When aid goes digital: 4 factors to bear in mind

Technology and innovation are continuing to transform the way we work, and humanitarian aid is no exception. Traditional methods of assistance — where beneficiaries may have to wait in line for cash, paper vouchers or food items — can bring with them a whole host of issues, including security problems, identity fraud, or corruptibility and mismanagement of funding. As a result, digital payments are an increasingly appealing option for aid organizations — and traditional aid may no longer be the norm in countries where digital solutions can take their place. The right conditions have to be in place for any innovative solutions to emerge, and solid infrastructure is an important foundation. For example in Jordan, with its strong telecommunications industry and relatively robust road networks, a stable base for cash-free assistance has been created. Since 2012, the Office of the United Nations High Commissioner for Refugees has been registering the now 650,000 plus Syrian people living in Jordan using biometrics and iris-scanning systems. And cash-free assistance has been moving in the same direction. “The Syrian response is the first ever almost fully digital response in the history of humankind,” Tidhar Wald, government and corporation relations specialist at the Better than Cash Alliance, told Devex in an interview. “When you see how something as technical and as geeky as digital payments make people’s lives better, you realize how tremendous the change is.” So what’s the future of cash-free assistance? Here are four key factors to bear in mind when it comes to rolling out digital humanitarian aid programs: 1. Impact vs. innovation. As with all innovative initiatives that rely heavily on advanced technology, critics are quick to assess the real impact of cash-free assistance programs. A report produced by the London-based Overseas Development Institute last year urged the humanitarian community to shift from in-kind donations to cash transfers. The think tank recommended assistance be delivered digitally wherever possible, noting that it’s an effective way to stretch limited aid budgets, and to help ensure the assistance is going to the designated recipient. The increased speed and security of such withdrawals could also help secure buy-in from potential donors. “One of the reasons for donor fatigue is uncertainty,” said IrisGuard Founder and CEO Imad Malhas, the company behind the biometrics scanning system employed in Jordan. But in the long-term, will innovation outperform traditional aid? The economic costs and benefits are important to weigh up. The borders in Jordan are now closed, in part due to the pressure on the country to support the refugees living there. The World Bank estimates that the arrival of Syrian refugees has so far cost Jordan more than $2.5 billion a year, or a quarter of the government's annual revenue. But the economic efficiency of programs such as the e-card initiative, among others, helps to flip the idea that this community is an opportunity rather than a burden, and to change the narrative, said Shada Moghraby, communications officer for World Food Program in Jordan. By working with local supermarkets, she said, the food agency is aiming to see money spent circling back into the local economy. “We’re looking into ways of forming contracts with wholesalers and trying to get them to provide us with better prices,” said Moghraby. “This way you’re increasing the profit margin and it’s more cost efficient for the refugees.” According to a study published in 2015, since the launch of WFP e-card initiative the assistance program has injected 600 million Jordanian dinars ($845 million) back into the local economy. 2. Human-centered approach. As beneficiaries are able to make more choices based on their needs rather than receiving goods, they may not need sanitary items or clothing and the assistance could go further. “As soon as you provide people with money, you also provide them with the agency and dignity to make their own choices on the type of food they would like to eat themselves,” said Better than Cash Alliance’s Wald. This is important given the tightening of humanitarian budgets. Since the Syria donor conference in London in February last year, where WFP received a total of $623 million from Germany, the agency has provided over 535,000 Syrians living in Jordan with monthly payments using these e-cards. While shopping in a WFP partner supermarket, a refugee from Syria receiving this food assistance allowance, speaking anonymously with Devex, said that before beginning to use the card in 2014 she would have to spend all the assistance in one go. As the head of a family of nine she now collects the entire assistance for the whole family and can split that over two shopping trips in a month. Her experience is just one example of the over 80 percent of Syrian refugees living outside of refugee camps, an urban context that brings with it a series of potential obstacles. She explained that she oversees the cooking for her entire family. Food is a central part of family life and she takes pride in being able to manage her own budget. “I don’t care about the price,” she said. “I care about the quality of the produce.” 3. Data collection for donor interest. For the humanitarian agencies involved, accurate data collection, both qualitative and quantitative, is an important benefit. The real-time data collected means being able to better understand consumer spending patterns, and know exactly what is being bought and how often. This up-to-date market research can be shared with donors to improve access and distribution of what is really needed, said the Norwegian Refugee Council’s Catherine Osborn. This system also means people are able to use the assistance without being immediately recognizable as refugees. According to Aoife McDonnell, an external relations officer with UNHCR, this helps to avoid the stigma sometimes attached to receiving aid. 4. Partnerships that work. In order for these kinds of high-tech solutions to be applied in humanitarian contexts, a functioning ecosystem is required. This means getting all actors around the table at the same time, said Wald. These kinds of partnerships between organizations, businesses, and the host government are essential to be able to evolve any multisector project, as recognized in Sustainable Development Goal 17, “Partnerships for the Goals.” “You cannot have one without the other. All of these parties need to be aligned together,” said Wald. “The government of Jordan has done a lot to allow those digital payment mechanisms to be rolled out.” Partnerships within Jordan are taking different forms. The iris-scanning system, for instance, is now being used in an initiative between UNHCR and Cairo Bank so that recipients can withdraw cash from an ATM by scanning their iris directly at the machine. This aims to keep risk of identity fraud to a minimum. However, several recipients have expressed concerns that the machine could harm their eyes. There are already plans in place to continue rolling out digital cash assistance projects elsewhere. Last September, the European Commission announced the European Union and its member states would dedicate 348 million euros ($369 million) in humanitarian aid to Turkey to support the everyday needs of the most vulnerable refugee families, signing its largest ever humanitarian program using direct cash transfers. The Emergency Social Safety Net, under the Facility for Refugees in Turkey, is the first social assistance scheme of its kind and implemented by the WFP and partners. Given the ongoing humanitarian catastrophe in Aleppo, the future for the crisis in Syria remains bleak. But these long-term sustainable programs taking root in the region could be an important factor as people may wish to remain close to Syria and think how, if at all, they will return. Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you free every business day.