Podcast Summary: Transforming Humanitarian Aid with Cash Transfers

Podcast: The CGD Podcast
Host: Rajesh Merchandani, Center for Global Development
Guests:

• Degan Ali (Executive Director, Adeso)
• Owen Barder (Senior Fellow, CGD, Panel Chair)
  Date: September 15, 2015
  Episode Theme: How cash transfers can make humanitarian aid more efficient, effective, and respectful of recipients’ needs.

Episode Overview

In this episode, Rajesh Merchandani leads a discussion with Degan Ali and Owen Barder on the urgent need for reforming humanitarian aid, focusing on giving cash directly to refugees and those affected by crises instead of traditional in-kind aid. The episode examines the evidence for cash transfers, their advantages, the resistance they face, and the transformative potential they hold for the broader aid system.

Key Discussion Points & Insights

1. Why Cash Transfers?

• Cash is more efficient, accountable, and empowering than traditional aid (food, goods).
• Owen Barder: "People themselves know what they need. If you give people food and what they really need is medicine ... if you give them cash, they can choose that." [01:31]
• Evidence shows overheads are lower, it supports local economies, and recipients retain dignity and choice.

2. Cash Transfers in Practice – Adeso’s Experience

• Adeso has implemented cash transfers in Somalia since 2002, showing positive results even during severe droughts.
• Degan Ali: "We understood the local context ... when we did our first cash transfer program in 2003, in less than 24 hours, the shopkeepers were reopening." [02:34]
• Injecting cash revived local markets deemed 'collapsed' by outsiders.
• Over a decade, external evaluations found no evidence of misuse (e.g., spending on arms or stimulants) or negative social outcomes.
• Degan Ali: "There has been no evidence that antisocial behavior, that it resulted in conflict, that it resulted in beatings against women, all these westernized perceptions ... none of that happened." [05:26]

3. Addressing Critics & Potential Problems

• Critics fear cash will be wasted or markets won’t work, especially post-disaster.
• Owen Barder: "We shouldn't assume that markets won't work ... if you give people money, markets and entrepreneurs will respond pretty quickly." [06:13]
• Some cases require traditional aid, but cash should be the default presumption for humanitarian support, not the exception.

4. Security & Delivery of Cash

• Cash already moves globally via remittance networks; humanitarian actors can piggyback on this (as Adeso did in Somalia).
• Shift toward mobile payments and digital cards is reducing risks.
• Degan Ali: "Now we're using mobile payments ... through these ATM-like cards. And that's the way of the future." [09:09]
• Owen Barder: “There are private sector companies ... who have the expertise to move money securely. It makes much more sense for the humanitarian system to work with those private sector actors.” [10:13]

5. Transforming and Reforming the Humanitarian System

• Widespread use of cash could fundamentally restructure humanitarian aid, eliminating inefficient silos (food, water, shelter agencies).
• Degan Ali: "Let's use that opportunity to reform the current structure ... giving a holistic package ... either on the phone or a card." [11:50]
• Aid agencies are likely to resist, as current models are product-oriented; cash gives choice and control to recipients.
• Owen Barder: “It shouldn't be revolutionary to organize this public service around people rather than stuff.” [13:17]

6. Political & Institutional Challenges

• Significant resistance is predicted from aid agencies and industries with vested interests in the present model (shipping, agriculture, etc.).
• Cost efficiency is a powerful argument for reform and for gaining public support.
• Degan Ali: "If you can convince the average taxpayer that ... that dollar will actually assist maybe two people instead of the current way ... that's a very powerful argument." [14:13]

7. The Role of Donors and Next Steps

• Change must come from donors (governments, agencies) insisting and funding cash-transfer models.
• Movement is seen from DFID, the EU, and some governments, but a major acceleration is needed.
• Owen Barder: "If we don't deliberately and consciously change gear, then the growth of the use of cash transfers will be too slow and too limited." [18:19]

Notable Quotes and Memorable Moments

• Degan Ali: “For us it just made sense. It was the right thing to do. We understood the local context.” [02:34]
• Owen Barder: “The main reason is that people themselves know what they need ... most of all, it gives people the dignity and the choice to decide for themselves what they need.” [01:31]
• Degan Ali, on reform: "I have this vision ... where someone in Kenya or Somalia or in Nepal after an earthquake immediately gets either a payment through their phone or gets a biometric card where all their needs are topped up every single month ..." [11:50]
• Owen Barder: “We should be organizing around people. And the best way to do that is to give people cash and enable them to choose.” [13:17]
• Degan Ali, final thought: "I think it's just about doing business differently and doing it better ... we need to realize that cash can have so many ramifications both in cost in reforming the system ..." [19:26]
• Owen Barder: “Let’s not paint the international institutions as resisting change ... it’s really a question of how the system as a whole changes and shifts from the equilibrium it’s in being organized around things, to the equilibrium it needs to be in, which is to be organized around people.” [16:12]

Important Timestamps

| Timestamp | Segment/Topic | |-----------|---------------------------------------------------------------------| | 01:31 | Why cash is better: dignity, efficiency, local economy | | 02:34 | Early cash transfers in Somalia; reviving local markets | | 05:26 | Evidence: No misuse, antisocial behavior, or negative effects found | | 06:13 | When cash might not work and when it should | | 08:26 | Security risks and mobile/digital cash delivery | | 10:13 | Role of private sector in secure delivery | | 11:39 | Transforming the humanitarian sector | | 14:13 | Political case: efficiency, cost, lobbying | | 18:19 | Donor leadership needed for systemic change | | 19:26 | Final call for courage and better business in aid |

Conclusion

This episode presents a compelling, evidence-backed argument for transforming humanitarian aid through cash transfers. The guests challenge traditional, paternalistic approaches, describe how cash builds dignity and supports local economies, and show that recipients use funds wisely. They call for donors and the wider aid system to embrace cash as the default, not the exception, and to seize the current global moment—especially with the forthcoming World Humanitarian Summit—to institute reforms for efficiency and effectiveness.