IOM IRAQ CASH FEASIBILITY ASSESSMENT JANUARY 2019 TABLE OF CONTENTS

Acronyms 4

1. Purpose and Objective 5

2. Cash In The Global Context 6

The opinions expressed in the report are those of the authors and do not necessarily reflect the views of the 3. Iraq Context 7 International Organization for Migration (IOM). The designations employed and the presentation of material throughout the report do not imply the expression of any opinion whatsoever on the part of IOM concerning the legal status of any country, territory, city or area, or of its authorities, or concerning its frontiers or boundaries. 4. Humanitarian Cash-Based Interventions In Iraq 9 IOM is committed to the principle that humane and orderly migration benefits migrants and society. As an intergovernmental organization, IOM acts with its partners in the international community to: assist in meeting the operational challenges of migration; advance understanding of migration issues; encourage social and economic development through migration; and uphold the human dignity and well-being of migrants. 5. Donor and Government Positions On Cash Based Interventions 13

This publication has been issued without formal editing by the Publications Unit. 6. Market Access, Capacity and Prices 14 ACKNOWLEDGEMENTS

PUBLISHER 7. Delivery Mechanisms and Financial Service Providers 17 International Organization for Migration The UN Migration Agency - Iraq Mission Main Office in Baghdad UNAMI Compound (Diwan 2) 8. Challenges and Risks Related To CBI 20 International Zone, Baghdad, Iraq Tel: + 3908 3105 2600 E-mail: [email protected] 9. Cash Assistance And Risks Related To Counter-Terrorism Measures 23 Website: www.iomiraq.net

Report design and layout by Connard Co – www.connard.co Main References and Bibliography 24 Cover Image: Displaced family receives cash at IOM Iraq distribution in Erbil. Photo: IOM Iraq

© 2019 International Organization for Migration (IOM)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the publisher. CASH FEASIBILITY ASSESSMENT CASH FEASIBILITY ASSESSMENT

ACRONYMS 1. OBJECTIVE

Accountability to Monitoring, Evaluation, AAP MEAL Affected Populations Accountability & Learning IOM Iraq commissioned the Cash Feasibility Assessment with the main objective to evaluate to what extent the context in Iraq is conducive CaLP Cash and Learning Partnership MEB Minimum Expenditure Basket to CBIs, what are lessons learned from current CBIs and identify CBI Cash-Based Intervention MENA Middle East North Africa recommendations for future IOM programming.

Camp Coordination Ministry of Labour CCCM MOLS More specifically this assessment will review assess market access and capacity to meet increased demands/ cash injection, and Camp Management and Social Affairs review the political context and existing cash operational environment (including previous experiences and lessons learned with CBI), analyze risks, benefits, challenges and cost-efficiency gains of cash assistance (including beneficiary protection Ministry of Migration CCI Cash Consortium Iraq MOMD considerations), outline optimal cash delivery mechanisms and FSPs in view of initiating and scaling-up CBI in Iraq. The meth- and Displacement odology of the assessment included: CfW Cash for Work MOT Ministry of Trade • Desk review of IOM Iraq’s emergency response, IOM’s • Key informant interviews (KII) with: (1) IOM (2) External and partners’ CBI in country, donor policies and national Stakeholders including CWG/ MPCA and NFI/ Shelter CWG Cash Working Group strategies on cash and World Bank and Government Clusters, UN agencies, INGOs, and CCI, (3) Members MPCA Multi-Purpose Cash Assistance related Social Protection/ Safety Nets. of beneficiary community in Fallujah and East/ West EPS Electronic Payment System Mosul, (4) Market traders that provide NFI and Shelter • Field missions to Fallujah, Anbar and Mosul (East NFI Non-Food Item materials, (5) FSPs. and West), Ninewa to meet camp management, IDP FSP Financial Service Provider Office for the Coordination households, IOM Field Teams and observe vendors and OCHA of Humanitarian Affairs beneficiaries’ purchase behaviour. GDP Gross Domestic Product PDM Post Distribution Monitoring GoI Government of Iraq PDS Public Distribution System HRP Humanitarian Response Plan PMT Proxy Means Testing Inter Cluster ICCG Coordination Group POS Point of Sale

IDP Internally Displaced Person Rapid Assessment RART and Response Team IOM International Organization for Migration SAG Strategic Advisory Group

ISC International Smart Card Survival Minimum SMEB Expenditure Basket Islamic State of Iraq ISIL and the Levant SSN Social Safety Net

JPMI Joint Price Monitoring Initiative UCT Unconditional Cash Transfers

Joint Rapid United Nations High JRAM UNHCR Assessments of Markets Commissioner for Refugees

Single mother receiving cash distribution says she will use the money KII Key Informant Interviews WFP World Food Programme to buy clothes for her three children. Photo: IOM Iraq

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2. CASH IN THE GLOBAL CONTEXT

CBI are arguably one of the most relevant topics of discussion in the humanitarian sector today. Globally, CBI account for over US$3 billion but represent only 10% of the humanitarian portfolio, even though they are proven to be appropriate in 80% of crises worldwide and suitable for most, if not all, emergency contexts – including challenging and insecure environments such as Iraq – either on their own or in combination with in-kind and other transfer modalities.

It is estimated that 42%1 of the humanitarian budget could Globally, debates have shifted from whether cash is appro- be more effectively allocated to financial aid. CBI ‘raises the priate to how agencies can adequately and systematically bar’ of market analysis and accountability to affected popu- scale-up, maximize and coordinate CBIs. There is widespread lations (AAP) by making the humanitarian industry both more global support for cash-based assistance and a recognition cost-efficient and more people-centered. The humanitarian that it can make the humanitarian sector more efficient and community still lacks knowledge of local markets, although it people-centered in line with the commitments made within is central to understanding livelihoods, coping strategies of the Grand Bargain agreement.3 While not free of challenges, affected populations, and how they access what they need organizations are working together to ensure that CBI is the in crisis situations. Giving people in need a choice on how to preferred and default method of support of humanitarian spend humanitarian assistance allows them to regain some assistance in the coming years. dignity and empowers them to take SOME control some over Recent examples of contexts that are not conducive to their lives. CBI also helps humanitarian actors understand CBI include besieged areas within Syria with ongoing better what are the needs of crisis affected people, their fighting, remote areas cut off from transport networks in surrounding environments and can strengthen existing (or South Sudan (e.g. during rainy season), areas cut off from help create new) national systems (such as safety nets and markets following the earthquake in Nepal and areas with social protection), support local markets, increase stabiliza- severe movement restrictions during the Ebola crisis. This tion prospects by linking humanitarian with development demonstrates that only some specific contexts are unsuit- activities as well as better coordinate and harmonize the able for cash transfers and that, while some governments delivery of assistance of aid institutions.2 resist cash programming, this is not the case in Iraq now. In the last decade, CBI consistently proved that, where local Similar contexts to Iraq include Afghanistan, Yemen and markets exist, and the environment is conducive, they can Libya, where cash is being implemented at scale to meet help populations meet their basic needs and access services humanitarian needs. Countless reports, panels and summits in a more dignified, empowered, accountable, cost-efficient support the view that CBI (stand-alone and when provided and effective manner, while stimulating and having positive as complementary assistance) has the largest transformative knock-on effects on local economies, host communities and potential to increase accountability to affected populations displaced persons’ prospects. and support national systems.

