There is consensus in the literature that giving people cash in humanitarian contexts provides greater choice and dignity while at the same time stimulating local markets. In comparison to in-kind approaches, cash emerges as more efficient to deliver and – depending on the particularities of a given context – it can also be equally or at times more effective at delivering the desired outcomes when compared to in-kind assistance and vouchers.
The evidence presented in this literature review demonstrates that cash-based responses are valued for money with respect to improving humanitarian outcomes and reducing the cost of the
response. In particular, unconditional cash transfers allow people to buy the goods and services they need through local markets and are also characterised by flexibility that would be hard to
match through in-kind responses (ECHO, 2016); flexibility is important because evidence shows that programme beneficiaries exhibit a wide set of needs, which translate into unique expenditure
patterns (UNICEF, 2017).
Cash-based responses also produce gains for local economies. A comparison between voucher programmes and cash transfers showed that whilst voucher programmes generated up to $1.50
of indirect market benefits for each $1 equivalent provided to beneficiaries, unconditional cash transfer programmes generated more than $2 of indirect market benefits for each $1 provided to
beneficiaries (The Campbell Collaboration, 2017).
The effectiveness of cash and in-kind transfers are generally considered to be similar. On average, impacts appear to be balanced across modalities (food, cash, a combination of food and cash). The evidence reviewed by the World Bank Group (2016) demonstrated that in 11 developing countries cash was most effective in achieving specific objectives in 48 per cent of cases and food in 36 per cent; vouchers and combined cash and food modalities were most effective in the remaining 16 per cent of cases. Recent publications on the impact of cash-based responses have demonstrated that cash assistance improves refugee families’ housing situations in Jordan (UNHCR, 2018a), and that there is strong evidence for the positive impact of cash in relation to food security, livelihoods and nutrition (UNCHR, 2018b). In Zimbabwe, cash transfers in target areas significantly boosted food security, nutrition and abilities to cope with shocks (CARE, 2017). Unconditional cash transfers and vouchers can improve household food security in conflict-affected areas and maintain household food security within the context of food insecurity crises and drought (The Campbell Collaboration, 2017). Cash has also been equally effective as in-kind assistance in the school scholarship programme in Cambodia (WFP, 2018); in Kenya, the unconditional Cash Transfer Programme was effective in enabling beneficiaries to cover most important household needs (Kenya Red Cross Society, 2017). In Somalia, it was found that a cash transfer system appears to be reaching the most vulnerable in society, particularly disabled people and minority clans (Forcier Consulting, 2018).
While the effectiveness of cash and in-kind is similar, the efficiency is generally in favour of cash (WB, 2016). Cost efficiency of CBR is improved in particular once programmes are at scale (WB, 2016). IRC found that its CBR programmes had a wide range of cost efficiency, from a low of 14 cents for every dollar transferred up to $1.32 for every dollar transferred. IRC identified the scale at which programs are run as ‘the biggest single factor driving cost efficiency’ (IRC, 2016). For CBR ‘reaching more households spreads the fixed costs of country support over a wider pool
of beneficiaries, driving down per- household costs dramatically’ (IRC, 2016). Cash emerges consistently as more efficient to deliver (WB, 2016; UNHCR, 2017; WBG 2016), but some evidence points to a trade-off between costs for the agencies and those for beneficiaries: as payment or distribution points get closer to beneficiaries, costs for the implementer get higher, while the transaction costs for beneficiaries decrease (WB, 2016).
The operating context can significantly influence cost efficiency. Overall, efficiency values for CBR were lowest in complex emergencies, followed by slow-onset natural disasters (e.g. drought), then rapid-onset natural disasters (e.g. other extreme weather events, earthquakes) and highest in refugee responses (WB, 2016). Cash is also not an appropriate response in all locations. After the Nepal earthquake, smaller affected communities in the higher mountains were provided with in-kind items since markets in these areas were barely functional even before the earthquake, and they were poorly connected to the road network (ODI, 2016).
Technological advances also drive the cost efficiency of CBR. Biometric identification (iris scanning), mobile money solutions and digital payment technology increase the potential to reach people quickly and minimise the risks of fraud and loss of resources, making the process more cost-efficient (UNCHR, 2017 & 2018a, Forcier Consulting, 2018). There is no evidence of cash being more or less prone to diversion than other forms of assistance (ODI, 2015).
Whilst the initial cost of setting up CBR can be high, it can also be offset by time. In Kenya, the mass registration and bank account opening exercise was resource-intensive to put in place, but
the marginal cost of all additional transfers was negligible making cash a more cost-efficient response than food-aid, which incur significant logistical costs for each distribution (Cash Learning
Partnership, 2017). The review also finds evidence that Multi-Purpose Cash Transfers (MPCT) can potentially lead to cost efficiency gains as additional efficiency gains can be expected from a
coordinated MPCT approach that leads to the reduced number of assessments, integrated delivery platforms and reduced numbers of operational agencies (ECHO, 2016).
Some evidence shows that there are few differences in impacts based on the number of instalments used to deliver a programme (UNICEF, 2017). Given that delivering assistance in one instalment is more cost-efficient and that no significant difference in impact was observed in the DRC, UNICEF’s report promotes a one-instalment operative strategy in the future for humanitarian multi-purpose cash transfer programming in the DRC (UNICEF, 2017). There are also strong arguments for integrating emergency transfers with established national social
transfer systems to drive efficiency and national responsibility for the response (ECHO, 2016).
The evidence reviewed also points to the limits of CBR; cash interventions are unable to tackle systemic issues around quality of service provision, education and largely also health (albeit they
can help cover costs of dealing with small ailments, or channel some resources into the WASH sector (ODI, 2017; UNCHR, 2018b). CBR cannot address legal and policy issues that often constrain livelihoods or access to services, particularly for refugees, such as the right to work or access to national health and education systems, CBR are also not a substitute for technical skills and support (UNCHR, 2018b). Example of when cash is insufficient can be Afghanistan, where the repatriation cash grant has catalysed investments in livelihoods for a small number of beneficiaries, and scarce and poorly paid livelihood opportunities were prompting further migration of male youth to Pakistan and elsewhere (UNCHR, 2018b).