What just happened to humanitarian cash transfers?

A simple maze, much like some participative processess, is usually rendered using an algorithm leaving the task of finding the entrance and exit with the longest solution path at the end of the process. A more complex maze with no dead ends is called a braid maze. Braid maze designers are aware of the difficulties and need to plan for the entrance and exit in advance due to their level of complexity. Learn more about mazes here.

Understanding the essential meaning of the newly proposed UN Common Cash System

Yesterday OCHA, UNHCR, WFP and UNICEF released a Statement expressing the intent to create a common cash system for their operations. If this actually materialises, it has incredible transfromative potential for the cash transfer sector and for the wider humanitarian ecosystem. The statement weaves together a myriad of political threads and it says as much in ink as it says in white spaces. Clarity is important when what is being communicated is difficult and transcendental. Experience has shown us that radical constructs where participation is reengineered don’t work, particularly when the issues at hand are so complex. Dissecting the different layers of meaning in this fait accompli Statement will result in many meetings that will cost money that could otherwise be transferred to people who need it. I’d like to offer back 5 points on the essential meaning of the UN statement in the hopes that it could save some of those resources.

Needless to say, these are my personal interpretations of the text. They are informal, frank and based on what I know. Inevitably, some of my conclusions might be incorrect or incomplete. I apologize in advance for any mistakes, platitudes or oversimplifications. If you know the right answer to something I misread, please use the comments section below to let me and others know.

1. This sounds groundbreaking while feeling very conservative.

The groundbreaking bits:

c) This common cash system is collaborative, inclusive and builds on a single transfer mechanism approach and joint cash programming — from needs assessment to monitoring.

e) This common cash system will also encompass joint cash feasibility assessment, coordinated targeting of beneficiaries, a single transfer mechanism, joint post-distribution monitoring and pursuing accountability to affected populations through agreed complaints and feedback mechanisms

At last some UN agencies seem to have agreed on what is worth competing on and what isn’t! There is no added value for the people receiving the money- or the agency delivering it- in conducting any of the activities mentioned in e). No one likes duplication that doesn’t add value. Centralising this functions to increase efficiency makes total sense.

There is in fact value in differentiation in program design as that is where the specific mandate and skill set of different agencies matter. It is in this differentiation where agencies can be held accountable to donors for how funds are managed. This used to be the UN’s argument against the ECHO single agency model back in 2017. Apparently not anymore, program design is also going to be mainstreamed according to c).

This is in equal parts exciting and terrifying. The exciting part is that it could open the doors to the real application of unrestricted cash (multipurpose cash) to cover a variety of needs with the beneficiary making real choices. The terrifying part is that the single mechanism also includes monitoring. What this means is that a centrally owned and managed system will decide where it can do cash, design it and then monitor its own performance. This common cash system idea is starting to look less revolutionary as it removes independent oversight.

It also leaves me wondering. From the funding side: Can donors now expect a single grant application from the common cash system? Will it be a pool funding mechanism from which UN agencies are funded- like a CERF for cash? What implications does this have for their business models?

The conservative bits:

With this in mind, UNHCR, UNICEF and WFP, as operational agencies delivering cash programmes alongside other forms of assistance, and OCHA …

Because they can maybe try to work together, but they will never agree to be the same. The fact that OCHA is not operational has been a sticking point in cash coordination discussions for a long time. How will this unreconcilable difference affect the governance of the system?

d) Based on data protection principles, operational agencies will harmonize their data management approach through interoperable data systems and data sharing agreements…

Avoiding duplication and ensuring interoperability is very positive, while incredibly complex to achieve in reality. In fact, this is exactly what the 15 NGOs who have been working in setting up a Collective Cash Delivery (CCD) Platform have been doing for the past two years. They have operated under the same principles as the proposed Common Cash System and have also opened the possibility of collaboration with other cash actors. Last time I checked, they were still looking for funding despite having a fully developed technical proposal. Who will fund the development of the UN common cash system? What will happen to the NGO equivalent that has already been developed?

2. Cash is now part of the humanitarian reform process.

…cash-based assistance as one of the most significant reforms in humanitarian assistance in recent years…

Interesting choice of words here. Cash has been described as an innovation, as a tool, as a catalyser, and infamously as a default method (from the 2016 WHS). This is the first time I see it described as a ‘reform’. Don’t get me wrong- this represents the reality of it and is a game-changer. Now that cash is being framed as a humanitarian reform what changes in terms of funding, ownership and control? For example, will CaLP now be engaged in humanitarian reform?

3. What is good for the agency is NOT always good for the people.

We recognize the need to improve complementarities between our mutual efforts in the field, create synergies and ensure that affected populations receive the best assistance and services in a cost-effective manner.