1 The Cash Learning Partnership (CaLP) (2018), The Power of Financial Aid http://www.power-of-financial-aid.org/. 2 Statement from the Principals of OCHA, UNHCR, WFP and UNICEF on cash assistance (05 December, 2018) https://reliefweb.int/report/world/ statement-principals-ocha-unhcr-wfp-and-unicef-cash-assistance. 3 The Grand Bargain, an agreement between more than 30 of the biggest donors and aid providers, which aims to get more means into the hands of people in need https://www.agendaforhumanity.org/initiatives/3861

Giving people in need a choice on how to spend humanitarian assistance allows them to regain some dignity and empowers them to take control some over their lives. Photo: IOM Iraq

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3. IRAQ CONTEXT

Iraq is going through a critical period of transition, 2018 statistics4 show that, with a population of 38.7 million people and an economy largely dependent on oil, Iraq is considered an upper middle-income country.

With current GDP growth at 1.9%, thanks to a recent of Iraq (GoI) is putting in place a reconstruction package In the western Anbar region20 and west Mosul,21 both loca- With regards to prices, JPMI findings23 show that expensive improvement in security conditions, higher oil prices and linking stabilization to a long-term vision,8 where over tions of high IDP density, JRAM conducted earlier in 2018 districts include Erbil (Erbil), Karkh (Baghdad), Abu Ghraib expected higher public and private investment, there is a US$88.1 million will be required for recovery and recon- found that damage to electricity, water and communication (Baghdad), Sulaymaniyah (Sulaymaniyah) and Zakho (Dahok) more favourable GDP growth outlook of 6.2% in 2019. struction needs. infrastructure were greater than damage to road infra- and cheaper districts are Sumel (Dahok), Khanaqin (Diyala), structure, which is key to transport of commodities and Mosul (Ninewa) and Fallujah (Anbar). NFI price fluctuations Unemployment rates are at 16% (youth unemployment While markets were severely damaged and impacted by the supply chain. Moreover, the JRAM round that the delay at are reported to be greater than food. Studies which cover 36%) and the public-sector accounts for nearly 42% of full- war and there is an acknowledged lack of reliable data for check points and security concerns overall were reported over 30 districts in Iraq on a monthly basis24 found that time employment with a low percentage of women (19%) all areas of the country and for all products and services, by a minority of retailers (38%) and close to half (45%) of increased cash injections can be absorbed by local markets participating in the labour force. Iraq imports goods mainly multiple actors interviewed for this assessment recognize wholesalers in western Anbar, but this was not reported without posing any threat to its functioning. from Turkey, China, the United Arab Emirates and Iran, that the Iraq context is suitable for CBI. as a main challenge for businesses or for market access though the latter only made up about 15% or less of total The World Bank,9 Overseas Development Institute (ODI),10 in west Mosul. The JRAMs further indicated that the vast imports in 2017. US sanctions on Iran and demands on Iraq Iraq Cash Working Group (CWG)11, Iraq REACH’s Joint Rapid majority of consumers (97%) reported not to face any phys- to comply with them will likely have an impact on the level Assessments of Markets (JRAM)12 and Joint Price Monitoring ical barriers, including security, in accessing market places of imported goods in 2019. Initiative (JPMI),13 Iraq’s donor community,14 Cash Learning in both locations, and assessed goods were widely avail- Iraq is the third largest humanitarian crisis in terms of Partnership (CaLP)15 and the Iraq inter-agency group16 all able in the market place22 with limited shortages across all funding and needs after Syria and Yemen5. At the end confirm in reviewed documentation that Iraq is an upper assessed market places and a significantly level of confidence of 2018, it is reported that the country still hosts about middle-income country, rich in natural resources and human expressed by retailers and wholesalers in their capacity to 1.8 million internally displaced persons (IDPs)6 – of which potential with well-connected, integrated, recovered/ing and respond to a 50% to 100% increase in demand in west 600,000 live in camps and 1.2 million live out of camps – an resilient markets,17 stable prices,18 national social protec- Anbar. 94% of retailers and 96% of wholesalers reported estimated 4.1 million returnees and over 250,000 Syrian tion systems, and reinstated focus on poverty reduction19. being able to increase supply by 100% in response to signif- refugees7, as well as host populations - ‘remainees’ - in crit- Several line ministries in GoI, including the Ministry of Labour icant rises in demand in west Mosul. ical need of aid. and Social Affairs (MoLSA), effectively distribute cash assis- tance since 2010. JRAMs indicate that markets in Iraq have The humanitarian response plan 2018/19 estimates that 8.7 rebounded significantly despite damage and conflict in most million Iraqis (22.5 percent of the population) are unable parts of the country. to meet basic needs and require some form of humani- tarian assistance. The fight against the Islamic State of Iraq and the Levant (ISIL) particularly affected the economy and markets and doubled poverty rates across the country (in ISIL-occupied areas this went up to 41%). The Government

