Industry Insights: Why all money will soon be digital

The Humanitarian system is under severe stress. Today, as a result of armed conflict, famine, epidemics, and natural disasters, there are millions of people facing displacement, hunger, violence and disease.

News coverage is sensational and short-lived, but the resolution and recovery time is not for those affected. As the numbers continue to rise, new solutions are needed to ensure that aid can reach those in need efficiently, effectively and responsibly.

Earlier this year, I had the opportunity to attend the UN’s first World Humanitarian Summit (WHS) in Istanbul. The event was a global call to action by UN Secretary-General Ban Ki-moon, to reaffirm a collective commitment to humanity, share best practices and initiate concrete actions to better prepare and respond to crisis situations.

Amongst the discussions were the recommendations of the UN’s High-Level Panel on Humanitarian Financing, appointed by the UN Secretary-General in 2015 to work on finding solutions to the humanitarian financing challenge. The panel identified and examined three areas: reducing the needs, mobilizing additional funds through either traditional or innovative mechanisms, and improving the efficiency of humanitarian assistance. As in other sectors, for efficiency improvements, digital solutions hold promise for humanitarian actors, and one area agreed by the Humanitarian Financing Panel as well as other experts throughout the Summit was that the use of digital cash in humanitarian aid offers significant benefits.

Cash transfer programs are the direct distribution of money — as opposed to goods — to individuals affected by crisis. In this context, the term “cash” refers not only to physical cash, but also to redeemable vouchers, cards and electronic money transfers, such as mobile money.* While cash transfer programs currently only make up about 6% of global humanitarian aid, there is clear and compelling evidence of the strength of these programs. In our data-driven and mobile-first society, the case for digital programs is even more clear.

Giving individuals affected by crisis money directly also gives dignity, choice and empowerment. When transacting with digital money in particular, these modalities provide transparency and accountability, reduce duplication, enhance localization, and are more efficient and effective, i.e. easier to disburse more quickly and at less cost. As an example of these benefits, a representative at one panel noted that during the Somalia food crisis, the UK government found that with cash transfers, 85 pence per pound reached the beneficiary versus only 35 pence per pound with food aid.

recent report by key development and aid organizations coordinated the Overseas Development Institute (ODI) highlighted the need for greater use of cash transfers in humanitarian aid and that, where possible, cash should be delivered digitally and in ways that further financial inclusion.

While the context and market dynamics should of course be central when choosing the type of tool, cash in its various forms also holds the power to strengthen and shift those dynamics.

Given the nature of the circumstances in which they are working, for humanitarian organizations, the shift to digital can take additional time and planning. There are also particular considerations to take into account for the aid context, including:

  • Identification and KYC
  • Data protection and privacy
  • Security and fraud
  • Availability of existing digital payment systems (i.e. mobile money providers)
  • Merchant adoption

To learn more about cash-transfer programming and the use of digital cash in financial inclusion and humanitarian work, I recommend the Cash Learning Partnership (CaLP) and Better than Cash Alliance, two groups actively working in these areas.


*For more information, Cash Atlas highlights interesting statistics on the use of CTPs from global aid organisations.


This article was originally posted by Diana Biggs on Medium. She is not affiliated with Hooros Digital

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