Cash

Why not cash?

How the Norwegian Refugee Council provides smart aid.

Kahanbu Mastayabo stands in front of a sales booth. "Let’s buy some of this oil," she suggests to her husband.

As the midday sun appears between the clouds, she unfolds an umbrella to protect her five-month-old daughter Esther from the scorching rays. The young mother and her husband are doing their shopping at a temporary market on the outskirts of Kanyabayonga, a small town in eastern DR Congo. The market is organised by the Norwegian Refugee Council (NRC) and the Directorate-General for European Civil Protection and Humanitarian Aid Operations (ECHO).

They agree on five litres of oil and pass their electronic payment card to the trader, who holds the card up to a smartphone scanner. A total of USD 3.79 is subtracted from the card after Mastayabo enters her personal code on the screen to confirm the purchase.

“This kind of payment is very new to us, but we like the system and haven’t had any problems,” the twenty-six-year-old explains.

Like most other newly displaced families in DR Congo, the family is struggling to making ends meet. They work in the fields for a meagre 1,500 Congolese Francs (USD 1.10) a day, which barely covers food and rent.

Read caption Kahanbu uses the personal e-voucher card she received from NRC to pay for her goods. The card is scanned by a smartphone to confirm each purchase. The screen displays how much money has been spent and how much remains. Photo: Christian Jepsen/NRC

New times for those displaced

With cash from electronic voucher cards, e-vouchers, provided by NRC and ECHO, Mastayabo and her husband are able to buy exactly what the family needs.

What is cash-based assistance?

Cash is humanitarian assistance in the form of cash or vouchers. Distributed to people or communities, this type of aid allows them to acquire the exact food, products and services they need.

We give cash in the following ways:

  • Electronic transfers, where a displaced person can receive a cash transfer through technology, such as smart phones or electronic payment cards.
  • Vouchers, which can be exchanged for a specific quantity or value of goods or services.


Cash comes with different types of conditions and restrictions:

  • Unconditional cash grants are based on needs, and people do not have to do anything to receive them.
  • Conditional cash grants, which a person must earn through certain activities, such as working or going to school.
  • Unrestricted cash grants, which a displaced person can use for anything he or she chooses.
  • Restricted cash grants are designated for a certain use or to buy a certain item.
  • Multipurpose cash grants are regular or one-off cash transfers which are supposed to cover a family’s needs for food, shelter, education, health, water and sanitation facilities, and means for a livelihood. The family is free to use the cash as they wish.
NRC, NORCAP, UNHCR, ODI


The nature of humanitarian crises has changed over the past 20 to 30 years. Of the 65 million people displaced today, most do not live in refugee camps. They’re in cities and urban areas. More and more people are in need of humanitarian aid globally, and they’re needing it for a longer period of time.

But the humanitarian aid that is actually provided is insufficient. The gap between actual needs and funding is widening. The whole humanitarian system is under immense pressure. With the money that is allocated, both donor countries and aid agencies want to maximise impact even more.

Read also: Why cash is smart aid

Why not just give them cash?

This is where the cash comes in. Two decades ago, Mastayabo and her family would have queued for hours to receive weekly rations of rice, flour and basic household items. But it would have been costly and time-consuming – for them and for the organisations giving them out.

"Today, a displaced family can receive an envelope of life-saving cash, an electronic card or money transferred directly to a mobile phone, with which they can buy food, pay rent and purchase what they need locally," says NRC’s Secretary General Jan Egeland.

Aid agencies still distribute food to displaced people, but the last years have seen an increase in cash-based assistance. With cash, transfer logistics are easier. The people caught in crisis are able to purchase what they need, and at the same time, put money into local markets.

Technological progress can make humanitarian aid more efficient. As a signatory to the Grand Bargain agreement between the world’s biggest donors and aid providers, the Norwegian Ministry of Foreign Affairs (NMFA) will contribute to increase the use of cash in humanitarian response.

“Although many donors are scaling up in order to meet the increased humanitarian needs, the financing gap is widening,” explains Mette Tangen, NMFA’s cash expert. “It goes without saying that we need to find new, innovative and more efficient and effective ways of to respond. The old way of doing business is simply not enough.”

She thinks that increased use of technology, not least in the field of cash transfer, has the potential to reform humanitarian response.