4 The World Bank in Iraq (2018), ‘Overview’, https://www.worldbank.org/en/country/iraq/overview. 5 Development Initiatives (2018), Global Humanitarian Assistance Report. 6 IOM Iraq Mission, Displacement Tracking Matrix (November 2018). 7 UNHCR Iraq (2018), Fact Sheet. 8 The Republic of Iraq, Ministry of Planning (2018), National Development Plan Summary 2018-2022. 9 World Bank (2018), Iraq Economic Monitor Toward Reconstruction, Economic Recovery and Fostering Social Cohesion. 10 Overseas Development Institute (ODI), Kristin Smart (2017), Challenging the system: humanitarian cash transfers in Iraq. 11 Cash Working Group (June 2018), Survival Minimum Expenditure Basket (SMEB). 12 REACH Iraq (2016- 2018), Joint Rapid Assessment of Markets. 13 REACH and Cash Working Group Iraq (November 2016-September 2018), Joint Price Monitoring Initiative (JPMI). 20 REACH Iraq (March 2018), Iraq: Markets rebound despite damage and conflict in western Anbar. 14 DFID, ECHO, OFDA (2018), Humanitarian Cash Assistance in Iraq: Short-Term Priorities for Alignment and Advocacy. 21 REACH Iraq (January 2018), How are market dynamics in West Mosul responding to the Iraqi conflict? 15 The Cash Learning Partnership (CaLP) (2018), Cash Consortium of Iraq (CCI), Case Study Findings. 22 With exceptions of kerosene, butane and sanitary napkins not available at the time of data collection in western Anbar. 16 OCHA (2018), Iraq Humanitarian Response Plan (HRP). 23 REACH (October 2017), Iraq: Emerging trends in prices and availability of goods across markets. 17 Same references as above mentioned in footnotes 9, 10, 11 and 12. 24 REACH Iraq (2016- 2018), Joint Rapid Assessment of Markets and REACH and Cash Working Group Iraq (November 2016-September 2018), Joint Price Monitoring 18 The Humanitarian Practice Network (HPN), Su’ad Jarbawi (October 2015), Unleashing the Multi-Purpose Power of Cash (in Iraq). Initiative (JPMI). 19 UNHCR, Matthews and Mitchell (2018), Harnessing Social Protection for Displaced People in Iraq.

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4. HUMANITARIAN CASH-BASED INTERVENTIONS IN IRAQ

The humanitarian response in Iraq has seen an uptake of CBI Market based interventions, including through cash and since 2014,25 with the formation of the Cash Working Group vouchers, are used extensively to meet the needs of refu- (CWG) in 2014, headed by UNHCR and Mercy Corps (MC), gees, IDPs, returnees, and host communities in Iraq since which saw the membership grow from 13 members to over 2014, following reports of Syrian refugees selling in-kind 40 in two years.26 In 2015, a Cash Consortium of Iraq (CCI) winter items to procure much needed goods and services.29 was created assisting 3,335 households in 2015 and 12,759 According to data from OCHA’s Financial Tracking System30 households in 2016. The CWG in Iraq focuses mostly on the cash-based response for IDPs comprises of cash trans- technical aspects, coordination and harmonization of Multi- fers designed under sector-specific objectives (Protection Purpose Cash Assistance (MPCA) and less on sector-based and Food Security) and multi-purpose cash assistance, cash. The CWG provides MPCA in different geographical representing an estimated funding of US$ 31.1 million (2.4%) locations such as in Diyala, Anbar, Najaf, Muthanna, Basrah, of the total 2018 humanitarian response.31 Misan, Thi-Qar, Qadissiya, Wassit, and Kerbala.27 The uptake of cash assistance in Iraq can be attributed to the creation of 4.1. SHELTER/NFI AND OTHER SECTOR-BASED a separate chapter for MPCA in the 2015 and the 2016 Iraq CASH-BASED ASSISTANCE Humanitarian Response Plans (HRP) and the placement of While UN and INGOs participating in the Shelter/ NFI Cluster CWG under the Inter-Cluster Coordination Group (ICCG).28 implement a limited (3%) of CBI in its programmes and MPCA represents US$ 60 million (10.5%) of the total HRP activities, the Cluster Coordinator reassures there is no 2018 (US$569 million) requirements, with US$ 31.1 million market-based challenge to justify this. IOM Iraq’s procure- (2.4%) currently funded. ment unit reports that 99% of shelter and NFIs are procured The international humanitarian response to the crisis in Iraq in Iraq. Those internationally procured are due to specifica- is well into its fifth year. Since the conflict began in December tions, not unavailability of the product per se. 2013, it underwent several and significant stages, with peaks A commonly expressed concern by donors and human- in 2014 and 2016, forcibly displacing millions of Iraqis and itarian partners is what type of commodities are bought affecting those who remained in areas occupied by ISIL. A with CBI and how to ensure technical quality of purchased combination of the rise of ISIL, the war in neighbouring Syria, goods or construction work undertaken. Cash-based the military operation to retake occupied areas resulted in shelter programmes commonly use a combination of needs general instability, violence, population displacement, unem- assessment and targeting, conditional (such as payment in ployment and poverty. The defeat of ISIL in 2017 left the Iraqi instalments) or restricted cash (vouchers) along with tech- government the challenging task of rebuilding infrastructure, nical support and training to address these concerns. providing services and job opportunities. The national focus is on decongesting and consolidating IDP camps, shrinking The commitment of the Shelter/NFI Cluster to increase CBI in its humanitarian operations and restoring infrastructure, and programming is evidenced in decisions taken by the Strategic supporting the safe and dignified return of IDPs in line with Advisory Group (SAG)32 such as (1) incorporating socio-eco- the Poverty Reduction Strategy and National Development nomic vulnerability targeting to sector-based assessments and Plan 2018-2022. (2) published guidance on CBIs for Shelter, NFI and ‘Seasonal’ Response (meaning winter and summer seasonal assistance).

25 IBRD (2018), Project Appraisal Document on a Proposed Loan in the Amount of US$200 million to the Republic of Iraq for the Iraq Emergency Social Stabilization and Resilience Project, Social Protection & Jobs Global Practice Middle East and North Africa Region. 26 The Cash Learning Partnership (CaLP) (2018), Cash Consortium of Iraq (CCI), Case Study Findings. 27 Although it is expected that not all these areas will receive support in 2019 due to expected funding shortages. 28 Overseas Development Institute (ODI), Kristin Smart (March 2017), Challenging the system: humanitarian cash transfers in Iraq. 29 Overseas Development Institute (ODI) and Centre for Global Development (CGD), (2015), Doing Cash Differently: How cash transfers can transform humanitarian aid - Report of the High-Level Panel on Humanitarian Cash Transfers. 30 OCHA’s FTS https://fts.unocha.org/ 31 CaLP (2018), Cash Consortium of Iraq (CCI), Case Study Findings. 32 The Strategic Advisory Group of the Shelter/NFI Cluster aims to engage key actors working in the Shelter/NFI sector to share ownership, applicability and legitimacy of the Cluster and its activities.

