006 after the big earthquake in Indonesia ... at that time INGOs [were] promoting the use of woven bamboo. And you know what happened? There's no market analysis. The woven bamboo [price increased] from $3 [to] $7. So the intervention caused harm in the local economy,” she said.

That early lesson taught Puspasari the importance of conducting market analyses in communities prior to intervention. In one case where they found there would be a huge demand for shelter materials, her team worked with the government to address potential inflation issues through policy, she said.

Should the sector use multipurpose cash-based programming?

More than a decade ago, when aid organizations came to donors proposing cash transfer or voucher assistance programs, the question they often heard was, “why cash?” said Puspasari. Fast forward to today however, and donors’ questions have shifted to: “why not cash?”

But there’s another trend now that seems to interest donors — multisectoral or multipurpose cash programs. This means giving households a single cash grant that will cover all of their needs.

This has raised concerns for those working in the housing sector. As with unconditional cash, households may not prioritize housing and construction with the grant they receive.

Puspasari said that raising awareness in the community on why they need to spend for shelter would be critical, instead of telling them what to do.

“It’s like when you have your salary, do you want anybody telling you how to spend your salary? No, right? This is the same with the community,” she said.

Following the earthquake and tsunami in Central Sulawesi in 2018, one of the things World Vision did was a cash-for-work program. When they monitored how households used the money afterward, they found that families prioritized their shelter over their food needs.

“I think it’s a balance helping [the] community understand how to use multipurpose cash for shelter, but on the other hand trust the community that they know what are their priorities,” she said.

About the author

  • Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.