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Give them cash, not stuff

Categories : Cash is efficient
August 12, 2016
Tags : Payment, poverty, Security, Trust, Unbanked, Universality
The incredible list of benefits linked to cash allowances for refugees greatly exceeds those of in-kind aid. So why aren't more aid organisations adopting aid-in-cash?
Communication Team / Equipo de Comunicación

There is a growing movement of aid organisations that are recognising the benefits of giving refugees cash allowances rather than food or clothing.  For example, UN high Commissioner for Refugees representative in Jordan, Andrew Harper, started handing cash allowances to refugees as a strategy to move them out of camps. With almost 700,000 displaced people flooding into Jordan from Syria since 2011, refugee camp populations are exploding – one of them, Zaatri camp, is now the country’s fourth-largest city. 

Just over 5% of the world’s aid is provided in cash, according to the Center for Global Development. The rest is in the form of vouchers and in-kind donations. This is not to say that providing basic needs to refugees is useless, on the contrary. Such donations offer immediate relief when it is most needed. 

The argument for cash is another one. It lowers the risk of displaced persons feeling like victims. It empowers them and it provides a new economic model where refugees are seen as consumers. It is also less wasteful as the cash in hand will be used for specific needs – contrary to in-kind donations which are often resold for below-market prices.

Setting up cash-allowance programs provides an unrivalled tracking system. For example, UNHCR centres in Jordan require refugees to have their irises scanned before opening a bank account for them. Their irises are then “verified” at the ATM, identifying them before a cash withdrawal.

Kids of families that receive cash allowances are more likely to go to school instead of work because their parents have the resources to provide for the family’s basic needs. 

Other significant benefits include huge cost savings in transportation. Cash doesn’t need containers; food does. From 2011 to 2015, USAID spent $70 million a year on shipping alone. 

Strangely, one of the biggest obstacles to change are the NGOs themselves. Cash-allowance programs require fewer administrators and less staff. This doesn’t mean that aid organisations will disappear, but such an evolution would certainly result in a natural selection of the most innovative and competitive agencies – possibly another of the many benefits to add to the list in favour of aid-in-cash.

To read Quartz’s full article, please click here