This sentence is a list describing different things that are important. Unfortunately the authors didn’t take this opportunity to shift points of view and truly put people at the center. The main driver for complementarities and synergies between UN agencies should be to ensure people receive the best assistance. Cost efficiency for the agency is important, yet the real core should be serving people better and this appears as another item on a list qualified by cost efficiency.

b) Our priority is for cash transfers to be delivered to vulnerable populations in ways that are simple, safe and easily accessible for the recipient and maximize the value of the assistance they receive. Each person identified for cash support should be able to access humanitarian assistance from operational agencies through a common cash system.

DFID has been funding UX research on cash. The first sentence sounds like a nudge to that. Quite positive to make user driven cash design a priority for this new system. Not so positive to imply that a UN common cash system would automatically achieve that. The simplicity and ease of access for people comes mainly from the approaches, payment methods and accompaniment put in place. Think of it this way: in places with high levels of vulnerability and financial illiteracy, the problem for people to easily access the money is not having 5 different cards from 5 different agencies. The problem is not knowing how to use a PIN number. In fact, having 5 different cards could even help as a mental accounting tool to designate expenditure for different needs (this card with UNICEF logo for school costs, this card with WFP’s logo for food, etc). It is the assumption that what is good for the agency is good for people that is a problem for me here.

4. What is good for the UN is NOT always good for the cash ecosystem.

c) This common cash system is collaborative, inclusive and builds on a single transfer mechanism approach and joint cash programming — from needs assessment to monitoring. It can be deployed in most settings, and is based on the identification of ‘shared business needs’ across agencies. The system will be ‘collectively owned, jointly governed and have clear and predictable roles, responsibilities and arrangements and will be available to multiple partners (including partners outside the UN). The governance of the system needs to give everyone confidence that costs are covered but no surplus or “profit” is generated.

This is how I read this point:

The system is based on the shared business needs of the UN agencies involved, understood as a compromise on the different goals and objectives of the different agencies. Not only ‘mandates’, but strategic direction as in the things each agency has to achieve to operate, stay afloat and deliver successfully on its mission.

Collectively owned’ — Everyone shares the costs and profits (that will come from defining the costs).

Jointly governed’ — Everyone shares in decision making. Not sure how feasible it is to put on an equal footing agencies with different operating capacities and radically different resourcing levels. This equates to UNICEF and WFP/UNHCR having equitable decision making power with OCHA.

Predictable roles’ — Coordination is more a function than a structure. How does this duplicate or replace current cash coordination efforts? This seems to contradict the previous IASC strategic note on cash coordination regarding the value of local actors and contextualisation of coordination systems (see also WHS localization work stream).

Available to multiple partners’ — Can partners also be owners? Will partners take part in decision making or have predictable roles? How about other UN actors like UN WOMEN, UNWRA or FAO- is it different for them? Needless to say this is dangerous for NGOs who currently deliver the last mile of a large part of UN cash programming. Lots of learning from the LOUISE process in Lebanon could apply here.

A complex system that runs at cost only. I guess it depends how they define ‘cost’.

d) …with the objective to move towards a common data management and tracking system based on common beneficiary lists and easy access to beneficiary identification, thereby avoiding duplication

NGOs and others operating outside of this system will struggle even more to have access to data. If you can’t access data on people, you can’t serve them. When did competition stop being healthy? Governments tend to regulate monopolies because they can affect customers. Monopolies can put prices higher than in competitive markets, monopoly agencies have little incentive to offer good quality services and they tend to be in a position where they use their dominant power to push small suppliers into a corner with unfair conditions- or just squeeze them out of the market.

5. We know it is coming, we just don’t know when or what it actually looks like.

Common cash system’ sounds like a mix between the UNHCR Common Cash Facility and the NGO Common Cash Delivery Platform (now Collective Cash Delivery Platform). The use of the word common is interesting. Common can refer to a single thing or service that serves everyone. It almost excludes the possibility of the agency accessing other similar things or services coming perhaps from the private sector. Is that what was meant?

It is a ‘system’ not a platform or a facility. A system is a set of things working together as parts of a mechanism or a network. Which could represent the merger of Scope, Building Blocks, proGres, RAIS, etc. Check out this diagram for PRIMES. I don’t want to imagine the interoperability negotiations to make this happen.

In this new world of a common cash system having common procurement guidelines (UNHCR’s CCF) or a service agencies can contract (WFP’s One Card) isn’t the way to go anymore. Or is it?

We look forward to taking this discussion forward within the wider humanitarian system in the coming months and in line with action plan that has been developed.

Imagine how different yesterday would have been for thousands of humanitarian experts if the action plan had been published as an annex to this Statement. The closing statement above leaves the future in a shroud of mystery. The external reader is left wanting, already feeling excluded by a pre-cooked action plan that resulted from closed discussions.

While the call for further engagement is welcomed, it is only made on the assumption that the idea of the common cash system will not be debated. Actors will be invited to discuss in line with the action plan. The cash sector is in need of better coordination of all traditional and non-traditional parts of the ecosystem, not just a few. Constructing a common cash system and then reengineering participation will not work, particularly when the issues at hand are so complex. Going forward without inclusive discussion of the concept of the System itself will likely result in disruption instead of the true transfromation we owe to the people we aim to serve.