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3 Ways Digital Solutions Improve Cash and Voucher Assistance Programs

By Guest Writer on February 22, 2024

cash voucher assistance

Humanitarian assistance has greatly changed over the past two decades, bringing forth new mechanisms to provide assistance to persons affected by crises.

Not only has the rise of cash and voucher assistance (CVA) allowed humanitarian relief organizations to respond to crises more efficiently through market-based approaches, but the digitalization of humanitarian programmes has impacted the speed and scale which operations are carried out.

At the intersection of these two advancements is the use of digital technologies for CVA, bringing forth numerous opportunities to improve the effectiveness of humanitarian responses at scale. This is the subject of Digital technologies for cash and voucher assistance in disasters.

1. CVA Time-saving benefits

In humanitarian settings, the timely delivery of goods and services is an important measure of effectiveness. Time savings is often cited as a benefit of CVA compared with in-kind assistance, but the degree to which time is saved depends on the type of technology used within each programme stage.

Time savings were noted most often in the value transfer and tracking processes. Blockchain-based platforms, smart cards, e-vouchers, and mobile money all showed positive impacts on delivery time by enabling cash delivery to beneficiaries through e-transfers, which in turn allowed local purchasing and eased last-mile physical distribution challenges. The time needed for reconciliation and verification of payments was shortened using digital accounting tools and batch payment processing.

In general, digital identification and registration processes are less resource intensive compared to paper-based registration processes, but larger benefits of having a digital identification platform appeared during the monitoring processes.

Data management platforms (e.g., U-Reports, RedRose) allowed humanitarians to access real-time data, saving time to collect, process, and disseminate information. U-Reports were used alongside mobile money, which could gather feedback from beneficiaries and share instantaneously for continuous programme improvement. RedRose provides delivery solutions and manages beneficiary data through a centralized online platform. It has full functionality when offline and is synchronized when reconnected to the network.

The system was integrated with the mobile payment system to ease the payment process through automated distribution and reconciliation processes. These time-saving measures not only reduce the need for additional resources but improve programme effectiveness as well.

2. CVA Cost saving benefits

Digitization of CVA delivery processes can reduce costs for both humanitarian actors and beneficiaries, including banking and transfer fees, human resources needed for processing, and delivery costs of cash distributions.

Within existing CVA programmes, humanitarian relief organizations are recognizing that switching from physical cash distributions to digital payment systems can reduce transfer costs and improve cost efficiency for the programme. This was also shown to lower the costs of monitoring and evaluation, as digital payments took less time to reconcile. Other cases have found that mobile money further reduces the costs borne by beneficiaries, as they do not need to rely on ATMs for money, reducing transportation costs and withdrawal/transaction fees.

Pilot programmes testing new technologies demonstrate further promise. In Jordan, UN Women and WFP utilized blockchain technology for distribution and noted a 98% reduction in costs by eliminating the need for financial service providers (FSPs). While the transfer costs were not significantly reduced compared to other mechanisms, the platform reduced indirect and overhead costs with its user-friendly interface and automated features.

Thus far, such pilot projects have only been conducted with small, controlled cohorts, which are inclusive of setup costs. While it is assumed that delivering at larger scales using digital technologies would improve cost-efficiency further by offsetting the implementation and set-up costs, additional testing is needed to measure the true impact on costs.

3. CVA Quality improvement benefits

While time savings and cost reductions may be achieved internally through the implementing organization, quality measures often require cooperation with external actors, such as FSPs and beneficiaries, to be realized. Quality is relevant for all stages of CVA programmes and is linked with various desired outcomes including beneficiary security, access, financial inclusion, technology reliability, functionality, and usability.

Proper use of technology can drive quality programming for both beneficiaries and organizations. In terms of security, digital IDs reduce the risk of fraud and identity theft. These measures are frequently used in programmes that use mobile money and e-vouchers to keep beneficiary data protected and encrypted. Blockchain-based platforms and biometric identification are also being piloted to test service quality.

Both add another layer of protection and transparency to the handling and storage of beneficiary data and reduce reliance on physical identifiers such as ID cards.

The aspects of functionality and reliability were also improved through digitalization. For instance, blockchain-based platforms provided value by tracking assets without the need for a central authority and could be integrated with other platforms, such as biometric identification.

Heavily centralized governance with strict controls and standardized boundary resources are not reliable settings for non-profit platforms; balanced structures based on trust are more effective. Blockchain-based platforms enable humanitarians to monitor individual transactions among aid recipients, thus increasing supply chain visibility. At the same time, it reduces transaction costs, data mismanagement risks, fraud, and corruption.

Additionally, in countries that require a bank account alongside a mobile money account, refugees or others who lack proper identification may be left out. However, using biometric data in the registration process can help fulfill KYC requirements and expedite the registration and distribution processes. Furthermore, digital IDs alongside data management platforms allow increased scalability and easier management of beneficiary accounts, giving more flexibility and control over CVA programmes.

Both humanitarian relief organizations and financial service providers seek to improve quality measures. Platforms such as mobile money are being redesigned by FSPs to enhance usability and options for access, while other programmes, such as e-vouchers utilize graphical interfaces to reduce the risk of excluding illiterate persons.

As beneficiaries grow accustomed to technology-based platforms, there may be an increase in trust not only in the service but also in the service provider. All initiatives increase financial inclusion among vulnerable populations – a desired outcome for many CVA programmes.

An edited synopsis of Digital technologies for cash and voucher assistance in disasters by Amin Maghsoudi, Russell Harpring, Wojciech D. Piotrowicz, Damian Kedziora

Filed Under: Relief, Reports
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2 Comments to “3 Ways Digital Solutions Improve Cash and Voucher Assistance Programs”

  1. Jeremi says:

    If you’re exploring open-source options for enhancing social protection efforts, you might want to look into OpenSPP ( https://openspp.org ), a project I’m leading. OpenSPP is designed to make beneficiary management more efficient, whether they involve cash, vouchers, or in-kind support. It’s already made a significant impact, reaching over 20 millions of beneficiaries. Newlogic also provides it as a service to make it easier to use and Famoco provide a close loop payment solution based on it.

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