Anticipating vital issues around cash in the response to the Ukraine crisis

The world watches as events in Ukraine unfold, a population displaced within their country and spilling over into neighbouring countries. And it is of course not the only place where this is happening; conflict now drives 80 per cent of all humanitarian needs globally, with 82.4 million peoples forcibly displaced.

Amid the horror, the solidarity of individuals and organizations is heartening. There is of course a need to act fast, but also to consider the consequences of our actions and ensure the basic humanitarian tenet – ‘do no harm’ – is at the forefront. Complex emergencies have high levels of uncertainty in terms of demand, supply and access to infrastructure and services. Logistical bottlenecks at ports and border crossings can be exacerbated through well-intentioned but unplanned, unsolicited goods causing blockages, which may impede the movement life-sustaining goods.

Anticipatory action for conflict situations is a growing field of interest. Based on lessons learned from previous conflicts, such as those in Iraq, Libya, Syria and Yemen, we identify four key criteria for donors and responders to consider when supporting, designing and implementing humanitarian cash and voucher assistance programmes for conflict settings. 

Estimating needs

People affected by crises are best placed to identify and prioritize needs such as food, water, healthcare and shelter. But when communities are scattered, or sheltering in basements and tube stations, this challenge is multiplied. Even determining the scale of need – how many people, and where – is complex. The fluidity of conflict, when compared to natural disasters, adds to this uncertainty. Things change rapidly as the fighting intensifies or moves. And if people have the ability and means to evacuate, those registered in one location may not be there tomorrow.

Planning and organizing humanitarian assistance in such situations requires agility and responsiveness, in order to reach the most vulnerable people in an appropriate and timely manner. Additionally, seasonal and climate-related hazards must be considered when estimating the needs of displaced populations.

Goods versus cash

Logistical costs for in-kind assistance (goods) comprise nearly 60-80 per cent of the total costs in disaster relief operations. Logistics in conflict settings are especially challenging, due to factors such as damaged infrastructure or limited security and access. For example, there is a truck driver shortage in Poland as Ukrainian drivers leave to join the army in their own country. 

It is therefore important to consider cash assistance as well as goods. Multipurpose cash assistance allows recipients – whether people who remain at home, or those who are displaced – to decide how and when to meet their multiple needs. Cash can also be used to support host communities.

CaLP states that in 2019, 20 per cent of total aid was delivered as cash assistance. Evidence from Ukraine shows that between 2017 and 2021, cash assistance rose from less than 40 per cent to more than 50 per cent. Cash can be provided in a phased approach, for example moving from goods to cash as the situation allows, or different approaches can be applied in different parts of a country. Donations to humanitarian agencies via shops or appeals can be either goods or cash, providing flexibility on when to provide each. However, conflicts often lead to dramatic price hikes (e.g., for fuel and basic food items), which should be considered when calculating the amount of cash assistance needed (e.g., the minimum expenditure basket per affected family).

Access to markets and infrastructure

When markets and banking infrastructure function in tandem with logistics capacity, cash assistance can be very supportive for affected populations, giving them the dignity of choice and flexibility in spending; it also reduces logistical costs. However, access to such infrastructure is often extremely challenging in conflict zones, especially when moving from government-controlled areas to non-government-controlled areas. Specialized aid agencies have to estimate the best- and worst-case scenarios, from a functioning system to collapsed markets, shops and banking services. 

However, the plethora of different delivery mechanisms for cash (e.g., electronic vouchers, mobile money, bank accounts, debit/ATM cards) means it can often be transferred using services people are already familiar with. For example, electronic cash can be transferred discretely and doesn’t necessarily require people to access physical sites to receive it. It also facilitates electronic payments for goods and services. People can even receive regular funds while on the move, as we saw in Greece during migrant response efforts in 2016, and even take money across borders.

The local economy

Traders and suppliers are part of a crisis-affected population and can be further affected when they lose their source of income. In Crimea, for example, supply chains and banking systems functioned after the initial annexation in 2014, but there are now limits on ATM withdrawals and the shops that remain open may be impossible to access for security reasons.

Rather than passively waiting for markets to recover, there is a need to proactively strengthen and support the recovery of both markets and suppliers, where possible and feasible. Local businesses are an integral part of society and in place when a crisis starts; this creates an opportunity to consider and coordinate their involvement in disaster prevention, preparedness and response operations. The multiplier effect can also provide greater value to a local economy than the initial cash injection.

Conclusions

Conflict situations do not necessarily preclude the use of cash assistance – and may in fact alleviate some of the inherent risks. Donors providing cash allows humanitarian responses to provide both cash and goods, and to pivot between cash and goods as the context changes. Affected people generally prefer cash, as it can meet a wider range of needs, particularly when provided as multipurpose cash assistance. Additionally, the use of electronic cash allows assistance to be provided without people having to leave safe locations, or when people are on the move.

Cash assistance should be considered from the start, allowing emergency action plans to be augmented as the situation changes. The provision of goods should be phased and agile, allowing this approach to be paused – and assistance changed to cash – when markets and infrastructure allow. Increased engagement by, and coordination of, local markets in the development and implementation of humanitarian responses can help to provide a more effective and sustainable response, by tapping into an additional resource and minimizing the cost of duplicating existing local infrastructures and networks.

Finally, conflicts are often just one of the multiple risks in an area, alongside geopolitical issues, natural hazards, and wider social issues, These all need to be analysed, as they are also likely to disrupt supply chains, both in conflict areas and neighbouring countries hosting refugees.