The purpose of this paper is to evaluate the financial and material flows in cash-based responses (CBRs) and their implications for humanitarian operations. This research proposes to view cash as a commodity used by humanitarian actors in emergency operations and therefore aims to explore how CBRs impact on humanitarian logistics and ultimately, affect beneficiaries.
The methodological approach of grounded theory was chosen for this inquiry because it allowed the researchers to generate a general explanation for the process of CBRs in emergency situations based on the views of participants interviewed. Interviews were conducted with senior managers, supply chain managements and logistics officers from international humanitarian organisations (HOs), United Nations agencies and commercial organisations involved in humanitarian operations. Examples of topics covered during the field work included, procedures and policy; knowledge and information management; systems and technology; actors and agents.
The impact of CBRs on humanitarian operations can though not be understated. They alter supply chain design, the very role of beneficiaries as well as HOs, and change the strategy of aid delivery from push to pull. Perhaps, the most important factor is the elimination of many logistical activities that needed to be performed by HOs. Delivering cash diminishes the needs for lengthy procurement and assessment processes, pre-positioning, transportation and distribution. This bears the potential of significant reductions in costs for delivering humanitarian aid at the same time as it is an important move from aid to trade.
The challenge for humanitarian agencies in the coming years is to overcome their fears surrounding CBRs, and to implement cash programmes where they are judged to be the most appropriate response. This will require not only a change in donor policies, but also a fundamental change in the skill set of humanitarian logisticians, who are used to identifying needs and providing commodities and thus to maintaining control over the provision of assistance.
The contribution of this research is twofold: this is the first examination of cash-based interventions in humanitarian operations through the prism of supply chain management. Second, the research is field based and grounded in empirical observations thus adding to the literature and offering insights to practice.
1. Introduction
The typical humanitarian supply chain (HSC) relies on robust logistics systems and resources such as transport, warehousing, inventory and an army of logisticians. Recognising the weakness of delivery options, and the resulting cost to both their taxpayers and the beneficiaries (Barrett et al., 2009), some of the main humanitarian donors and organisations including the International Committee of the Red Cross, International Federation of the Red Cross and Red Crescent Societies, Oxfam, and the World Food Programme, among others, have started systematically experimenting and learning by funding cash and voucher-based innovations instead of delivering finished products to beneficiaries (Fenton et al., 2014).
The use of cash-based responses (CBRs) is on the rise (Harvey and Bailey, 2011; Kovács, 2014; Heaslip et al., 2015), for example, the European Civil Protection and Humanitarian Aid Operations (2012) shows an increase from 2 per cent in 2007 to 23.1 per cent of the budget shares of food assistance programmes by 2013, and both the OECD and ECHO have pushed for more CBRs as part of their “Grand Bargain” commitments (European Civil Protection and Humanitarian Aid Operations, 2016; OECD, 2017). CBRs arguably speed up the delivery of aid, reduce the need for inventories and transportation capacity, and even allow beneficiaries to make their own choices rather than humanitarian organisations (HOs) making these for them. But while there are evaluations of CBRs and even their various cash transfer modalities in terms of costing (Margolies and Hoddinott, 2014) and overall economic impact (Kabeer and Waddington, 2015) in the development sector, their impact in the humanitarian sector, and on logistics and operations, is rarely in focus. And while the literature on traditional HSC strategies typically refer to supply and demand management (Cozzolino, 2012; Kovács and Spens, 2009; van Wassenhove, 2006), no study specifically refers to supply chain management of CBR programmes.
This paper proposes to view cash as a commodity used by HOs. The aim of the paper is to explore how CBRs impact on humanitarian logistics. In order to do so, a grounded theory study is conducted that evaluates the financial and material flows in CBRs and their implications for humanitarian operations across key emerging themes.
The paper is structured as follows. It starts with a review of the impact of CBRs on HSCs, then turning to the delivery mechanisms of cash in humanitarian operations. The literature review further highlights the challenges and benefits of implementing CBRs. This is followed by the research design, and a discussion of the research findings from a grounded theory study in a refugee camp setting in which CBRs were introduced instead of in-kind food aid. Refugee camps are interesting from a humanitarian perspective, not only because of the sheer number of refugees worldwide, but also as they often constitute a longer-term humanitarian setting (Haavisto et al., 2013). CBRs have been used for quite a while in development aid, and their use in disasters is also rising; yet, an important application area outside of the development sector is in refugee and IDP camps. The paper ends with conclusions and suggestions for further research.
2. Impact of CBRs on HSCs
When donors contribute to a disaster appeal, they want their money spent on alleviating the immediate distress in a visible way (Beamon and Kotleba, 2006). Aid agencies compete for donor resources which can be a barrier to collaboration and cooperation (Kovács, 2014). Collaboration in supply chains can be vertical or horizontal (Rajamani et al., 2006). The horizontal partnerships are usually between humanitarian agencies that often compete for the same financial resources (Cozzolino, 2012) and this can be a barrier to CBRs as they are not as visible as in-kind aid and often harder to quantify results to donors. At the same time, however, various donors even have rising targets for CBRs to increase, and the Cash Learning Partnership (2017) even came out with a roadmap for planning humanitarian response for both sudden-onset disasters and chronic crises.
Preparing a supply chain in the humanitarian sector has moved towards diagonal partnerships (cross-sector partnerships) which is a partnership between “actors at different levels on the value chain and from different sectors and industries” (Cozzolino, 2012, p. 26). For CBRs, this means working with commercial partners like Visa or Western union, mobile phone companies, local non-governmental organisations (NGOs), community groups or local authorities. Working with other partners, however, raises the question of risks and security (Christopher and Peck, 2004) as control moves outside of the aid agency and cash-based programmes bring their own set of risks and security concerns.