Cash based interventions increase liquidity in the local economy by boosting individual spending. Photo: IOM Iraq

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Explanations for the low uptake and use of CBIs in the 4.2. MULTI-PURPOSE CASH ASSISTANCE (MPCA) Figure 1. Number of MPCA Distributions Per District Jan – Apr 2018 Shelter/NFI cluster include limited experience with market MPCA is the most commonly used tool for CBI in Iraq to based programming and perceived fears with regards to meet basic needs of vulnerable IDPs. CWG and CCI post product quality and availability, which have not yet been Zakho distribution monitoring (PDM) findings show that house- Amedi founded, particularly as agencies such as IOM procure most, Sumel Dahuk holds receiving MPCA spend the assistance mostly on food, AREA OF FOCUS MULTI MONTH if not all, of their NFI and Shelter items nationally and locally. Shik- Akre Soran Telafar han 1 – 3 shelter/rent, basic NFIs, healthcare and repayment of debt. Shaq- Evidently, certain specifications, for instance, UNHCR-sized Ham- lawa MPCA is provided as either a one-off or a maximum of three daniya tarpaulins may not be available in the market, but other Sinjar 4 – 7 consecutive months grant to out of camp populations. The Koisniaq Dokan shapes and sizes are available. Mosul Erbil 8 – 19 CWG observed people reverting to negative coping mech- Makh- Chamchamal 20 – 35 mur There has been much discussion in both the cluster and the anisms once assistance is discontinued, including selling maniyahSulay- Kirkuk ONE OFF SAG on the issue of access to markets and availability of NFI assets and reducing expenditure on food. Even though Shirqat 1 – 2 and Shelter quality products in enough quantity. Some feel beneficiaries are referred by the CWG to MOLSA as soon Daquq Kafar that in-kind distributions are more appropriate in areas far as they are assessed and identified with needs, the referral Baiji To oz 3 – 7 Tikrit from markets or where markets are no longer functioning, system doesn’t always work as there is a 70% compatibility Kifri GOVERNORATE while other CBI proponents point out that creating market rate with households assessed and assisted with MPCA and DISTRICT demand will quickly result in increased supply capacity. MoLSA’s targeting approach. In addition, MOLSA has limited Khanaqin Thetnar Ana Global experience has shown that even in places perceived capacity and funding. The CWG and CCI hope to strengthen Muq- dadiya to be far from markets or where access is limited, entrepre- and mitigate this in 2019, with support of the World Bank Heet neurs usually step in quickly to fill gaps in the market. and other donors. Ramadi The Shelter/NF Cluster has made commitments to utilize the Currently MPCA is provided to out-of-camp populations only. Falluja CWG socio-economic vulnerability tool, at least some of the The main reason for this is that people in camps are provided socio-economic vulnerability indicators in its assessments for with basic services free of charge. A Joint Assessment Mission 2019. Options considered by NFI and Shelter actors include (JAM) conducted by UNHCR and WFP in 2014 revealed that e-vouchers, “trade fairs” in camps with limited market access the limited purchasing power of refugees in Iraq and access and/or freedom of movement and possibly MPCAs, as it contains to the wholesale markets outside the camp were stifling Socio-economic vulnerability assessments are used to Figure 2. MPCA programme components cash-for-rent in its Minimum Expenditure Basket (MEB). the growth of markets in the camps, meaning that markets identify beneficiaries for MPCA. This targeting tool is largely would restart in and near camps if cash is provided to the Discussions within the Shelter/NFI SAG identified the poten- aligned with MoLSA’s World Bank proxy means testing (PMT) camp population. 1 tial impact of MPCAs on shelter needs of the affected for poverty targeting and allows referrals between sectors, Needs 5 community. Experience33 shows that IDPs receiving MPCA Visits to two IDP camps showed people requesting for cash Assessment FSP Selection agencies and ministries, though fine-tuning is required. & Cash & Contracting spend it mostly on rent. Therefore, separating out IDPs with assistance and reportedly being able to meet all their needs This form of targeting is a globally recognized humani- Feasibility 3 7 remaining critical shelter needs from those whose shelter in sufficient quantity and quality in local markets nearby. tarian approach that (a) incorporates displacement status Community PDM (Including Communication Market needs have been addressed through receiving MPCA is crit- However, the provision of cash in camps is an ongoing to identify most vulnerable individuals within conflict affected Monitoring) 6 ical. It is in the Shelter/NFI Cluster’s interest to therefore build 2 discussion and one that may arguably change in coming communities (e.g. IDP, returnee and refugee) and (b) covers Distribution, Response Disbursement its CBI capacity by transitioning fully its seasonal NFI assis- months as camps continue to close or reduce in size. While basic needs of those most vulnerable within the wider group Analysis & Redemption tance as well as Sealing Off Kits (SOKs) to cash and vouchers the CWG policy of ‘no MPCA in camps’ remains, in-kind assis- of people in need. It ensures that those most in need do not 4 and to pilot MPCAs in coordination with CWG and CCI. While tance continues to be provided in camps, as well as different Beneficiary go unassisted and that there is a “handover” from humani- Selection & addressing immediate life-saving needs may seem to be types of sector-based conditional cash assistance (such as tarian assistance to national systems. This targeting is being Registration more effectively met through in-kind distributions, because of CFW for food/ livelihoods), restricted cash implemented by used in HRP 2019 sector plans, demonstrating a shift from pre-positioned contingency plan items, moving as quickly as WFP (food vouchers) and unrestricted and unconditional status-based assistance to a needs-based approach and a possible to cash-based assistance will build market capacity cash assistance by UNHCR (e.g. winter cash assistance). flexibility to incorporate sector needs. This shift represents The provision of MPCA covers food, water, electricity, NFIs and support market sustainability. In-kind based responses a recognition of market recovery, commodity availability (consumables and hygiene items such as sanitary pads, should include strategies to quickly transition to cash. and price stability and the need to integrate humanitarian toothpaste and toothbrush, and so on), communication, assistance with existing safety nets in order to maximize effi- transportation and rent. Local prices, market elasticity and ciencies and ensure sustainability. Other sectors can use this cost of living have been taken into consideration. In June methodology of targeting and are expected to complement 2018, these amounts were revised to 480,000 IQD (415 US$) it with sector specific assessments. The socio-economic per month. It intends to cover a family of six, the estimated vulnerability assessment tool allows for adaptation of agency family size in Iraq. and sector-based information and data collection require- ments. The SAG of the Shelter/NFI Cluster endorsed the tool to be used on top of the Shelter/NFI assessments. 33 Iraq Shelter Cluster (2015), Cluster guidance on cash-based Shelter and NFI assistance.

