Since 2014, cash and voucher assistance (CVA) has played an important role in the management of humanitarian crises. Worldwide, CVA has grown to constitute 10 percent of all humanitarian funding. In Jordan and Lebanon, where much of the humanitarian need stems from the Syrian civil war, CVA programming is highly digitized. However, the CVA delivered to Syrian refugees and vulnerable members of the host communities in Jordan and Lebanon has not provided a pathway to financial inclusion because the funds have been paid into pooled accounts controlled by aid agencies rather than accounts controlled by individuals.
The authors posit that CVA should be used to encourage financial inclusion because inclusion can increase resilience. If there is a preexisting enabling environment, humanitarian agencies and governments can transfer CVA in the form of digital payments to recipients’ personal financial accounts at banks and nonbank e-money providers. Beneficiaries who open financial accounts to receive CVA can use these accounts to build a transaction history that can lead to access to a wider range of financial services such as savings, insurance and credit. Consequently, financial inclusion triggered by CVA transfers can contribute to the creation of economic resilience. Meanwhile, financial services providers tap into a new customer base.
To enact this vision, the authors state that: 1) financial inclusion must be a priority for donors and governments; 2) an enabling regulatory environment for digital financial inclusion and the necessary physical infrastructure must be in place; and 3) financial services providers must see the business case for participating in the transfers.
This is a summary of a paper by Nadine Chehade, Peter McConaghy and Chrissy Martin Meier; published by CGAP (Consultative Group to Assist the Poor); April 2020; 54 pages; available at
https://www.cgap.org/sites/default/files/publications/2020_03_Working_Paper_Cash_Transfers.pdf
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CGAP homepage
https://www.cgap.org/
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