Generally speaking, CBRs imply a reconfiguration of the HSC with consequential important contributions to the reinstatement of the local economy (Heaslip et al., 2015; Kovács, 2014). In HSCs where the main activity is providing physical goods, the actors conducting the activity of distribution are commonly a local partner such as the local authorities or local NGOs (Altay and Ramirez, 2010). In the distribution of CBRs, there is a shift for the role towards an actor that can better handle the financial flow – though financial flows here refer to cash as a commodity. A pre-condition is still that there are functioning markets on location and that the beneficiary has access to that market. This form of humanitarian assistance has since become more popular and new telecommunication solutions for cash transfers such as “mobile money” launched by Safaricom have enabled their use in various African countries (Fenton et al., 2014; Kovács, 2014).
The literature on financial flows in supply chains focuses on the integration of material flow information in financial systems (Pfaff et al., 2003) such as activity-based costing and its implications for enterprise resource planning systems (Comelli et al., 2008), electronic data interchange (Fairchild, 2005) of e-commerce in general (Shahrokhi, 2008). As in traditional logistics literature, the aim is to minimise costs by identifying cost drivers for different logistical activities. Stemmler (2003) even talks of “finance-related logistics costs”, i.e. financial costs triggered by logistics such as insurance costs in inventory financing. Similarly, the total cost model includes insurance costs as one of the variables constituting inventory carrying costs (Lambert and Stock, 2000). In financial supply chain management (FSCM), the focus shifts to cost tracking by stock-keeping unit or by shipment, i.e. to holistic thinking through visibility in the financial flow (Johnson, 2006). In sum, cost minimisation, risk avoidance and revenue maximisation are the goals of FSCM (Nagurney and Ke, 2006). Related to risk management, Johnson (2008) assessed the security of financial transactions while Craighead et al. (2007) discussed the problems of operational disruptions in terms of their implication for financial flows in the supply chain, i.e. operational disruptions and vulnerabilities are evaluated in terms of the financial risks associated with them. In their evaluation, the severity of an operational disruption is assessed by its financial consequences.
The traditional HSC pushes items first and gradually moves towards a pull strategy once more information becomes available, however, CBRs enable a pull strategy to be implemented from the beginning. This facilitates meeting the needs of beneficiaries quicker and more accurately. In a traditional model HSC, financial flows originate from donors to HOs, which use these finances to pay for material supplies that they deliver to beneficiaries. In CBR, financial flows from donors still come to HOs, which then assess the possibility for distributing cash directly to beneficiaries. If this is possible – given that there are items available on a market, for instance – the financial flows go to beneficiaries, who pay themselves for the products and services they need. HOs become the brokers of these flows, and the distributors of cash, but not the providers of the purchased materials (see Figure 1). Their role in delivering materials diminishes to the materials that are not available on the local market.
Figure 1 illustrates the two extremes of before and after supply chains, illustrating material flows with full arrows, and financial flows with dashed arrows. In the original case, HOs procure materials and deliver these to beneficiaries. In the ultimate, unconditional CBR case, HOs would only deliver funding to beneficiaries, who themselves procure from suppliers. This also implies a significant change in supply chain strategy. The traditional HSC pushes items first and gradually moves towards a pull strategy once more information becomes available. CBR enables a pull strategy to be implemented from the beginning. Through this, arguably, they can meet the actual needs of beneficiaries quicker and more accurately.
3. Delivery mechanisms of cash in humanitarian operations
There are a range of mechanisms (or “transfer modalities”) used to deliver CBRs aid to recipients (see Table I). The picture can of course be more complicated if cash is conditional and/or earmarked for particular items and/or suppliers. The Sri Lankan Government made people open bank accounts to facilitate a CBR programme after the 2004 Indian Ocean tsunami as did the Iranian Government after the Bam earthquake in 2003 (Doocy et al., 2006). However, this pre-supposes a well-functioning banking system with branches located in the programme target area. It would also require that the target beneficiaries have bank accounts, which for vulnerable populations is not always the case.
Types of CBRs in emergencies (ODI good practice review)
| Type of cash-based responses | Definition |
|---|---|
| Unconditional cash transfer | People are given money as a direct grant with no conditions or work requirements. There is no requirement to repay any money, and people are entitled to use the money however they wish |
| Conditional cash transfer | The agency puts conditions on how the cash is spent such as reconstructing a home. Alternatively, cash might be given after recipients have met a condition, such as enroling children in school or having them vaccinated. This type of conditionality is rare in humanitarian settings |
| Vouchers | A voucher is a paper, token or electronic card that can be exchanged for a set quantity or value of goods, denomination either as a cash value or as predetermined commodities or services. Vouchers are redeemable with preselected vendors or at “voucher fairs” set up by the implementing agency |
| Cash for work | Payment (in cash or vouchers) is provided as a wage for work, usually in public or community programmes |
Source: Heaslip et al. (2015)
Another consideration with banking is access to funds for the beneficiaries especially in conflict areas or remote areas. Mobile banking is an option in these situations which is where mobile ATMs can be driven to a location on a specified day. Beneficiaries use a PIN code or fingerprint recognition to access funds (Action Contre la Faim, 2007). Mobile banking needs to be facilitated by banks who assume the risks and responsibility of these operations and since banks are not HOs, their motivation is profit and this needs to be considered before implementing this type of delivery mechanism (Farrington and Slater, 2006). Where the banking structure is not a viable option as a delivery mechanism, direct cash transfers may be considered. This can be done by agency staff or it can be outsourced to money transfer agencies like Western Union who already have the expertise and sometimes the presence in the target area. Direct distribution can also be done by the government or NGOs or sometimes local traders can be sub-contracted as they are present and a recognised service provider in the area (Heaslip, 2013).
Vouchers are another mechanism for delivering relief; however, they are limited as they are usually item specific or valid for one supplier. Pre-paid cards are becoming more popular as they give greater choice to the beneficiary and can be programmed to be valid with more than one supplier which removes the risks associated with monopolies. Mobile phones are another delivery mechanism that is increasing in use due to the high percentage of mobile phone ownership in even the poorest countries. Concern Worldwide pioneered this relief transfer mechanism in a humanitarian context in a remote area of Kenya in early 2008. Funds were transferred to registered numbers which could then be exchanged for actual money or electronically transferred to another phone or used for phone credit through a system they pioneered, the M-PESA system, which does not require a bank account (Datta et al., 2008). This system needs a functioning telecommunication network and an agent who will exchange the digital credit for actual cash although the mobile phone can serve as a digital wallet with some traders accepting the digital credit as payment (Datta et al., 2008).
