UNCDF

LEARNING SERIES >> Collaborating to scale the responsible digitization of humanitarian payments

Camilo Tellez-Merchan, Malak Yusuf and Mia Ryan

Digital payments have revolutionized the humanitarian sector with enhanced accountability, accessibility, user choice and operational efficiencies.

 

Notably, cash and voucher assistance (CVA) doubled from US$2.8 billion in 2016 to US$5.6 billion in 2019. In this context, the Better Than Cash Alliance sees the urgent need and a powerful opportunity to further boost the outreach, efficiency, and efficacy of digital humanitarian payments through enhanced coordination and harmonization among UN agencies.

Building the foundation

Crises, conflicts and climate shocks are becoming more frequent and costly, leading to a growing demand for humanitarian transfers. Commitments were made to increase the use and coordination of cash-based programming in the 2016 Grand Bargain. In 2017, the UN Working Group on Common Treasury Services identified a need to increase members’ capacities, and invited the Better Than Cash Alliance to share good practices in payment digitization.

In 2018, research began on improving UN Collaboration, Coordination, and Harmonization Opportunities in humanitarian payments, and common strategies, policies and business models of the United Nations High Commissioner for Refugees (UNHCR), the United Nations Children’s Fund (UNICEF) and the World Food Programme (WFP) were assessed. These Alliance members stressed the challenges of ever-increasing humanitarian needs; growing donor pressure; UN reform; and new technology-enabled, direct assistance business models that bring new opportunities, but also new risks.

In parallel, the 2018 Statement from the Principals of OCHA, UNHCR, WFP, and UNICEF on Cash Assistance (UNCCS) marked a formal commitment to an inclusive common cash system. It was time to collaborate to maximize impact.

Recent advances

Collaboration on procurement and shared delivery mechanisms has improved, yet the COVID-19 pandemic has stretched capacity across all UN operations. The need for efficiency, transparency and coordination is greater than ever, and efforts are well underway.

Formal and informal collaboration mechanisms have been implemented to support organizations and complement country-led humanitarian transfer initiatives with consistent and institutionalized approaches. Harmonized transfer mechanisms were established in 25 countries since 2019, including the LOUISE team in Lebanon, the Common Cash Facility in Jordan, and the SCOPE card (WFP/UNICEF) in Somalia. Benefits for recipients are new or greater financial access and reduced travel time to obtain their humanitarian payments.

But challenges persist, arising from global and regional dynamics between agencies and donors; different organizational cultures and mandates; and the diversity of local contexts, actors and program objectives involved in operationalizing digital transfers. The Alliance continues to address these challenges by supporting members and country-led initiatives with, for example, an active program in Colombia, this year, digitizing humanitarian payments for almost 2 million Venezuelan migrants.

Lesson learned

Through Alliance engagements, three key lessons emerge for UN agencies working on the digitization of humanitarian payments.

1. Respect local contexts and engage local partners in the harmonization journey

Understand the context, feasibility and sustainability of digital payment initiatives in humanitarian settings. This is the crucial first step in identifying how agencies can better collaborate. There is a need to balance country-led approaches to humanitarian transfers with global harmonization efforts, and so country-level representatives need to be fully included in the journey toward better collaboration.

2. Invest in understanding commonalities and differences in organizational mandates

This works at two levels. Build relationships with agencies and see how digital payments link to their respective strategies. Approaches to humanitarian transfers differ in three main ways: maturity; emphasis on working through national, local systems; and approaches to financial aggregation and costing. UN agencies have a responsibility to navigate these differences and leverage each other’s expertise for the benefit of vulnerable populations. In parallel, to improve national-level implementation, develop relationships at the global level, such as with the Common Cash Statement Group, Cash Working Groups and international development organizations. For many Alliance members, effective coordination mechanisms are key success factors, ensuring that all stakeholders including governmental bodies are fully committed.

3. Put users at the center when digitizing humanitarian payments

Interoperability of data and systems is crucial to effective and flexible end-to-end delivery across agencies, and harmonization delivers solutions focused on recipient needs. For example, WFP’s Building Blocks has developed the largest blockchain network in the humanitarian sector that allows organizations to better coordinate assistance. Humanitarian organizations deposit money into a blockchain account from which recipients can redeem their allocations in a single transaction to meet immediate needs for food, shelter and healthcare. Building Blocks can now also integrate with UNHCR’s existing authentication technology that enables interoperability, reduces transaction fees and improves security and privacy.

Data protection

Such developments must also focus on the safeguarding of client data and the fair treatment of users, especially women, in humanitarian and emergency settings. In response to this, improving transparency and minimizing fraud requires that interoperable systems are paired with robust risk management approaches and protocols. Internal data protection practices have been developed, but no single, standardized consent model yet exists. However, the embedding of responsible practices as outlined in the UN Principles for Responsible Digital Payments is an important step to ensuring that the rights of individuals are not compromised as part of inter-agency and humanitarian-level information sharing.

The way forward

Long-term strategies and collaboration are needed to effectively serve the most vulnerable through digital payments. The Better Than Cash Alliance is committed to assisting members, partners, and the humanitarian community in this crucial and needed endeavor towards a more resilient future.

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