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    • Ukraine

    What aid groups need to consider when distributing cash aid in Ukraine

    Aid groups have begun distributing cash aid in Ukraine and while it is being peddled as the most effective response, aid workers said the conflict’s volatility and market unpredictability mean it might not be the best solution for everyone.

    By Sam Mednick // 06 April 2022
    Aid workers help an internally displaced woman to sign up for UNHCR’s cash assistance program in Mukachevo, western Ukraine. Photo by: © UNHCR / Oleksandr Radysh

    DNIPRO, Ukraine — When asked what type of aid assistance would be most beneficial, Svitlana Servatovska has a hard time responding. The 40-year-old business owner lost everything when her city of Mariupol in southern Ukraine was decimated by Russian airstrikes. Seated in the lobby of a hotel in the eastern city of Dnipro with her husband where they’ve sought some respite from the attacks, the couple said the help they’ll want from humanitarians depends on where they’ll go next.

    Cash assistance would be useful if they continue traveling west, which has so far been spared from major violence, but it won’t work if at some point they try returning home, they said. Since early March when missiles damaged or destroyed more than 90% of buildings in Mariupol, nobody’s used money, Servatovska said.

    “Food was the best currency because there wasn’t anything to buy,” she said. While living in a bomb shelter for weeks without water, electricity, or access to information, she and her husband would barter with neighbors, exchanging vodka for cigarettes, she said.

    Almost six weeks into Russia’s invasion of Ukraine and aid groups have begun distributing cash aid, trying to get over $288 million into the hands of at least 1.3 million people deemed the most vulnerable, according to the United Nations.

    The scale of the cash response in this context is unprecedented, aid workers said, and while it’s being peddled as the most effective response — as opposed to in-kind assistance — providing flexibility, choice, and dignity for those receiving it, the conflict’s volatility, market unpredictability, and the differing levels of violence within the country means it might not be the best solution for everyone.

    At the onset of Russia’s invasion of Ukraine, the U.N. asked for $1 billion for three months to respond to what it has called the fastest-growing refugee crisis in Europe since the Second World War. More than 10 million people — one-quarter of the population — have been displaced and thousands more have been killed and injured.

    Many families, like Servatovska, live in or have fled from cities where shops were razed, leaving nothing to buy, or the towns are now occupied or besieged by Russian troops, making it challenging to bring in goods. Aid groups said a cash response will only work if it’s adaptable to the fast-changing nature of the conflict, quick to scale, based on market monitoring, and combined with in-kind assistance, especially in hard-hit parts of the country.

    “Stocks of many goods in the market have been volatile during the early stages of the conflict. There were signals that the markets weren't able to cope at the start and any kind of large-scale response on cash will need to see markets rebound and stabilize,” said Craig Tucker, head of programs for Hungarian Interchurch Aid.

    Tucker is worried that the aid community is “jumping to cash so quickly,” because it’s what is usually done globally, with donors talking about cash first. But before everyone makes the move, he said markets need to be assessed and agencies must decide the right modality for distributing it.

    A ‘no regrets’ approach

    In order to get money to people quickly, the cash working group, co-chaired by UNOCHA and ACTED, has launched a “no regrets” approach, a more inclusive response than it would be in a slower-onset, smaller scale emergency context where people are asked more questions and have to provide greater detail to prove they’re in the category of people eligible for assistance, said Andreas Schuetz, who co-chairs the group for UNOCHA in Ukraine.

    “The whole approach is to include people to be able to access cash assistance rather than excluding them in the very initial stage of the rapid response,” he said.

    Currently, female-headed households, pregnant or nursing mothers, older people, those who have medical conditions, and people with disability among others, are eligible for cash, with adults and children receiving $74 a month per person for three months beginning in March, according to the U.N.

    “In one area people might be able to make digital payments at the supermarket using their bank card, but it doesn’t mean in two weeks they’ll still be able to.”

    — Tim McInerny, cash and markets lead, Norwegian Refugee Council

    While the aim of this approach is to get money to people quickly, aid groups said the process has been slow. It took time for authorities to give permission to organizations to collect people’s personal information and distributing money through financial systems in Europe comes with more regulations than in crisis contexts in low- and middle-income countries, often with less stringent banking rules, which is taking time to navigate, aid workers said.

    Only a few organizations have begun distributing cash, others are registering people, while many organizations are figuring out the best way to do it, be it cash in hand, wire transfers, or prepaid cards among other options. Globally, the international community is moving away from cash in hand, which can be riskier to handle and more labor-intensive to distribute.  