Table II summarises various reasons for cash-based interventions, while listing examples for them from the humanitarian context. In other words, CBRs are set out to revolutionise HSCs.
Examples of CBRs (selection of DG ECHO-funded projects)
| Type of intervention | Type of cash-based responses | Examples | Objective of intervention |
|---|---|---|---|
| Providing beneficiary with cash or vouchers as a direct grant with no conditions or work requirements | Unconditional cash transfer | UNHCR grants to Chechen refugees in Baku, Azerbaijan (primarily to cover a portion of rental expenses) Cash for host families (UNHCR Kosovo) Transport allowance for families returning to Liberia from Ivory Coast (UNHCR, IOM and NRC) | Avoid refugee camp dependency, sustainability of aid |
| Paying beneficiaries in cash for taking part in a public works programme | Cash for work | Palestine job creation programme (SC, Mercy Corps, UNRWA and others); Creation of jobs among traders (PU Palestine) Road clearance (ACF in Afghanistan) Road construction/rehab – DR Congo Water and sanitation projects Somalia | Empowerment of beneficiary, enhancing feeling of belonging to society during/after complex disaster to avoid continuous fitting, sustainability of aid |
| Paying beneficiaries in vouchers | Cash for work | Vouchers for work, Oxfam Mali and Niger | Empowerment of beneficiary, sustainability of aid |
| Providing a cash grant during training | Conditional cash transfer | Medair, Afghanistan: cash was provided to encourage trainees; the trainers were elderly women with craft-making skills which risked being lost to the community | Support gender equality, empowerment of beneficiary, secure cultural heritage |
| Paying beneficiaries to repair their own houses or rehabilitate farm land | Conditional cash transfer | ACTED Afghanistan ICRC Liberia (clearing of cash crop farm land for returnees) | Empowerment of beneficiary, sustainability of aid |
| Providing beneficiaries with cash on condition that they do something (attend school, plant seeds, demobilise) Destocking | Conditional cash transfer | UNHCR grant for Afghan families returning to Afghanistan from Pakistan and Iran (provision of cash at transit centres in country of return) Livestock purchase – CORDAID Ethiopia | Sustainability of aid, avoiding pro-longed refugee camp dependency |
| Providing beneficiaries with vouchers for a particular type of good (e.g. seeds) or a bundle of goods | Vouchers | Seed voucher fairs in DR Congo (AAA, PU) Seed/fertilizer/tools voucher schemes by FAO/CRS in LesothoSeed/tuber replication (e.g. Sweet Potato replication (WV Zimbabwe) Donkey vouchers (Oxfam Sudan) Water vouchers (UNICEF Madagascar – proposed for 2007)Vouchers for food (PU DR Congo, ICRC Palestine) Vouchers for fuel – DCA and French Red Cross, Lebanon Vouchers for seed (exchanged through market traders) – ICRC Liberia | Sustainability of aid, climate change adaptation, securing means of livelihood, empowerment of beneficiary |
Source: Heaslip et al. (2015)
3.1 Challenges of CBRs
CBRs are not a panacea and there are many challenges and concerns surrounding their use (Farrington and Slater, 2006; Bailey et al., 2008). Some of the fears cited are the potential for the anti-social use of cash, causing gender disadvantages or generational conflict (Bailey et al., 2008). The argument for gender disadvantage stems from the control that women typically have over food resources and the introduction of cash could disempower them (Bailey et al., 2008); however, it is difficult to see how this could not also happen with the sale of in-kind goods. Cash is fungible and flexible and can be used in a manner that is not beneficial or “wasted”, although these claims are rarely supported (Harvey and Bailey, 2011).
Safety is a major factor for consideration in cash transfers, as consideration has to be given to both the beneficiaries and those physically distributing the cash (Bailey et al., 2008). Cash is easier for a recipient to hide; by the same token, it is also easier for a thief to carry away (Harvey and Bailey, 2011). Using CBRs in conflict situations raises concerns not only for secure delivery but also the impact of the cash on the conflict and if it could make the conflict worse. Evidence suggests that methods for safe and secure delivery of cash exist even in conflict situations (Bailey et al., 2008); however, it is hard to quantify the impact of humanitarian cash projects on conflict situations. In some cases, CBRs may be considered a more secure alternative to in-kind aid. In Chechnya, CBRs were considered more appropriate than bulky in-kind aid due to the security situation in this conflict scenario. In this situation, there were pre-existing, secure financial systems such as banks and mobile banking was available through private/commercial companies (Danish Refugee Council, 2008). Some strategies to reduce the risk incurred by agency staff include outsourcing the distribution to a specialised agency or choosing an indirect method of delivery (Harvey and Bailey, 2011).
The supply chain for any type of aid always contains the potential risk of corruption and CBRs are no different. Cash-based projects may be more vulnerable to manipulation and corruption of targeting systems as they may be viewed as more attractive than in-kind aid (Bailey et al., 2008). Cash is often considered at greater risk of corruption because it is highly mobile and highly desirable but corruption risks exist for in-kind aid projects too. Corruption risks for in-kind aid are higher during the phases of procurement, warehousing and transport which are phases that do not apply to cash transfers in the same physical way (Ewins et al., 2006).
CBRs usually have close monitoring systems in place because cash-based systems are designed to make cash visible so there is little evidence of corruption associated with them (Harvey and Bailey, 2011). Another consideration in assessing if CBRs are appropriate is the risk of inflation in the price of goods that people need as a direct result of injecting cash into the local economy.
Inflation would increase vulnerability and devalue the buying power of the CBR. Inflation is a real concern for any cash-based intervention as it diminishes the real value of the grant but the CBR has the potential to actually cause inflation which not only damages the market but it also disadvantages recipients and non-recipients alike (Bailey et al., 2008). Agencies usually have fixed budgets and so adjusting the amount of the cash grant can be difficult which can impact on the project objectives if inflation erodes the value of the grant. Rising food prices can also be caused by market forces as happened in 2007-2008 food price crises which create similar problems for fixed cash grants (Wheeler and Devereux, 2010).
