Cash transfers: New SOP for quick disaster response?

A beneficiary of a cash transfer program to build resilience against hunger and malnutrition in Burkina Faso. Cash transfers should be an integral part of disaster preparedness, according to the U.N. Office for Coordination of Humanitarian Affairs. Photo by: Anouk Delafortrie / European Commission / CC BY-ND

Aid has been coming in from all over the world to help the Philippines recover from the devastating effects of Typhoon Haiyan — but thousands of victims are still struggling to get back on their feet.

They need a bit of money to buy food or basic supplies for rebuilding their homes, an often overlooked need in the aftermath of a disaster, when humanitarians tend to prioritize other ways of relief.

Cash transfers can be part of the solution. Distributing money to people after emergencies — especially in the recovery phase — is key because it is easy to distribute and gives survivors flexibility and autonomy in attending to their needs, according to a brief submitted to representatives of the U.N. Office for Coordination of Humanitarian Affairs in Manila obtained by Devex.

“Cash transfers … will feature strongly in the humanitarian response to Typhoon Haiyan as a way to aid the recovery of the markets while also reinforcing choice, dignity and accountability for the affected people,” according to the aid worker involved in the planning process for OCHA’s post-typhoon cash transfer program who spoke on condition of anonymity. “It highlights that cash transfers are increasingly considered as standard operating procedure, and should be an integral part of disaster preparedness.”

The cash transfer program will comprise a generous portion of the $791 million the world body has earmarked for the strategic response plan to the areas affected by the storm.

Advantages

OCHA has been supervising the U.N.-led relief and response process through its cluster systems, despite some challenges like for instance delivering supplies with the limited equipment available, both from the Philippine government and humanitarian groups involved, and accessibility. Cash transfers address these issues, providing three crucial advantages:

  1. Empowerment and flexibility. Although material relief supplies — including food, water and shelter — are the primary needs of the people to survive each day, cash transfers give flexibility to the people’s recovery and rehabilitation and the freedom to choose how they want to address their needs.

  2. Support to the local economy. The goods being bought by the people who have purchasing power through the cash transfer are sold locally. The money stays inside the local economy. This issue may apply more on the recovery phase, as availability of commercial establishments immediately after disasters is slim.

  3. Less procurement delays. Having money ready to buy supplies means not having to rely on normal procurement process implemented by aid groups, which normally takes quite a bit of time and sometimes get delayed even further by national customs regulations when the goods are sourced from overseas.

All these fit in the Philippine context, making cash transfers an ideal standard operating procedure in the first stage of an emergency response, said the aid worker. Aside from the country’s resilient market structure, Filipinos are familiar with this scheme given the government’s ongoing Conditional Cash Transfer program and the wave of remittances overseas workers send every year. The country also has a large and active private sector that can assist in the planning, implementation and monitoring of this financial tool.

READ:Conditional cash transfers: Taking stock and looking ahead

Types and issues

Cash transfers can be classified into three types: unconditional, conditional and vouchers. Unconditional cash transfers do not require beneficiaries to enter into an agreement or “condition.” The opposite goes for the conditional cash transfer, while the vouchers allow beneficiaries to claim only the specific types of commodities.

Currently, both the Philippine government and international humanitarian organizations are giving out unconditional and conditional cash transfers given the scale of the disaster. In Tacloban, The Tzu Chi Foundation, a Taiwanese NGO, has been handing out 500 pesos (about $13) to survivors as part of their cash-for-work program, Devex observed on the ground in the city. The people get the money as a reward for hard work in helping clean their communities.

“The important thing is to empower the people. The cash-for-work teaches them the value of working in earning the money at the end of the day. By making them work for it and work together, they have a sense of community,” Tzu Chi senior volunteer John Alwall told Devex. “What we want is to sustain the efforts. If we can leave them these values, aside from the relief goods, we can really help them improve their lives.”

Despite the merits of the cash transfer program, there are risks.

Corruption, for one, can be a major problem. The Philippine government is under intense scrutiny following a recent legal scuffle involving lawmakers embezzling billions in public money, pushing it to roll out an online transparency hub to monitor donations and pledges for post-typhoon operations.

Another challenge is the lack of sufficient regulation on how people spend the money. Giving the people flexibility is a good thing for their empowerment but it also has to have limitations. Small vendors in Tacloban, for instance, are already selling huge quantities of cigarettes and liquor despite the undeniable devastation around.

People may also run the risk of becoming too dependent in this doled out money. Cash transfer programs will need to address all these issues to become the future SOP in any emergency situation.

Additional reporting by Carlos Santamaria.

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About the author

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    Lean Alfred Santos

    Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.