    As the needs grow, humanitarians said one of the biggest challenges they foresee to the cash response is scaling it. The “no regrets” approach gets cash out the door quickly, but steps soon need to be taken toward more scalable and coordinated systems, said Tim McInerny, the cash and markets lead for the Norwegian Refugee Council operating in Ukraine. “We’re getting cash out right now but it’s small scale … Using pre-existing systems is fine for now but we have to build systems for scale to reach the significant numbers of people in need,” he said.

    The current system involves making phone calls to register people and asking questions, which can take more than 30 minutes, he said. In order to reach large numbers, people need to be able to self-register and a back-end system to decide who fits the criteria needs to be included, he said. Adding that people also need to be given multiple ways to access the cash, such as bank accounts, bank cards, post-office, and remittance cash-out points.

    Some four million Ukrainians have fled across the border, and in each country they’ve arrived in there are different financial regulations to navigate, aid groups said. For example, in Romania, where more than 600,000 Ukrainians are sheltering, the government doesn’t allow the use of anonymous prepaid cards, instead, each card needs to be linked to a person’s identification and a passport, which slows down the process, Diana Tonea, Romania’s mission lead for Mercy Corps, said.

    Part of the challenge in rolling out cash is getting local aid groups and volunteer movements — which have been the backbone of the response — to switch to cash, Tonea said.

    “These organizations can buy stuff, take food items, move goods, and receive donations, which seems easier for them. But they’ve never done cash assistance because they’ve never had to,” she said.

    Customers wait in line at a supermarket in Dnipro, Ukraine. Photo by: Sam Mednick / Devex

    Access challenges and contingency plans

    The conflict has made it harder to access goods such as fuel, with domestic demand increasing and supply decreasing. Foods such as grains, vegetables, and meat as well as hygiene items are also less accessible in conflict affected areas. 

    Locals in the east, where much of the violence is concentrated, said there’s a constant concern that supplies will run out. “Everybody’s scared about it,” said Marina Orekhova, a communications assistant for Right to Protection, a local aid group. For the last three weeks in Dnipro, she hasn’t been able to buy some staples such as salt and more people are calling the group’s help hotline saying they can’t find medicines such as insulin, she said.

    International organizations said they’re focusing on providing in-kind assistance more than cash for people in cities and towns with heavy fighting and that are besieged by Russian troops, however, access is not easy. In recent weeks a few convoys have been able to get to some hard-hit areas, such as Kharkhiv and Sumy, but access negotiation takes time and convoys often have to try multiple times over several days to gain entry. Several attempts into Mariupol, one of the most badly impacted cities in the war, by aid groups have failed.

    Aid groups are trying to spread awareness about where and how people can register for cash assistance through apps such as Telegram, which is popular in Ukraine, says Schuetz. But given the unpredictability of the conflict, humanitarians say agencies need to have contingency plans ready to adapt to different scenarios in case new parts of the country become inaccessible.

    “In one area people might be able to make digital payments at the supermarket using their bank card, but it doesn’t mean in two weeks they’ll still be able to,” said McInerny from NRC. Telecommunications towers could stop working or the market could stop accepting payments, he said.

    Complications are already arising from people who need cash in newly Russian occupied territories. After the invasion, Elena Romanovska’s town in the eastern region of Donetsk was captured by Russians, rendering the Ukrainian currency unusable, she said. The 45-year-old had to travel to two cities to exchange the Ukrainian hryvnia for the Russian ruble, she said. Humanitarians say situations like these are ones they’re still trying to figure out how to handle.

    As aid groups continue navigating the cash response, some humanitarians are drawing on lessons learned from other crises. One important thing to note, they say is that despite the challenges of distributing cash in conflict-affected areas, a multi-pronged approach is key from the start because it’s hard to shift to cash once an in-kind approach has begun, Tonea said.

    “Once aid groups establish supply chains, rent warehouses, and hire staff it takes on a life of its own,” she said. “And people get into that mindset which is hard to change.”

    More reading:

    ► How international NGOs are setting up a Ukraine response from scratch (Pro)

    ► Pregnant women struggle to access medical care on Ukraine's front lines

    ► The globaldev organizations hiring in response to Ukraine crisis

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    About the author

    • Sam Mednick

      Sam Mednick

      Sam Mednick is a Devex Contributing Reporter based in Burkina Faso. Over the past 15 years she has reported on conflict, post-conflict, and development stories from the Middle East, Africa, Asia, South America, and Europe. She recently spent almost three years reporting on the conflict in South Sudan as the Associated Press correspondent. Her work has also appeared in The New Humanitarian, VICE, The Guardian, Foreign Policy, and Al Jazeera, among others.

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