All of these delivery mechanisms require logistical planning which needs investment in the planning and preparation phases. Electronic payment schemes can also be expensive in the short term (Smith et al., 2011), which is usually the defining feature of emergency relief. Without a more comprehensive approach to CBRs, it will not be possible to reduce these costs through prearranged contracts used like a postponement mechanism or greater investments in networks that have the potential to be utilised in an emergency.
4. Research design
The methodological approach of grounded theory study was chosen for this inquiry because it allowed the researchers to generate a general explanation for the process of CBRs in emergency situations based on the views of a number of participants interviewed (Strauss and Corbin 1998). Humanitarian operations in emergency situations are fundamentally based on, and enabled by the networks that facilitate the connections and interactions vital to these operations. Therefore, this approach enabled the research team to “ground” the data collected in the “actions, interactions and social processes of people” (Creswell, 2013, p. 62).
This inquiry used the social constructivist approach advocated by Charmaz (2006) who views grounded theory as “a set of principles and practices rather than as prescriptions or packages” (p. 9). This approach enabled the inquiry to be conducted with flexible guidelines but crucially allows for theories or interpretative analysis to emerge about “the experience within embedded, hidden networks, situations, and relationships, and making visible hierarchies of power, communication and opportunity” (Creswell, 2013, p. 65). Grounded theory enabled the research team to inquire into and interpret from the perspective of the respondents of the study. This is an essential aspect of this project as CBR programmes are all unique and therefore the perceptions, thoughts and attitudes of the informants are crucial to gain an insight into CBR programmes.
Palestine was chosen as the case to examine since Palestine has received cash transfers since 2010 funded by the World Bank in collaboration with the European Union, in other words, this case can be considered one of the longest ongoing cash transfer programmes (CTPs, the first denomination used for CBRs) to date. These World Bank-funded CTPs had until May 2013 reached almost 100,000 households (WB 80247, 2013). What is more, this is in fact the only CTP on which also procurement plans were published, increasing the visibility in the supply chain. In spite of this being the case, there are only a few documents published with regards to this CTP as well, ruling out more complex analyses of the data. Thus, the case should only be regarded as an illustrative example of CTPs. Also, no prior frameworks exist for CTPs, hence we turned to the innovation literature as the basis of our analysis.
The partner for implementation of the programme is the Palestinian Ministry of Social Affairs. The background reasons for the implementation of the CTP were that in spite of high levels of donors funding, there was a lack of coordination and a non-effective poverty-targeting mechanism to promote the health and well-being of Palestinians. The CTP aimed at targeting the first and foremost the extremely poor households (WB 80247, 2013). According to CTP documents (WB AB7257, 2013), 26 per cent of Palestinians lived in poverty in the year 2011.
We undertook a literature review of a range of secondary sources and supplemented this with data from interviews with logisticians in HO including United Nations (UN) agencies. Upon having reviewed different methods of CBRs, we selected the rather well documented CBR of Palestine for in-depth analysis. We undertook a literature review of a range of secondary sources (see Table III). Secondary data are often used in the area of humanitarian logistics and supply chain management due to limited empirical access (see Banomyong et al., 2009, Altay and Ramirez, 2010; Matopoulos et al., 2014) – which is a prime reason for the use of archival and secondary data in supply chain management research (Rabinovich and Cheon, 2011). Our documentary analysis (see Table IV) enabled us to develop an understanding of the complex operating environment of HOs in humanitarian disasters. This facilitated a sensitization to the context, language and operations of the interviewees and permitted the development of appropriate interview protocols.
Data sources
| Document name | No. | Type of document |
|---|---|---|
| West Bank and Gaza – Cash transfer project: procurement plan | WB 81387 | Procurement plan |
| Project paper on a proposed additional gran in the amount of US$410.0 million to the Palestine liberation organisation for the benefit of the Palestinian authority for a west bank and Gaza cash transfer project | WB 77503 | Project paper |
| West Bank and Gaza – Additional Financing for the Cash Transfer Project : procurement plan | WB 80238 | Procurement plan |
| West Bank and Gaza – Cash Transfer Project : additional financing | WB AB7257 | Project information document |
| West Bank and Gaza – Cash Transfer Project : additional financing | WB AC6884 | Integrated safeguards data sheet |
| West Bank and Gaza – Additional Financing for the Cash Transfer Project : procurement plan | WB 81384 | Procurement plan |
| West Bank and Gaza – Cash Transfer Project : restructuring | WB RES10379 | Project paper |
Source: All documents are from the World Bank regarding CTPs in the West Bank and Gaza, and are available at: http://documents.worldbank.org/curated/en/docadvancesearch
Interview group
| Organisation | Code/pseudonym | Position held | Years involved in humanitarian logistics | Type of relief involvement | Personnel employed in organisation | Expenditure US$ |
|---|---|---|---|---|---|---|
| United Nations Organisation A | Interviewee A | Supply chain manager | 16 years | Over 75 countries Emergencies, livelihoods, food, education | 11,500 employees | 2.97 billion |
| United Nations Organisation B | Interviewee B | Procurement and logistics coordinator | 20 years | Over 125 countries Emergencies, livelihoods, legal, protection, education | 7,600 employees | 1.8 billion |
| United Nations Organisation C | Interviewee C | Supply chain manager | 25 years | Over 150 countries Emergencies, livelihoods, legal, protection, education | 10,800 employees | 2.6 billion |
| International Humanitarian Organisation A | Interviewee D | Supply chain manager | 11 years | Over 189 countries Emergencies, shelter, livelihoods, legal, health | 100,000,000 volunteers | 394.2 million |
| International Humanitarian Organisation B | Interviewee E | Logistics manager | 12 years | Over 20 countries Emergencies, livelihoods, legal, protection, education | 2,500 employees | 150.3 million |
| International Humanitarian Organisation C | Interviewee F | Logistics manager | 10 years | Over 15 countries Emergencies, health, livelihoods, education | 1,500 employees | 35.8 million |
| International Humanitarian Organisation D | Interviewee G | Supply chain manager | 8 years | Over 15 countries Emergencies, health, livelihoods, education | 2,500 employees | 60.3 million |
| International Humanitarian Organisation E | Interviewee H | Logistics manager | 8 years | Over 15 countries Emergencies, health, livelihoods, education | 1,200 employees | 30.8 million |
| International Humanitarian Organisation F | Interviewee I | Logistics manager | 5 years | Over 15 countries Emergencies, health, livelihoods, education | 1,400 employees | 36.2 million |
| Commercial Organisation A | Interviewee J | Supply Chain Manager | 15 years | Over 12 countries Emergencies, logistics service, air transport | 200 employees | 12 million |
| Commercial Organisation B | Interviewee K | Logistics consultant | 10 years | Over 10 countries Emergencies, logistics services | 15 employees | 2.5 million |
To gain further insights into CBRs we contacted logisticians in HOs involved in Palestine. In the end, semi-structured interviews were conducted with 11 logisticians in HOs. The interview participants represented a range of HOs in terms of the type of relief involvement, which included multi-country, food, water, shelter, education and health (see Table IV). Criteria for inclusion in the study were that participants had experience of cash-based interventions in Palestine; however, participants from the commercial sector were also sampled as their experience of cash interventions, particularly in delivery mechanisms, was broad and insightful. A second requirement was that participants have the capacity to provide a full and descriptive account of their experience, the ability to express them with ease. Respondents were selected by the means of stratified sampling, i.e. in a way as to cover organisations across different types of operational mandates. A further criterion for inclusion was that respondents had to have a minimum of five years of experience in HL, i.e. not just in logistics overall.