Read caption A boy on a chukudu transports goods between the e-voucher market and the centre of Kanyabayonga town in eastern DR Congo. Photo: Christian Jepsen /NRC

More efficient

According to the humanitarian and finance industries alike, cash is cost-saving and efficient aid because the organisations are able to spend fewer resources and reach more people.

"It’s obvious that it is easier to transport cash than traditional in-kind aid and that it’s even easier to transport electronic money," says Idar Kreutzer, CEO of Finance Norway, the Norwegian financial industry’s organisation, and head of NRC’s board.

In most humanitarian crises, aid organisations can distribute cash in safe and efficient ways – although there are risks, like theft. These risks are reduced when using electronic cards.

The logistics of transferring cash electronically are not just cheaper and faster than transferring traditional aid materials. They’re also more environmentally friendly. Kreutzer puts it simply: “Because there’s no need for large shipments of food and goods."

So when would cash not be used?

Cash expert Jaqueline Frize was deployed by NRC’s roster CashCap to the Cash Learning Partnership in Jordan earlier this year. Speed is key in emergencies, she says. If there is no cash delivery system up and running already, starting off with in-kind assistance may be more efficient.

NRCs Head of board Idar Kreutzer visiting DRC with SG Elisabeth Rasmusson, 2012.
Photo: Erik Abild/NRC
Read caption Idar Kreutzer during his visit in DR Congo in 2012. Photo: Erik Abild/NRC

More dignified

People fleeing conflict and disaster have had everything they hold dear taken away from them. Life suddenly becomes dramatic and, at times, desperate.

Frize thinks putting cash into people's hands creates a different power dynamic, because it allows the most unprotected to be actors in normal market dynamics.

"By giving people money,” she says, “you also give them the power and the responsibility to spend it."

Frize says those who receive cash spend it reasonably. She is astonished by people’s ability to save money.

"If you give people cash, even in an emergency, people are already thinking about tomorrow. Somehow they will find a way of saving some of that money and investing it."

It can be as basic as buying three chickens and then selling the eggs. They might eat less this week, but with the money they save, they will be able to eat better next week. Frize explains that most people spend the money on their basic needs, improving their diets, improving their homes and paying their debts. Humanitarians often think of basic needs on a day-to-day basis, she says. But in everyday life, we think with a longer-term perspective. It’s the same for people in crisis, explains Frize: “People in a crisis [still] have to plan for the rest of their lives."

In Jordan, Syrians use the money for rent and for fresh fruits and vegetables like they would eat back home. They’re also spending money to keep in touch with family and relatives who are still in Syria or elsewhere.

Read caption More than 6,000 displaced families – over 37,400 people – stocked up with food and household items at the Kanyabayonga market during the 11 days it was open in March 2017. Photo: Christian Jepsen/NRC

Supporting local economies

Providing cash can create a demand for goods, and help re-establish infrastructure and markets in crisis-affected communities. The use of cash-based assistance supports local economies, which often play a fundamental role in building up – or rebuilding – struggling local communities.

NRC’s food security expert, Thomas Ølholm, describes NRC’s preferred approach: work with traders to bring back the supply of key products, to meet the demands in areas where functioning markets have collapsed because of a crisis.

"We explain to them that we will provide money to the population and ask if they can provide the relevant products the population needs,” he says. “This way, we bring the market to people living in displacement, instead of expecting them to seek out markets that are far away."

In such a dynamic, it’s important to balance local needs with the needs of the displaced population. According to Frize, this type of approach can spur new products for the whole community.

"Even in places like the Sahel,” she notes, “if you give cash to a rural community, the traders will know there is a market. So, suddenly they bring food to an area that perhaps was waiting for the one-year harvest."

Kreutzer has also seen how cash can have a strong, positive effect at the local level when he visited NRC’s operation in DR Congo back in 2012.

"I visited a local market where I saw how we, through cash-based assistance, contributed to creating local markets where people sell their products.

It’s simple: with cash comes demand, and with demand comes economic expansion.

But it’s not that simple: there can also be unintended consequences of cash-based assistance. One possible negative effect is the potential for sudden increases in local demand, which may result in overproduction in a short period of time.

"That’s why it’s important to have functional markets supplementing the needs that cannot be met locally with goods brought in,” Kreutzer explains. “This should ideally be done by local private actors, in order to stimulate the market."

Ølholm says NRC is very conscientious about the risks related to bringing cash to a local community. For instance, it’s important to know whether the market can meet the population’s needs. NRC experts constantly monitor price fluctuations and the availability of seasonal products each year.