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Table 1: CWG Minimum Expenditure Basket (MEB) June 2018 5. DONOR AND GOVERNMENT ITEM IQD USD % COVERAGE % OF FULL BASKET OF IRAQ POSITION ON CBI

Food 151,368 128 100 32% There are no observed government policies in Iraq against 5.1. IRAQ POVERTY REDUCTION AND GOVERN- Hygiene items (consumable) 16,547 14 100 3% the use of cash assistance by agencies for humanitarian MENT CASH BASED SAFETY NETS EXPERIENCE needs. For example, the CWG has reported that the ‘no cash Prior to the crisis, Iraq had established a social safety net Transport/ Communication 70,994 60 100 15% in camps’ policy is a CWG decision with donors and other through the public distribution system (PDS) supplying food agencies rather than a government request. MoLSA and other rations to all Iraqis and providing more than one-third of Iraqis’ Rent 173,588 146 100 37% ministries, including the MoMD, use conditional and uncon- calorie consumption. With the reduction of government reve- ditional cash assistance to boost purchasing power, increase nues, lack of access in remaining ISIL-controlled areas and the Electricity 32,176 27 100 7% employment opportunities, reduce poverty and encourage dynamics of populations on the move, the PDS system was other agencies to do so, according to the CWG and CCI. Water 26,352 22 100 6% disrupted and cannot be relied upon by households to meet In 2018, a donor alignment paper36 was created by DFID, basic food needs37. As PDS is not targeting specific vulnerable Total 470,827 397 100% ECHO and USAID/ OFDA calling for increased use of MPCA groups in Iraq, implementing MPCA on socio-economic vulner- and greater harmonization both among humanitarian agen- ability criteria has been challenging, since it goes against the cies and between humanitarian agencies and government culture of PDS and general safety nets for all in the country. ministries. As donors, there is a commitment to coordinate Since 201438, steps have been taken to establish a framework better among themselves in order to support and harness 4.3. CASH WORKING GROUP (CWG) through which development and humanitarian actors can collaboration rather than instil competition among actors. improve coordination of CBI interventions. Referral of vulner- The CWG is a bit of an anomaly in Iraq as it is considered Although the socio-economic vulnerability assessment tool This donor alignment paper on MPCA state that Iraq provides able households from MoLSA and CWG databases requires a ‘semi-cluster’ in the HCT, different from other countries used for MPCA captures displacement status (IDP, refugee, good conditions for the use of cash as a humanitarian the establishment of a system that builds on: (i) mapping of where CWGs operate as a separate technical working returnee, stayee) in its questionnaire, this doesn’t mean that response modality due to its existing and cash-based social existing services of both MoLSA and humanitarian actors, (ii) group, unattached to any cluster or sector. In other coun- humanitarian partners assist people based on this status but transfer systems, functional markets and available finan- training of social workers and (iii) an effective case manage- tries of the Middle East, a Basic Assistance Working Group rather on the needs identified within this wider group. The cial service providers. Under the Grand Bargain adopted ment program. To facilitate the process, the World Bank is Sector/ Cluster has been created to coordinate MPG/MPCA tool also allows the CWG to refer people in need to human- at the World Humanitarian Summit in Istanbul in 2016, aid planning to support MoLSA with referrals between MoLSA assistance as well as seasonal and new arrival support. In itarian partners, since they have assessed many people and organizations and donors have committed to ensuring that and humanitarian actors in the mapping of services. This mid-2014, UNHCR and Mercy Corps formed the CWG, with may not be able to assist all, particularly IDP / returnees. effective coordination, delivery and monitoring and evalu- will also build the capacity of MoLSA to refer beneficiaries the objective to coordinate, harmonize, share information, ation mechanisms are in place for cash assistance, where CBI and MPCA support protection, safe return, basic listed in its database, and requires developing an adequate harness best practices and establish exit strategies of CBI, cash is deemed feasible, relevant and appropriate, which needs, shelter for IDPs when they leave the camps. These communication plan within MoLSA, including training of particularly with the increased use of MPCA. seems to be the case for Iraq, as supported by sources and approaches are still humanitarian in nature rather than devel- social workers, as well as communities. evidenced by this assessment. In terms of Financial Service Providers (FSPs), the CWG opment oriented and allow for transition and alignment with Integration of beneficiary data across different programmes uses different Hawala34 companies to get around the ID poverty reduction / development strategies. In addition, in the managed by MoLSA, and between humanitarian and public requirements. Accepted ID documents which most IDPs do post-crisis phase in Iraq it is critical that humanitarian and assistance will ensure that benefits are targeting the right not possess include social security, cards from the Public development actors work together to strengthen the capacity people at the right time, improving the efficiency and effec- Distribution System (PDS) national ID ‘shehada al jinsiya’, of government ministries and national systems, so they are tiveness of social assistance. Connecting information on passport, residency permit ‘iqama’, marriage certificate, able to respond to internal displacement and future crises. vulnerable households assisted by the humanitarian commu- among others. Humanitarian actors work with both Hawala nity with public programmes managed by the Government networks/ companies and mobile money from two large will ensure effective continuation of assistance for the most communication companies operating in Iraq (Zain and vulnerable. In the long term, these activities will provide the AsiaCel). MoLSA uses the Qi-card as does the pension system foundation to help the GoI develop an integrated social in the country and Qi-cards are also used in the Ministry of protection system. This involves developing the full suite of Trade’s public distribution system (PDS)35. tools and services, including a social registry, a case manage- ment system, a monitoring system, a grievance and redress and a graduation mechanism. 34 Traditional system of transferring money whereby money is paid to an agent who then instructs an associate in the area to pay the final recipient 35 According to Overseas Development Institute (ODI), Kristin Smart (March 2017), page 10, Challenging the system: humanitarian cash transfers in Iraq: ‘The MoDM initially used cash transfers to respond to displacement through the provision of a1million IQD transfer (around $830 at the 2014 exchange rate). The aim of the programme was to provide displaced households with a one-off transfer following registration with the MoDM. In order to register, individuals had to produce documents (including PDS cards) giving their area of origin. The cash transfers were then completed either through cash-in-hand at ad hoc sites or via 36 DFID, ECHO, OFDA (2018), Humanitarian Cash Assistance in Iraq: Short-Term Priorities for Alignment and Advocacy. the QI Card. The programme faced significant financial challenges in 2015 and came to a halt in 2016. Humanitarian agencies also raised concerns regarding 37 CaLP (2018), Cash Consortium of Iraq (CCI), Case Study Findings. bias in registration and around the transparency of the distribution process.’ 38 World Bank (Fall 2018), Iraq Economic Monitor Toward Reconstruction, Economic Recovery and Fostering Social Cohesion.