Further background information concerning the interviewees is not included in this paper as anonymity was a condition of involvement. The interviews covered a range of general issues relating to the organisation, including history, size and a description of the specific role of the manager. The interviews were followed up with informal discussions which provided additional context for our analysis and formed the basis for interview checking.
The interviews were approximately one hour in duration and were recorded and transcribed verbatim to enable subsequent inductive analysis. The Skype interviews were recorded using Skype recording software. There were some technical difficulties experienced with the online interviews but they had little effect on the interviews themselves. The participants proved to be very experienced and all held senior management appointments within the humanitarian community. The participants were all employed in a logistics/supply chain management function.
During the interview process, respondents were first asked to provide a full and descriptive account of their experiences as humanitarian logisticians. This facilitated a sensitisation to the context, language and operations of the interviewees and permitted the development of appropriate interview protocols. The main body of the interviews covered a range of general issues relating to the organisation, including its history, size and a description of the specific role of the manager, and they were followed up with informal discussions which provided additional context for our analysis and formed the basis for interview checking. The data from the interviews were analysed using the computer assisted qualitative data analysis software Atlas.ti, with the analysis following the approach of Roulston (2010, p. 12) which recommends the following criteria for coding qualitative data: “setting/context, definition of the situation, perspectives held by the subjects, participants’ ways of thinking about people and objects, processes, activities, events, strategies, relationships and social structure (of talk), narrative and methods (research procedures)”. To code the data, the first interview was loaded from the primary documents folder into the reading pane of Atlas.ti. The transcription was read through several times and handwritten notes were taken. A set of codes and categories was then defined and assigned to the text, reflecting where patterns, concepts and activity were re-occurring. The codes and categories were then linked to conceptual themes or “families” in Atlas.ti. The codes were abbreviated for ease of use and were then used as working template for the other transcripts. Codes, categories and themes were added or removed as the analysis progressed.
Presentation of findings by way of thematic portrayal may assist clarity and understanding of a complex whole by separate consideration of its parts (Creswell, 2013). While each theme is presented independently, its interrelatedness and associations with other themes are signalled. Each theme is supported with extracts from the data. Raw data convey immediate experience in a way that compact descriptions cannot (Charmaz, 2006). Theme titles are intended to reflect the core meaning of each theme.
5. Findings
The following discussion focuses on four key themes related to financial and material flows in HSCs: procedures and policy; knowledge and information management; systems and technology; and actors and agents. These themes emerged from interviews with participants.
5.1 Procedures and policy
One theme, which subsumes a number of related points, and is shared across all accounts of CBRs, is the need for robust procedures and policies. All participants from the humanitarian community as well as the commercial sector expressed the importance of implementing policy and strategic planning when designing and implementing CBRs. The focus for humanitarians was on implementing the objectives of the humanitarian programme in a general context rather than a set of procedures and policies specifically applicable to cash-based interventions. The data collected from humanitarian professionals suggested that cash-based aid programmes exist in the same space as in-kind aid programmes:
Other people just have cash in their strategy where they will just mention it or it is vague sort of stuff where they say that it is a key humanitarian tool in their programmes but no-one actually seems to have a policy that says, this is how we define cash, this is how we use cash, this is when you don’t use it, these are the preconditions that need to be in place, and this is how we will build our capacity around it if we are going to do it; I haven’t seen that happen yet
(Interviewee D).
This is an interesting concept as it may suggest that the supply chain for CBRs exists outside of the HO. Many of the humanitarian professionals that were interviewed stressed that CBRs and the policy for them was not unique and did not require separate operating procedures:
For us, cash transfers are a means of delivery. So it is tool or delivery mechanism rather than a programme so you would expect your field operatives as much as your programmers to be familiar and competent in that (cash transfers) as they would be in traditional in-kind aid
(Interviewee A).
This has implications for CBR policy and procedures, with particular consideration to supply chain strategies. From the data, they do not appear to have separate policies or procedures in the vast majority of HOs so the supply chain mechanisms ought to be the same. The data, however, do not indicate this. Many respondents did not see a need for supply chain or a major role for logisticians when dealing with cash. One logistician viewed his role in the cash supply chain as quite limited:
Preconditions and assessments of markets would be a programme role and outside of the scope of the supply chain but that is now relating to the needs of the beneficiary. I always think is a supply chain component here, which is the validation of the supply chain on the market
(Interviewee B).