"We always have to consider whether to give cash, distribute emergency articles or do a combination of both,” says Ølholm, adding: "In-kind distribution of food should always be a last resort."

Read caption NRC provides a smartphone for each trader at the e-voucher market in DR Congo. The smartphone has an app, where all the goods are listed. Photo: Christian Jepsen /NRC

More transparent

With cash-based assistance, humanitarian aid becomes more transparent and more in line with the needs it is meant to cover.

According to the report Doing cash differently, a bigger share of humanitarian assistance should be unconditional and unrestricted cash. In a world where more and better digital pay systems are developing, the opportunities for giving cash in cheaper, more secure and more transparent ways are also growing.

Digital payment solutions provide cheaper, more secure and easier ways to control cash transfers. 

Electronic cash transfers will especially allow humanitarian assistance to become more transparent and accountable. One reason is that it will become easier to show how much of the aid is actually reaching the target group. Since it’s cheaper, more money can go directly into displaced people’s pockets. 

Another reason is that humanitarian organisations will be more accountable to those receiving assistance, as well as to donors and tax payers in donor countries.

"With cash we can easily track the amounts distributed and it is possible to document, control and to some extent measure the effects of the assistance we give," Kreutzer explains. "This applies to cash in general, but is most efficient when using electronic payment solutions."

Cash not always best

But cash and electronic cards are not always the best alternative.

When a cyclone strikes and causes massive destruction, it virtually wipes out all possibilities for markets and stocks. In these cases, Frize says: “A cash injection in the beginning of a response is probably not a good idea." 

The local markets will be too weak or won’t have enough products to meet the demand and cash could lead to inflation, according to Frize. “You may wish to start with in-kind and then move to cash as markets recover.” 

At other times, when there is a failing market, an injection of cash can send a message to traders that there are buyers that need to be served. This way the market is revived.

People need to have the possibility of buying the goods and services they are after, in order for cash to be useful.

And there are other needs that aren’t simple commodities. Cash can’t always cover those. Protection, water and sanitation services, and medical aid should all remain priorities for aid organisations.

Another obstacle? Making sure that cash recipients understand the timeline. It’s really important to do a lot of community participation in the beginning, to make people aware that the cash payments are not forever.

"It is important to have an exit strategy from the beginning,” Frize explains. “When you know you have done the job and achieved your goals, you stop. That way they can plan better and make better use of the cash you do give."

The combo

So we see that cash cannot meet all needs in every humanitarian crisis. What do we do then?

"The best programmes I’ve seen,” Frize says, “are the ones that do a combination of different kinds of assistance."

There are different types of cash-based assistance. Sometimes, you have to meet certain conditions to receive cash, such as going to school or working. Sometimes, there are restrictions related to how you spend the money. Other times, the cash is unconditional and unrestricted. In other scenarios, a combination of cash assistance and in-kind assistance – tangible items that could range from drinking water to blankets – is carried out.

According to Ølholm, NRC aims to make cash-based assistance as unconditional and unrestricted as possible.

"Spending money is about both needs and priorities," he explains. "When you have the money, you prioritise your spending according to what is most important to you. Imagine if you didn’t have enough money. How would you react if someone told you how to spend the little you received?"

Read caption Mastayabo (left) and her family have finished today’s shopping. They are loaded up with a mattress, a blanket, beans, oil, cassava roots, fruits and soap. Photo: Christian Jepsen/NRC

Innovation in humanitarian aid

Back at the Kanyabayonga market, Mastayabo and her family have finished today’s shopping. They are loaded up with a mattress, a blanket, beans, oil, cassava roots, fruits and soap. The USD 55 they were allocated has been fully utilised.

More than 6,000 displaced families – over 37,400 people – stocked up with food and household items at the Kanyabayonga market during the 11 days it was open.

"Since the electronic system works much faster, we have been able to accommodate 200 more families per day compared to other systems," explains Ibrahim Abdullya Ly, NRC’s emergency coordinator in DR Congo.

Starting in December 2016, NRC was among the first humanitarian agencies in DR Congo to successfully implement an e-voucher system of electronic payment cards. It is a more secure and efficient system than the traditional vouchers.

But we need to tread further down this digital path. We need to keep innovating, so that we can make cash-based assistance more present, more efficient, more accountable and more dignified.

"Innovation within humanitarian work is important and digital cash is an example of how we are testing new solutions, learning and improving the ways in which we provide aid," says Kreutzer.