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Cash transfers on the rise as an emergency response in the Pacific


Disaster response in the Pacific has usually focused on providing short-term relief

Despite increasing evidence of their value, the use of cash transfers in emergencies is still limited. ODI’s Paul Harvey estimated in a recent article in the Guardian, as well as a guest piece on Duncan Green’s ‘From Poverty to Power’ blog, that only 6% of humanitarian aid is currently provided in the form of cash transfers. So far there seem to be more appetite for writing about cash transfers in emergencies than actually doing it.

However, that could be changing: In the wake of the devastating cyclone Winston that hit Fiji at the end of February about a quarter of the US$39 million flash appeal is to be delivered in the form of cash transfers. This is mainly as a result of the World Food Programme using cash transfers for all of their food security assistance, amounting to US$ 10 million in aid to an expected 175,000 beneficiaries.

Pacific Island countries are among the most exposed to natural disasters

Many Pacific Island countries are extremely exposed to risks of natural hazards. The latest edition of the World Bank’s World Risk Index ranks Vanuatu and Tonga as the two countries most at risk worldwide.

Furthermore, the Solomon Islands, Papua New Guinea and Fiji are all among the fifteen most at risk countries globally. And in terms of the economic impact of annual disasters Papua New Guinea and Fiji are the most seriously affected in the region.

Disaster response in the Pacific has usually focused on providing short-term relief in the form of in-kind commodities such as food, relief kits, shelter etc sometimes followed by limited-scale recovery efforts such as housing reconstruction and small shelter solutions. Responses by humanitarian and development actors involving cash transfers have so far been limited to a few Cash for Work (CFW) programmes of limited scope (see for example here, here and here).

Why have cash transfers not been used more often?

Pacific Island countries have been subject to natural disasters for centuries and along the way have developed their own traditional coping strategies.

Research by the World Bank found that the idea that the community, clan or family would support those in need meant that, at least until recently, most countries in the region considered poverty, and therefore also the notion of government cash transfers, as a foreign concept. There is a view that Pacific Islanders enjoy ‘subsistence affluence’, meaning that cash is of less importance in rural areas.

The context in most Pacific Island countries is also extremely challenging for the implementation of cash transfers, whether as social security or in emergencies. Barriers include insufficient human resources and the weak institutional capacity of governments, an absence of cash-based local economies in many remote island locations, a lack of access to financial services outside the main urban areas, as well as geographic isolation and demographic dispersion of the small populations of many countries.

Photo: Mereseini Senikau (PFIP)/ UNCDF
Photo: Mereseini Senikau (PFIP)/ UNCDF

However, cash transfers are increasingly recognised as an important tool

As Pacific Island countries’ economies inevitably monetize, access to cash in the wake of disasters becomes more important as communities simply do not have the resources to be able to recover from natural disasters without outside assistance.

In the Pacific, traditional social protection mechanisms are most effective when addressing shocks that hit individual households, such as illness or funeral expenses, but are weak in the face of extensive poverty or shocks like natural disasters which affect everybody in an area.

As globalisation, systemic shocks and urbanisation erode traditional safety nets, more governments in the Pacific are recognising that a significant proportion of their population may now face difficulties meeting basic needs.

At the same time, new technologies might make payments more feasible. For example, following cyclone Ian in 2014, a UNDP Cash for Work programme in Tonga offered mobile money services, mobile phones and SIM cards with access to a network of agents through the Tonga Development Bank and Digicel Flagship Stores to provide payments. In Fiji, the government is now using an electronic payment system to deliver benefits under social security programmes.

Potential synergies between emergency cash transfers and social protection programmes

Pacific Island Countries have been expanding social security cash transfer programmes in recent years, and there could be opportunities to build more on these programmes in the future for cash transfers in emergencies.

In general, it is expected that countries which are already successfully implementing social security cash transfer programmes are more likely to support the use of cash in emergencies.

KiribatiSix Pacific Island countries now provide citizens with access to tax-financed cash transfer programmes. The most common type of cash transfers are tax-financed pensions, including non-contributory universal social pensions in the Cook Islands, Kiribai, Nauru, Niue, Samoa, Tonga and Tuvalu (for more on social security in the Pacific, see for example this paper here by DFAT).

The Poverty Benefit Scheme (PBS) in Fiji, which replaced the Family Assistance Program (FAP) in 2013, is the largest cash transfer programme in the region, aiming to reach the poorest ten percent of the country’s population, although, unlike the universal pensions, it does suffer from significant targeting inaccuracies. Fiji also have a Care and Protection Allowance programme, which assists families, guardians and residential institutions that provide support to orphans and adopted children.

There is little evidence that formal social security mechanisms, to date, have been used in the Pacific either for disaster response or explicitly for reducing risks arising from climatic and natural hazards. One means of using existing social security schemes in the Pacific, when a crisis hits, would be to increase the payments to beneficiaries for a short period. The more extensive the basic social security systems, the more people that could be reached in the future, when disasters strike.

In those countries without effective social security schemes, cash transfers in emergencies could potentially provide a starting point for developing or expanding broader, permanent national social security systems aimed at strengthening resilience to future disasters in the Pacific.

There is a growing literature linking social security with concepts such as resilience, disaster risk reduction and climate change adaptation – including the IDS’ Adaptive Social Protection approach and the World Bank’s Climate-Responsive Social Protection (CRSP) model. A World Bank report from last year looked specifically at how to make social protection in Fiji more responsive to climate change and natural disasters.

However, building responsive social security systems is challenging in countries where social security agencies have relatively low capacity and have not yet developed technologies and systems that allow programmes to scale up. Having the relevant information available in electronic Management Information Systems (MIS), is also essential for scaling up social security programmes as a response to emergencies.

In order to be able to quickly adjust benefits and payment systems based on the post-disaster context and needs, it is important to plan and enhance capacity and coordination before disaster hits. For this, investment in development of contingency budgets and plans, emergency response teams, Management Information Systems as well as establishment of partnerships with the private sector and civil society are vital.