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Table 2: Overview of Government of Iraq’s Ministries implementing CBI in Iraq

# MINISTRY TITLE OBJECTIVE / SECTOR TARGETING METHODOLOGY TRANSFER MODALITY DELIVERY MECHANISM FSP BENEFICIARIES DONOR

Unconditional/ 1 MoLSA Social Safety Net (SSN)39 Basic Needs PMT Electronic Cash Qi Card 1.2 million World Bank Unrestricted Cash

Unconditional and 2 MoLSA Job Seeker Support Livelihoods/ Employment PMT, Registration Electronic Cash Qi Card TBC World Bank Unrestricted Cash

Unconditional and Public Distribution 3 MoT Food Assistance Food Security PMT, Food security Voucher (TBC) TBC TBC Restricted Cash Systems (PDS)

Registration to the Unconditional and 4 MoMD Assistance Displaced Basic Needs Community Resource Electronic Cash Qi Card TBC TBC Unrestricted Cash Centres (CRCs)

Unconditional and 5 MoLSA Pensions40 Pensions TBC Electronic Cash Qi Card TBC TBC Unrestricted Cash

6. MARKET ACCESS, CAPACITY AND PRICES

In 2017 and 2018, REACH with the support of 11 CWG part- cash than to vouchers which require contractual agree- consolidate in 2019. Even in camps with limited mobility, purchase their goods in west Mosul, Shifaa and Mosul al ners gathered and analysed data from retailers, wholesalers ments with vendors. Vendors are initially ‘wary’ of voucher for instance, in Fallujah, families, particularly women, are Qadima, now purchase their goods from wholesalers in and consumers in West Anbar, Mosul and other districts in programmes. After discussion, they are more amenable but demanding cash assistance and report not having challenges east Mosul, especially in Gogjali. Regarding security issues, Iraq. The vast majority of consumers (97%) reported not still require predictability (of clients and expected purchases/ accessing markets, that prices are stable and that they find checkpoints were reported as a problem only by a minority of facing any physical barriers, including security, in accessing income) if a contract is to be signed. The experience of IOM all the commodities they need to meet their basic needs retailers (38%) and close to half (45%) of wholesalers. Findings market places across the country. WFP, UNHCR, CWG and is positive but challenging with (1) assessing vendors, (2) and more. were reported between retailers and wholesalers regarding CCI cash actors, who were interviewed for this assessment, contracting vendors, (3) ensuring vendor predictability, (4) the impact of the crisis on the supply chain: 71% of retailers did not mention challenges with accessing markets and no timely payments to vendors and (5) beneficiary database to 6.1. VENDOR AND MARKET SUPPLY, CAPACITY reported that the number of their wholesalers decreased documents highlighted this as a challenge, including IOM ensure tracking. AND WILLINGNESS since the crisis, whereas 64% of wholesalers reported an PDM reports. Humanitarian partners report that challenges increase in the number of their retailers. It is not easy to Markets are highly accessible. Only certain locations prove Widespread military operations to take back territory from of access are limited to a few elderly and disabled commu- understand markets in Iraq as one system as each region temporarily challenging with regards to access to markets, ISIL in Mosul in Ninewa and the town of Ana in western nity members. Across the board women seem able to access import goods from nearby countries, as outlined below: for example in Diyala Governorate, some parts of Mosul and Anbar have caused large-scale displacement, damaged key markets according to observations in IDP camps, markets hard-to-reach areas near the Syrian border. Some IDP camps infrastructure and disrupted supply chains. To determine • The northern region (Erbil, Dohuk, Sulaymaniyah and northern and CWG/CCI data, particularly in comparison to the period have restrictions on movements, for example as observed in the effects of the conflict and ISIL occupation on consumer part of Mosul) imports items from Turkey, Syria, UAE; of ISIL occupation. Fallujah and reported in Kilo 18, in Anbar Governorate. It was markets, infrastructure, security and suppliers across the • The southern region (Basra, Missan, Thiqar) imports items Markets have been the first responders to the crisis in Iraq not certain when and for how long these restrictions would country, REACH in partnership with the CWG, conducts a mostly from Iran; and vendors are responsive to supply and demand. The be in place. Cash in camps is still not implemented but could JRAM in 30 districts on a monthly basis. REACH and the market system is logically more responsive to unrestricted be considered as increasingly camps close, ‘decongest’ and CWG assess the response capacity of traders to determine • The central region (Baghdad, Diyala and Ninewa) imports if cash and market-based programming is appropriate as a items from Iran and Turkey. response modality from humanitarian partners. Findings in market assessments highlight that retailers and

39 This programme reportedly costs roughly 1.7 trillion Iraqi dinars a year, and it accounted for approximately 2.3 percent of 2018 current expenditure. World In response to the damage in infrastructure, there has wholesalers report high levels of confidence in their ability to Bank (2018), Iraq Economic Monitor Toward Reconstruction, Economic Recovery and Fostering Social Cohesion been a marked shift in the location of wholesalers since increase supply, with 94% of retailers and 96% of wholesalers 40 Third main social assistance programme in Iraq is public pensions, which consists of 2 mandatory pension schemes covering public and private sector employees. Total expenditure on pensions is around 4% of GDP and a sixth of annual current expenditure. Despite such high costs, there are large coverage mid-2014 (before the arrival of ISIL). Many who used to saying being able to increase supply by 100% in response to gaps, with only about 48 percent of the total labor force contributing to and covered by the pension (public) or social security (private) system. Public pensions reached less than 20 percent of the poor (while reaching more than a quarter of the non-poor) because they are not intended as anti-poverty transfers. Of the pension recipients, 85 percent were non-poor HHs.