Procedures and policy for cash-based interventions in humanitarian operations seem, from the data collected, to be either based on general operational guidelines or standard operating procedures or else they are produced by the programmers who “happen outside of the supply chain domain” (Interviewee H).
Supply chain management in emergency humanitarian situations involves the relationships between the actors that enable relief items (including cash) to get to the right place at the right time (Cozzolino, 2012). Preparedness in a cash-based HSC ought to then focus on establishing these relationships or networks. Although the chain is shorter, it can be more complex and the conditions and contexts are a crucial consideration when designing the cash-based programme. The data suggest that international HOs and UN agencies are using the same supply chain strategies that are used for in-kind goods; however, cash does not present the need for complex transportation, warehousing or customs clearance which is a major aspect of a logistician’s role. This may explain why it CBRs are described as a tool rather than a complex programme requiring a supply chain network and management of that network to deliver aid. Furthermore, the preparation of these networks and the establishment of the relationships required to facilitate alignment on the CBR supply chain appears to have been appropriated by programme planners, financial professional in aid agencies or legal departments in agencies. It could be argued that preparation and planning the strategic alignment of a cash-based supply chain belongs in the field of legal, financial or technical professionals; however, it may be worth considering that supply chain managers are best positioned to effectively coordinate these fields while ensuring that collaboration is driven by the humanitarian objectives of any given project.
The strategies and policies applied to supply chains in humanitarian operations are established and evolving; however, they are primarily focused on relief goods rather than cash. In this context, supply chain managers forge connections between disparate parts of supply chains which may contain different professional sectors. They attempt to align that chain so that everyone contained in it, from various sectors, geographical locations and professional functions, are all focused on achieving the same goal and are all communicating with each other to ensure the smooth flow of goods and services along that chain (Cozzolino, 2012). It may be possible to apply these same strategies to CBRs; however, there are limitations with CBRs to meet the immediate needs of a devastated population:
It only works in the event that the infrastructure is already in place in that area. It would take you eighteen months to put the infrastructure in place. If you have a mobile phone network and a viable financial institution that you want to bring together then it would take you about six months to put together a programme. You have to build partnerships and implement technology and you have to comply with regulation and obtain regulatory approval. Your role is to perhaps to align that value chain
(Interviewee I).
A professional in the commercial sector stated that supply chain strategies may address preparedness in a more comprehensive way, especially since money invested in preparation has the potential to save almost twice that in humanitarian emergency response spend:
I would not focus your money on the development to any great extent rather I would focus on what you actually do which is to help people but you need to get people with the knowledge and ability to build the interfaces to feed into or feed out of at either end. But having an understanding of the system so that they can quickly get it done and to be flexible enough to have a similar item that can be tweaked to fit into that system at short notice. That way you are not stuck to one particular method or delivery mechanism and you can use cash, vouchers or whatever and depending on the country, you will have different partners and different regulations
(Interviewee K).
5.2 Knowledge and information management
All respondents alluded to the importance of knowledge and information management; however, their focus was slightly different. The humanitarian sector tended to focus on the importance of knowledge management in terms of achieving their objectives of rendering assistance in an efficient and timely way. Therefore, they spoke about market forces and assessing markets:
We have to map out the capabilities of the market so that we can see that these small communities that receive huge refugee loads that is normally way bigger than the actual host community. You need to control this as if you go for a cash transfer that will do two things; the first is a doubling of prices and secondly the refugees become the most wanted people in the area because now the local population have to pay the same inflated prices as the refugees. You create hostilities in the host community. To manage and to validate the local market can sustain a cash programme is to me, a supply chain responsibility
(Interviewee C).
Respondents from the humanitarian sector usually stated that there was no real need for specialist knowledge in order to implement cash transfers. One humanitarian programmer stated that there was no such thing as core competencies for “cash people” and another humanitarian actor stated that they do not provide specific training for cash-based programmes as “people just pick it up along the way” (Interviewee G). This approach to CBRs by the humanitarian community could be demonstrating an adherence to supply chain strategies where partners are sought out who have core competencies in areas that humanitarians do not and it was a strategy echoed by the commercial sector:
Invariably it is better to understand that this may not be your core competency and you need partners to deliver those aspects of the service for you. It is very difficult for a company to adapt and it is best to identify where your strengths are and understand where your weaknesses are and look to partner with someone who has corresponding strengths where you have weakness
(Interviewee G).
While the humanitarian community can enlist partners to fill competency gaps in designing and implementing CBRs, it is important that they possess an awareness of the knowledge gaps that need to be filled and the role that external partners play in filling that gap. If the role of HSC mangers of CBRs is to facilitate the formation of a delivery network then knowing what you need to know and where to source the information is critical to that:
You do have points here where the supply chain managers need to be. You have the decision phase where the local market sustainability and the job of the supply chain manager is to know the local market and know what is available there and how sustainable is it. It is a clear factor in the decision making and if it is yes then we progress to “how?”. How advanced is it, or how will we do this; who are the likely providers if we are using mobile or debit cards or even vouchers. In all these steps I see that there are clear information paths where the supply chain needs to come in and deliver important information which must be a part of the decision making basis
(Interviewee F).
HSC managers need information to make decisions on CBRs but they may not have access to that information within their organisation and it may be easier to source it externally through commercial partners. This may be a reason that training on CBRs is not viewed as a need for humanitarians; however, while a supply chain manager may not need to know intricate details of technological innovation or be proficient in international finance, it is important that they possess a body of knowledge around these subjects as they have the ultimate responsibility for the CTPs:
One of the obvious areas in regard to training is being driven by regulation and relates to the pervading maxim “know your customer” and also money-laundering and financing of terrorism. Those regulations invariably place a responsibility on the people working in that space to provide adequate training to their staff as regulation does vary and it operates on a country by country basis
(Interviewee H).
