Cash and voucher assistance on the rise but progress is slowing

BySam Ursu

Cash and voucher assistance on the rise but progress is slowing

Cash and voucher assistance (CVA) programs are playing an increasingly important role in humanitarian assistance. In 2022, US$10 billion in development aid was in the form of CVA, accounting for 21% of international humanitarian assistance (IHA) against 20% in 2020, according to the third State of the World’s Cash report. As the number of people in need of humanitarian aid grew by about 30% in 2022, reaching 406.6 million people, the dynamics is highly valued. Yet, the paper published in November 2023 by the CALP (Choice & Dignity for People in Crisis) Network, pointed out that although the use of CVA has increased steadily since 2015, further progress is slowing.

Key statistics

Despite this significant 41% increase in CVA, its share in the total IHA went up by 4% only in 2022 compared to 2021. The report’s authors explained the disparity by a surge in international humanitarian assistance in 2022, which amounted to US$47 billion, up by 22% against 2021.

Of the total US$10 billion CVA in development aid, US$7.9 billion was meant for crisis-affected people, with the war-stricken Ukraine getting the lion’s share of cash. Other crisis-hit countries, such as Afghanistan and the Horn of Africa received CVA as well. Yet, such CVA beneficiaries as Ethiopia, Syria, Yemen, Myanmar, and Venezuela received only some 50% or even less of the funding requirements in 2022.

The report also highlighted that the use of cash increased relative to the use of vouchers as a proportion of total CVA from 72% to 81% between 2021 and 2022, after staying at 71-72% for three years.

Better regulation needed to enhance CVA effectiveness

CVA growth and effectiveness are influenced by a number of factors that differ from country to country and are largely influenced by context. Among the factors mentioned by respondents in a CALP survey, the report’s authors listed funding, donor preferences, organizational capacities, infrastructure, systems, inflation, liquidity, government policies, coordination, programming agility, and linkages with social protection and development programming.

Furthermore, issues such as large-scale CVA disbursements risk diluting that commitment as political biases or funding gaps could threaten the effectiveness of CVA.

At the same time, many CVA programs are not considered sufficiently flexible and innovative to serve communities in need. Lastly, the authors of the report are concerned that the use of CVA as humanitarian aid is still not supported by all decision-makers and so further “substantive” changes are required to underlying structures and mindsets to fully cement that in place.

Other issues revealed in the report include: some CVA programs involved “overly technical processes” for determining eligibility and disbursement, insufficient awareness that CVA can play an important role in climate change, and that the current framing of financial inclusion in CVA is too narrow as it relies nearly exclusively on traditional financial structures such as commercial banks when many would-be recipients find informal financial mechanisms better suited to their needs.

Prospects for CVA increase

The authors of the first issue of the State of the World’s Cash report estimated that CVA could account for 37-42% of all international humanitarian assistance “if used as the default modality wherever feasible and appropriate”. In 2022, a CALP study pointed out that the CVA potential could be even higher.

“If CVA were delivered wherever feasible and appropriate, it could account for at least 30% and up to 50% of global humanitarian assistance.”

The survey recommended three ways of increasing CVA, noting that given the surge in aid needs, all three should be put in place:

  1. Shifting the balance of existing activities towards more CVA where feasible and appropriate.
  2. Developing stronger links with cash-based social protection and development aid
  3. Increasing overall humanitarian financing (with CVA increasing as a proportion of this).

This year’s “State of the World’s Cash” report is the third in the series, with two earlier editions being published in 2018 and 2020. The organization now known as the CALP Network was founded in 2005 by several prominent NGOs but was rebranded in 2009 as “The Cash Learning Partnership” (CaLP,) with the explicit objective of increasing the scale of Cash and Voucher Assistance (CVA) by donor agencies and humanitarian organizations. In November 2021, the organization was rebranded as the Choice & Dignity for People in Crisis Network but retained the CALP acronym. The CALP Network’s self-described mission is to build CVA capacity within development organizations, primarily by providing training and e-learning.