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a rise in demand in west Mosul and a 50% to 100% in west 6.1.1. PRICE STABILITY 7. DELIVERY MECHANISMS Anbar. While IOM’s experience with voucher programmes41 Data from the JPMI shows that, despite the cessation of suggests that vendors require more predictability and armed conflict and several towns’ relative isolation from large AND FINANCIAL SERVICE PROVIDERS initially showed reluctance to implement these programmes, population centers, prices in November 2018 were found to it is a recognized teething problem: until the programme is be only 7% higher than the average price across north and 44 implemented, vendors will not trust to sign an agreement Financial Service Providers (FSP) are notably the biggest chal- 7.1. BANKS central Iraq for November 2017. The JPMI aims to harmo- if they do not know how much money and customers they lenge in Iraq with regard to CBI. Where they exist, they are nize price-related data collection among cash actors in Iraq, Iraq remains one of the most “under-banked” countries in will receive. Traders participating in the Mosul NFI (winter very outdated and unable to keep up with the pace of inter- producing monthly factsheets and standardized datasets to the Middle East North Africa (MENA) region and by some voucher) pilot who were interviewed expressed satisfaction national banking systems. However, existing FSPs are able inform cash programming. The JPMI is currently undergoing estimates over 80% of Iraqis do not have a bank account. with the programme; their only concern was on the first to scale-up CBI and create economies of scale and cost-sav- its 12th round of monthly data collection. By tracking prices The banking sector in Iraq consists of 55 banks (end of day of the cash distribution which saw several people in ings once programmes are implemented and predictability of food and non-food items (NFIs) on a regular basis, the 2013). This includes 7 state-owned banks (which own 479 the same shop at once. However, the demand was met and ensured. This was reported by all cash actors on the ground, JPMI enables monitoring of prices and availability of the most branches, 8 of which are located abroad), as well as 48 requested products were available in good quality and quan- including WFP, UNHCR and CWG/ CCI, particularly about commonly sold commodities. The JPMI seeks to ensure that private banks, which are divided into 23 commercial banks, tity, as observed during the assessment. mobile banking. Although Iraq’s financial infrastructure 8 Islamic banks, and 17 foreign banks. In total, they own price data is robust and specific to each district selected for offers a range of delivery mechanisms and financial service Overall, REACH studies suggest that any programming 515 branches, 4 of which are located abroad. According data collection. The JPMI is a collaborative effort of the CWG, providers, including mobile money, money transfer compa- leading to cash injection could be absorbed by the local to the World Bank, there is low banking density, wherein which consists of 12 partner agencies – ACF, DRC, IRC, Mercy nies, distributions via the banking sector and cash in hand, market without posing any threat to its functioning. the ratio of commercial banks to people is 4 banks per Corps, NRC, Oxfam GB, REACH Iraq, TdH, Tearfund, Triangle cash actors highlighted the limited availability of an effective Nevertheless, the protracted crisis impacted supply and 100,000 people, compared to the banking density standard GH, WHH, and World Vision. To ensure triangulation of prices, electronic transfer (e-transfer) mechanism, both in terms of market access, often in a highly-localized manner. In this of 1 bank per 10,000 people. ATM machines are also highly partner enumerators are instructed to gather a minimum of the management of information and the actual delivery of context, it is recommended that cash and market-based limited; World Bank data indicate that there are only three three prices for each item in each assessed market. All part- assistance, as a key challenge in using cash assistance at programming are designed based on area-specific informa- ATM machines for every 100,000 inhabitants45. The MENA ners use the same methodology and collect price data via a scale42. Uncertainty over the capacity of e-transfer systems tion, with each market place treated as a separate context region has on average 32-times more ATM machines per standardized mobile-based Kobo tool. to deliver in a timely manner across widespread geographic in which to plan an appropriate response. inhabitant. Most ATM machines are not connected to the areas, with real-time information management and delivery Since the first round of the monthly JPMI (October 2017), prices national switch and, as such, customers of one bank cannot platforms, that cover people who lack IDs, led many cash have remained largely consistent, with an average monthly access their funds from ATM machines of another bank. The actors to rely on informal money transfer companies, such price change of -0.2%; overall prices have fallen by a marginal National Development Plan of Iraq 2018-2022 includes the as the hawala network. amount in all but three assessed months. For food prices, two need for improving the banking sector and services. assessed districts of Baghdad – Karkh and Abu Ghraib – were WFP’s restricted cash transfer programme, the largest in The Central Bank of Iraq has full regulatory and supervi- the most expensive, recording among the top three highest Iraq, is run through a combination of its SCOPE informa- sory control over Iraq’s financial sector and is responsible average prices in every round. Following Baghdad, Erbil was tion management platform and the hawala network, which for issuing regulation and supervising; licensing financial another expensive district that consistently had among the is responsible for the physical distribution of cash. The fact institutions; setting monetary policy and providing over- highest food prices. In terms of the lower prices for food, that, as of December 2016, WFP was reaching 550,000 sight over the payment settlement system (national switch). this changed over time, but districts that consistently had IDPs across Iraq with a monthly cash transfer illustrates There are two important developments on the horizon that the lowest prices were identified in assessed areas of Ninewa the scope and coverage of the hawala system. A UNHCR could significantly improve access: (1) the implementation governorate – Shikhan, Akre, Mosul and Hamdaniya – as well internal review of FSPs43 indicates that the financial land- of the National Switch and (2) the establishment of the Iraq as Sumel district in Dohuk governorate. scape in Iraq consists of a range of public, private, and Interoperable Mobile Payment System (IIMPS) 46. An impor- state-owned commercial banks as well as financial compa- For NFIs, the findings are much less consistent. Districts that tant factor that has resulted in the low usage of banks has nies (formal and informal), development finance companies, were frequently the most expensive were Erbil, Karkh, Abu been a general mistrust of the banking system. This problem foreign exchange bureaus, and International Smart Card Ghraib, Sulaymaniyah and Zakho. Districts that commonly is further exacerbated by the lack of any deposit insurance (local Iraqi smart card). However, non-formal financial insti- had the lowest prices for NFIs were Sumel, Khanaqin, Mosul institutions to guarantee customers deposits back in the tutions, which are commonly referred to as Hawala, are and Falluja. But this changed over time. This inconsistency event of a bank failure. reflects a much larger variation in the price of NFIs compared widely used for financial transaction. to food products. NFI monthly price fluctuations have been greater than food in all but one assessed month and varia- tion among the prices for individual items is consistently high. Relevant units in IOM Iraq (Procurement, NFI, Shelter and CBA) reported that prices for NFI/Shelter remained stable, Women conversing with each other about how they will utilize the assistance they received. Photo: IOM Iraq particularly for items related to winter and summer SOKs. 42 ODI, Kristin Smart (2018), Challenging the system: humanitarian cash transfers in Iraq. 43 UNHCR, CBI, Review of Existing Financial Infrastructure and Payment Mechanism Options for UNHCR Iraq. 44 Most information and data for sections on Banks, Mobile banking and International Smart Card came from UNHCR, CBI, Review of Existing Financial Infrastructure and Payment Mechanism Options for UNHCR Iraq, 45 International Monetary Fund, Financial Access Survey (2017), Automated teller machines (ATMs) (per 100,000 adults) 41 IOM Iraq, Cash for NFI during winter pilot implemented for 200 displaced households in Mosul (November 2018) 46 With the help of the USAID’s Iraq Financial Development Project.