Knowledge management in humanitarian operations is about creating a framework where continuous learning can take place between humanitarian operations (van Wassenhove, 2006). Preparedness plans ought to have some insight into disaster relief operations (Kovács and Spens, 2009) and CBR systems require a great deal of preparation and planning. Each operation is unique and tailored but that does not negate the need for a “structured knowledge system that allows information to be shared among people and for them to be transmitted from one occurrence to another” (Cozzolino, 2012, p. 28). While back-office management capabilities could potentially be sourced through partnerships with commercial companies, an integrative partnership would allow for cross-sector cooperation to the mutual benefit of both parties (Cozzolino, 2012). Knowledge management is an important element for CBRs as they become increasingly used in humanitarian operations; however, the flow of information from the operation to the donors is another important element that is critical to demonstrating cash-based initiatives as a viable programme response. Accountability is a major barrier for donors in CBR systems as it is hard to quantify exactly what cash is spent on in anything but the general terms (Bailey et al., 2008):
More and more companies have communicated the fact that when you send goods you have the transportation costs, logistics, the customs costs and at the end of the day your costs become more than what your goods are valued at. People are starting to educate their customers as to what these costs are and that cash can be so much smarter
(Interviewee J).
5.3 Systems and technology
Systems of delivery are tailored for each humanitarian emergency response. The supply chain must be created or appropriated from existing chains and networks. A CBR will vary in methodology depending on the context and the conditions of the field of operations. Similarly, on the commercial side, the strategies vary according to the mechanisms and markets for cash transfer companies and for mobile operators:
Well mobile strategies vary. The two network operators that I worked for had very different strategies towards mobile financial services so their ambition and strategies were very different and the financial space that they occupied was very different. You will see that in all markets; the role that different network operators want to play in that space varies. The aspirations and the business model of the network operator will play a large role also
(Interviewee K).
Technology has had a large impact on supply chain management in recent years and technology enables the global movement of cash in a quick and safe way. This is one of the reasons that cash transfers happen more often in an urban setting than a remote, rural one:
When it comes to more sophisticated systems like you have in Lebanon and Jordan, you have a society that is used to cards and there is high saturation of the technology to read cards at a retail level like in shops or whatever, then it is different because to make that contract is a supply chain or procurement task. That is now a commercial contract with an external entity to manage this based on whatever lists and cash transfers that come from the programme side each month. That is a little bit of a balancing act. It is easier to use the technology that is there with an urban population but it is harder to see the impact of cash in a city compared to a village. You can restrict it to certain shops which are more like a voucher system or use a combination of systems like mobile, debit cards or vouchers. The ultra-urban setting like Cairo, sometimes the solution is to give them a regular debit card which means that they can use it on any ATM or any shop and they have unlimited freedom there. How can you increase visibility in these situations? You can’t
(Interviewee E).
Technology can play a large role in programme systems and strategies but they still need to be managed by people and this point came out in the data collected from the commercial sector also:
Yes technology can play a huge role in that but it is not the only thing. You do need human intervention and there has to be a human part to it and you cannot solve it alone through technology. It is difficult to make these things strictly black and white. It is particularly relevant with regard to money laundering where there are huge shades of grey and you need human intervention to make those decisions and so yes technology can help you enormously in identifying potential instances of money laundering but at some point a human with skills and experience in that area has to get involved and make a decision
(Interviewee J).
Where technology has proved to be invaluable is in enabling connections between different sectors who have to come together to deliver CTPs. Technology also enables integration which could allow the establishment of a humanitarian cash transfer system which can be reused globally:
A lot of them are not concerned about the volume going in and out as long as it is viable and it makes sense for them to do the integration. Once they have done the integration, you are in. It does not cost them anything to leave you up and running and if you are going to be in and out of certain countries and not there continuously then you don’t want to spend that much money building that up because you want to use something that is current so establishing those relationships is important. The relationship part is absolutely vital, the understanding, being able to listen, and be flexible in regards to developing an easy method of integrating into their system and ensure you understand how their system works in terms of compliance so you don’t create any problems for them
(Interviewee F).
This strategy of integration could be viewed as a postponement mechanism typically used in supply chain management; however, there would be a cost and a considerable commitment from the aid agency in terms of financial, time and personnel resources and this investment has no guaranteed date of implementing the system so it is a risky strategy for an industry that is driven by the need to problem solve. There is no problem; the system is not broken so it may be challenging to justify the change of strategic direction in the preparation and planning phases. A supply chain strategy that could be more cost efficient and easier to justify could be to forge relationships and identifying networks that could potentially be used:
You do not have to worry so much about having the networks so much as having the relationships with the networks that have the cash availability to pay out or the networks that have the capability to receive cash (pay-in). If you can establish those relationships and don’t rely on one but can have multiple ones for diversification, then you could put less of your efforts into that side and utilise their railroad tracks of well-established, well-respected agencies that already have the network and then you build around it. In some case you could utilise what they already have in place because it is very expensive to start from scratch
(Interviewee I).
The data indicate that the humanitarian sector viewed cash transfers enabled by mobile phone as one of many delivery mechanism options whereas the commercial sector indicated that mobile phone transfers were a rapidly growing sector and almost all of them spent a great deal of time discussing this particular delivery mechanism and its influence on the future direction of their industry:
It is context specific but over the years mobile is picking up speed. Mobile, over time, is going to be amazing because of the convenience level. In a lot of countries you are required to have a bank account to do transfers for compliance purposes but a lot of people do not have bank accounts and the banks are not located in rural areas as it is costly for the bank or some just set up kiosks. They cannot use local merchants or business like money transfer companies because they do not comply with their banking licences for securing funds and security and compliance. If you can grow a network that can meet the cash flow needs and allows these on your network to redistribute the funds and where you can find networks where you can be in those corner places then you are going to be so much more convenient than banks. It would be amazing if you could replicate what the Western Unions of the world have done but on the mobile side
(Interviewee B).
The commercial cash transfer professional all indicated that mobile phones were a rapidly developing sector in their industry and all believed that this area would develop and grab a larger share of the market:
When it goes on the phone and people accept that their money is on their phone then people will make those transfers without needing to take the cash out and so therefore the agent commissions, the cost of transfers is gone and the phone people will need to look at how they can generate a rate of interest on their phones so they don’t use it all at once. That will then diverge and I will be able to pay your phone bill or I will advance you the money so you can use the phone for cash. How long will this all take? Well lets’ see, it is now 2014, so I would say about 2020 you will see 30% of all remittances on the phones. I think you will also see about 20% using alternative vehicles and only about 50% using cash to cash
(Interviewee C).
