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Sudan Crisis: Cash is as Important as Food

Categories : Cash and Crises, Cash is a contingency and fall-back solution
May 9, 2023
Tags : Civil War, disaster recovery, Humanitarian, Sudan
While Sudan will require food aid in the short term, the bulk of the response is likely to involve cash transfers. But in what form?
James Shepherd-Barron

Disaster Risk Management Consultant, Author, and Founder of The Aid Workers Union

This post is also available in: Spanish

As the crisis in Sudan appears to be sliding inexorably towards civil war, the UN and its non-governmental partners are planning for a protracted humanitarian catastrophe. As is usual at the beginning of such disasters, the situation is fluid and uncertain. Aid stockpiles have been looted while hundreds of thousands have sought sanctuary in neighbouring countries, most of which are already facing their humanitarian crises. Hundreds of thousands more are displaced as they flee local violence. Widespread and potentially long-lasting food insecurity looms.

“Families across Sudan are running out of everything, including water, food, fuel and cash.”

Jan Egeland, Norwegian Refugee Council, 3 May 2023

The Central Bank is Unable to Distribute Cash

The UN-facilitated Cash Working Group for Sudan, temporarily based in Nairobi, Kenya, is considering its options: While there will be a short-term requirement for food aid, most of the response will likely involve cash transfers. But in what form? This is what we know at the moment:

“Traders will only accept cash. We can’t eat digital money!” – Internally Displaced Person, Port Sudan, 2 May 2023.

Physical Currency is Always Preferred

Evidence of cash transfers for social protection from Libya, Syria, Lebanon, Yemen and elsewhere in the region over the past decade has taught us the following:

  1. Physical currency is always preferred. The last mile of digital transfers almost always ends with recipients cashing out the full transfer value at the earliest opportunity.
  2. ATMs are the preferred cash-out option if their charges are deemed ‘fair’. Many reasons are mostly connected to perceptions of security, dignity, gender equity and conflict resolution with host communities.
  3. Access to local currency (in this case, the Sudanese Pound) can be part of the peace-making process.
  4. When international aid agencies are involved, recipients prefer $100 bills to hedge against inflation.
  5. Local markets bounce back quickly if the warring parties can guarantee lines of credit, insurance and supply-chain security.

The aid community and its private sector counterparts must be ready for a rapid and sustainable escalation in cash assistance. Fintechs like Aidonics and Zain are already advertising the benefits of end-to-end electronic transfers. There will be a time to consider the costs and benefits of all options, but that time is not now. Neither consumers nor merchants are willing to trust electronic payment systems in times of such political uncertainty.

As in the Syria crisis, international aid organisations planning for what happens next in Sudan should follow the example of Syria’s neighbouring countries by preparing to scale up cash distributions using pre-paid debit cards and ATMs. This will likely involve establishing an entirely new ‘ATM-based retail banking’ system across Sudan. Waiver of cross-border fees, reductions in interchange, interoperability and the daily setting of exchange rates will also have to be high on the agenda.

In light of all this, the Cash Working Group for Sudan – like Cash Working Groups the world over – would benefit from independent advice from a former Central Banker who understands retail payments, cash management for societies in crisis, and the Africa/Middle East payments environment. Volunteers should contact the author directly in the first instance.

This post is also available in: Spanish