The Case for Cash in Responding to Humanitarian Crises in Malawi
Malawi faces recurring crises driven by climate change, environmental degradation and rapid population growth that undermine efforts toreduce poverty rates. In particular, an economic dependence on rain-fed agriculture perpetuates high levels of vulnerability to climate extremes and variability.
An important component of effective crisis response and climate change adaptation strategies that is being implemented in Malawi is cash transfer and assistance schemes. Malawi began piloting cash transfers in 2005 in response to heightened food insecurity, and since 2012 they have been implemented as a national strategy by both government and non-government agencies.
This article, prepared by the INGO Cash Consortium*, outlines the case for cash assistance inhumanitarian crisis response contexts in Malawi.
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The growth of cash transfer and assistance initiatives
The implementation of cash transfer and assistance programmes in humanitarian contexts has grown significantly in recent years, with many humanitarian actors making public commitments to increase its use. The Grand Bargain includes commitments to increase the use of cash, invest in new delivery models that support its expansion at scale, and build an evidence base to assess its costs, benefits and impacts.
This trend is part of a series of broader humanitarian reforms, including greater financial inclusion, evolving coordination mechanisms, strengthened local leadership, and enhanced dignity of and accountability to affected populations.
The apparent benefits of cash transfer and assistance initiatives include increased flexibility, adaptability and cost-efficiency compared with other direct humanitarian assistance modalities. Cash disbursements are also purported to facilitate empowerment for recipients, who have the spending power as opposed to receiving tangible handouts which may or may not be desirable and appropriate for recipients.
Studies also point to greater food access, quality and diversity in comparison to direct food aid, as well as positive cascading outcomes for children’s nutrition, access to healthcare services, and school enrollment. Of course, the actual results and outcomes of cash assistance remain context-dependent.
Cash transfer and assistance in Malawi
Research, monitoring and evaluation studies conducted in Malawian contexts suggest that cash assistance, where feasible, is the most appropriate modality for humanitarian assistance aimed to enhance food security.
When cash amounts are tailored to needs and market price fluctuations (where markets are functioning), cash assistance is both effective and preferred among beneficiaries. Studies show cash assistance to have positive outcomes in terms of food security, nutrition and variety, in particular for enabling access to protein-rich meat, fish and pulses.
Evidence also suggests cash to be 10-40% cheaper to distribute than in-kind food aid, particularly when digital delivery mechanisms such as mobile phones and e-transfers are utilised effectively. Further, contrary to popular belief, cash transfers and assistance can create and support broader economic recovery in the aftermath of a crisis as recipient expenditure takes place primarily in local markets and through traders motivated to reinvest in the local economy.
Cash transfers can also have positive social impacts. Research commissioned by the INGO Cash Consortium* finds that cash transfers can enable joint household decision-making between women and men, with women’s perspectives traditionally sought for decisions relating to food and children.
Recommendations for effective cash transfers and assistance
Evidence shows that cash transfers can be an effective humanitarian assistance mechanism for enhancing food security in crisis contexts. In Malawi, cash assistance has been shown to be flexible, adaptable and scalable, with the ability to facilitate cascading social and economic outcomes.
In order to be effective, cash transfer and assistance mechanisms must be designed and implemented in partnership with target beneficiaries to understand needs and preferences. They must also be based on a comprehensive understanding of markets and governance systems. Finally, a transparent and accountable monitoring system is needed to ensure fair and equitable outcomes are in reach for all.
The INGO Cash Consortium recommends that:
- All cash assistance is designed in accordance with global and national standards so as to best fulfil the needs of the affected population. This includes adjusting cash values over time in order to maintain recipient purchasing power in the face of price fluctuations and changes in income patterns and/or seasonal expenditure.
- Continued investment is made in research on markets, livelihoods and the minimum expenditure basket, as well as in sectoral and multi-sectoral needs assessments, and strong market monitoring systems.
- Efforts are made to prioritise integrated e-payment systems over manual payments. This will require public and private investment in better digital payment products, business models and infrastructure.
- Linkages are enhanced between emergency cash assistance and existing social protection schemes to build resilience and support the transition from humanitarian to development goals.
- cash assistance mechanisms are informed by a gender analysis and ensure child safeguarding and protection, in order to avoid risks and maximize the potential benefits for children, women and men.
*The INGO Cash Consortium comprises Save the Children, Concern Worldwide, GOAL, Oxfam, United Purpose. the INGO Cash Consortium in Malawi commits to always prioritising cash over in-kind food aid, except in cases of evident market failure. It encourages other humanitarian organisations, Government agencies, and relevant stakeholders to do the same.
INGO Cash Consortium (2020). The Case for Cash in Responding to Humanitarian Crises in Malawi. Policy Paper.