CBRs may allow for a simpler and less exploitative exchange of goods and services because the value of cash is an abstract one and not based on supply and demand. The financial considerations that have to be taken into account when deciding to introduce cash was another theme that emerged from the data. It is not possible to categorically state that one delivery option is preferable to another as each option must be assessed in the specific context that it will be applied to.
5.4 Actors and agents
The reluctance to see cash as anything other than a tool for delivering aid was echoed again and again in the humanitarian sector which was completely at odds with the data collected from the commercial sector that saw CBRs as an industry in its own right with sub-divisions, multiple strategies and numerous areas for potential growth. The humanitarian community has a different focus and objective to the commercial cash transfer sector which may somewhat explain the reluctance to embrace and develop CBRs as a sector in its own right. The knowledge, capacity and means to implement cash transfers exist outside of the humanitarian sector and it is sourced through partnerships when required. This suggests a high level of cooperation and collaboration between the humanitarian community and the commercial sector in CBRs:
You would rely on the financial institution to do the regulation part and you would rely on the mobile partners to do the infrastructure, network and systems for you. Your role is to perhaps to align that value chain unless you want to go down the road of investing in some core infrastructure yourself which can then be deployed into different environments but that would be no small investment. You will always need that presence on the ground. You cannot do it remotely. For these types of services, the core to implementation can be regulation in that it can be a big hurdle. You need to understand it and engage with it and trust is another huge one and logistics is another key area. Your distribution and the ideal environment is where every transaction is done by mobile phone and technology based and there is no cash but nowhere has got to that point. That network that converts technical money into physical money will still need to be there
(Interviewee A).
The data suggest a need to develop strategic partnerships with commercial companies, local aid agencies and extend its network of local suppliers of cash transfer agents:
One programmer or consultant cannot think of everything and if these things are shared than you have a better chance of getting the best ideas and solutions for the project. Working together as a team lets you feed off each other’s ideas and input their own professional perspective and experiences. This decreases expenses and increases the actual amount of money that goes to the good that they are trying to do. Cross sector collaboration is so important and it goes back to the alignment thing. If you try to establish relationships and establish a relationship outside of being, perhaps competitors, then you can get more done
(Interviewee K).
Cost and service may be the metrics that CBRs will be measured by and possibly constrained by in the future also. Coordination will become more complex as more layers are added HOs and finance and communication networks. The challenges are considerable as the humanitarian community needs to have global reach while maintaining a local presence with the ability to respond in a timely and effective fashion. It needs to have market position and power while also ensuring that it maintains flexibility and scalability in its supply chain. It needs to maintain a centralised planning function while allowing information management, service and contracts management to also happen at a regional level. Finally, there must be a focus on customer satisfaction and provision of predictable and systematic support on a consistent basis that is measurable.
6. Conclusions and further research
There is no straightforward answer regarding the question whether to use cash or food aid as a response tool to food insecurity. However, the argument that in areas where markets are functioning and there is adequate infrastructure and partners to support CBRs, despite some shortfalls, would work better than food aid and should, therefore, be prioritised. Use of CBRs during sudden-onset disasters such as floods might not be very effective, unless the response is long-term and markets have normalised.
Despite the fact that CBRs are not new, CBR as an emergency response is still relatively rare. The challenge for humanitarian agencies in the coming years is to overcome their fears surrounding CBRs, and to implement cash programmes where they are judged to be the most appropriate response. This will not only require a change in donor policies, but also a fundamental change in the skill set of humanitarian logisticians, who are used to identifying needs and providing commodities and thus to maintaining control over the provision of assistance. Apart from handling cash as a commodity, humanitarian logisticians need to be able to assess its applicability, set up different delivery mechanisms, while at the same time being able to deliver the traditional way if a CBR is not deemed feasible. But while CBR-related training exists and is provided, it addresses the supply chain as part of its market analysis (and confusingly even calls it “market chain”). Being able to quickly analyse local and regional supply chains in a disaster setting will thus be an essential further skill for CBR implementation. At the same time, the need for backup systems that are able to deliver also goods if needed further underlines the need for humanitarian logisticians in the future. More research is though needed on how “markets” and their supply chains should be analysed in various settings; from sudden-onset disasters to refugee camps; and how HSCs can be set up so they enable CBRs, in-kind deliveries, or a combination of both. While this study focused on a refugee camp setting – and arguably, on one of the longest-term ones among those – there are still major gaps in the research on CBRs in sudden-onset disasters.
A further consequence of CBRs is that agencies must hand over control of aspects of emergency programming to the affected communities themselves. The current mantra of Cash Learning Partnership and many donors is multi-sectoral, multi-purpose CBR. The very idea is that beneficiaries should be able to make their own decisions whether they prioritise food, health, sanitation or other current sectors – after all, cash is the most flexible aid, at least from the perspective of the beneficiary.
The remaining question is whether the benefits of CBRs outweigh their drawbacks. Further understanding is needed of these and of the boundaries within which CBRs functions effectively. Some boundaries were highlighted in this study: the availability of food items on the market, and the availability of technical and/or banking systems to distribute cash. Apart from the economic and technical limitations these posit, these points also alter the requirements of the abilities of HOs to assess food and financial markets in a region that has been affected by a disaster.
The impact of CBRs on humanitarian operations can though not be understated: they alter supply chain design, the very role of beneficiaries as well as HOs, and change the strategy of aid delivery from push to pull – though in many cases, one sector may still deliver items that are not available on the market; whereas another can use CBRs for theirs. Perhaps, the most important factor is the elimination of many logistical activities that needed to be performed by HOs: delivering cash diminishes the needs for lengthy procurement and assessment processes, pre-positioning, transportation and distribution. This bears the potential of significant reductions in costs for delivering humanitarian aid at the same time as it is an important move from aid to trade.