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7.2. MOBILE BANKING Table 4: ISC/ Qi Card Presence and Coverage 7.4. HAWALA SYSTEM

Mobile phone is a ubiquitous channel for banking. Many Smart Card International has a wide network of partners ISC PRESENCE Informal funds transfer (IFT) systems are used frequently for studies show a strong correlation between the tele-den- who are eligible to operate the Point of Sale (POS) machines (CARD ISSUANCE AND EXPRESS SHOPS) transferring funds, both domestically and internationally. The sity47 and economic growth of the country. Mobile phones in addition to all bank ATMs across the country (Qi can be hawala system is one of the IFT systems that exist under different

are very popular in Iraq with 78% penetration in central and used at ATMs). Qi card is similar to other credit/ smart cards GOVERNORATE QI CARD USERS names in various regions of the world. It is important, however, southern Iraq and 90% in the Kurdistan Region of Iraq (KRI). recognized worldwide with the essential difference that the to distinguish the hawala system from the term hawala, which However, mobile phones are solely being used as a commu- smart card deals with balances without direct contact with means “transfer” or “wire” in Arabic banking jargon. Baghdad 49,443 nication tool and no cellular network provides mobile money the server to facilitate business in regions where there are no The hawala system refers to an informal channel for trans- or mobile banking services. good telecommunication networks. Qi card is the FSP used Anbar 971 ferring funds from one location to another through service by most if not all government ministries for payments of sala- providers—known as hawaladars. Hawala is an alternative or ries of staff. As was observed during the assessment, Qi-card Table 3: Mobile Companies and Network Coverage in Iraq Basrah 12,133 parallel remittance system. It exists and operates outside of, was present in all locations visited in Anbar and Mosul and or parallel to traditional banking or financial channels. The TYPE OF FIXED FIXED MOBILE near IDP camps, as well as around all market places visited. Diwaniya 673 components of hawala that distinguish it from other remit- NETWORK BROADBAND TELEPHONY PHONE ISC is a limited liability company partly owned by the tance systems are trust and the extensive use of connections Subscribers government, registered with the Iraqi Central Bank. It uses Muthanna 659 such as family relationships or regional affiliations. Transfers in Iraq 0.3 1.9 27.3 a technology for fund transfers via secure Smart Cards of money take place based on communications between (Million) operating in real-time. It provides offline fully integrated Najaf 6,119 members of a network of hawaladars, or hawala dealers. payments, switching and settlement solution suitable for Mobile The Hawala system is cheap and easy and widely used in Zain Asia Cell Korek multiple applications and services for un-banked and under- Babylon 10,110 Operator Iraq for money transfer. No credible information is available banked populations of Iraq. ISC is the only company in the on the number of hawala dealers currently operating in country which has a large coverage reaching most under Diyala 10,129 Number of Iraq. However, Hawala dealers are present in all big markets developed/unbanked areas using the latest technology of Subscribers 13.5 9.0 4.8 and charge between 2-4 USD per transaction for money (Million) the plastic card containing a computer chip and enabling a Thi-Qar 8,140 transfer within Iraq. holder to withdraw cash requiring encrypted data (biometric) of the card holder. This data can be read by special devices Salah al-Din 1,549 at point of sales verified with the biometric data (finger print 7.3. INTERNATIONAL SMART CARD or iris) of the card holder. The largest coverage of Iraq by the Kerbala 769 (ISC) – QI CARD ISC has been achieved through bilateral partnership agree- ments between the ISC and a number of governmental and Kirkuk 638 The Qi card, in use since 2008, is a global smart card used for private banks, financial institutions, PoS and the Post Office issuing Biometric ID cards for citizens in Iraq. The Qi Card is of Iraq (see Table 13). Missan 568 an Iraqi debit card and is the national credit card of Iraq. Iraq’s two biggest state-owned banks, Rafidain Bank and Rasheed In addition to cash express shops, 320 bank branches Ninewa 10,114 Bank, together with the Iraqi Electronic Payment System (IEPS) (government bank branches) and 52 private bank branches have established a company/ consortium called International across country are providing cash disbursement facility to Wassit 979 Smart Card (ISC), which has developed a national credit card Qi card users. called ‘Qi Card’. Currently there are more than 2.8 million Total 81,694 smart card holders in Iraq. They are mainly beneficiaries of the government’s safety net program and receiving monthly cash allowance and pensions from MOLSA.

Marketplace in Jeddah camp. Photo IOM Iraq 47 Number of phone connection per 100 individuals in a certain area.

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The National Development Plan 2018-2022 recognizes ensure harmonization with CWG and mobile banking (either that delivering cash through multiple FSPs is a worthwhile AsiaCel or Zain). CCI, CWG members and UNHCR mostly use investment. FSPs include Qi-Card to ensure harmonization the latter two FSPs but no one uses Qi-Card. with the Social Protection Floor and national Hawalas to

Table 5: FSP Review (combination of IOM and UNHCR’s inputs as well as WFP, DFID, CWG, CCI)

FSP DELIVERY BENEFICIARY CURRENCY TRANSFER CASH OUT AGENT TOTAL FSP COVERAGE TYPE TYPE REQUIREMENTS AVAILABLE FEES FEES FEES COST

Contracted Qi Card Smart Card All governorates ID IQD and USD CBA to fill in TBC TBC TBC Agents, ATM

Disbursement fee: Cash-out of merchants from ZainCash 7.85% Min- Zain cash Mobile Money Contracted Agents 15 Govt ID IQD 0% agents: 0.6% (from merchant) • 1.25% all Iraq 9.35% Max • 2.75% Mosul (invoiced to IOM) deducted from wallet balance

Rate goes between 0.5% to 0.9% 6.5% Min Asia Hawala Mobile Money Contracted Agents All ID IQD 0.5 - 0.9% for any disbursed - 6.9% Max

Direct Cash 2.5% - 3% depending on Star & Orbit Direct Cash delivery to All N/A USD/IQD 0% 2.5% - 3% governorate Vendors

Direct Cash Zozik Direct Cash All N/A USD/IQD Several options ranging from 2-3% 0% 0% 2%- 3% delivery

Families living outside of camps do not always receive the same structured support those living inside do. Cash based assistance meets their specific needs.Photo: IOM Iraq

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8. CHALLENGES AND RISKS RELATED TO CBI 9. CASH ASSISTANCE AND RISKS RELATED

The Cash Feasibility Assessment identified the following key challenges and risks: TO COUNTER-TERRORISM MEASURES

Challenges to implementing CBI and MPCA in Iraq include: beneficiaries in line with donor anti-terrorism policies; CCI and CWG have identified as a challenge the monitoring • Donors should be more responsive to requests from • Limited number of effective financial service providers • Low absorption rates of MPCA referrals to national Social of beneficiaries of cash assistance with perceived ISIL affil- humanitarian organizations for guidance on the content, (FSPs) capable of delivering cash48, Safety Net (SSN)49, iation, as there is a requirement from some donors to scope, and application of counter-terrorism measures in screen beneficiaries who are suspected of terrorism activ- specific contexts; • Providing cash assistance in camps to IDP population due • Differences between the targeting system and approach ities. Following discussions with the CCI Lead, the CWG to CWG policy on no MPCA in camps, donor anti-terrorism of humanitarian MPCA vs SSN50, reducing the effective • Donors and intergovernmental bodies should take coordinator, as well as reviewing global experience on this, policies and difficulties in providing targeted assistance ‘handover’ of caseloads supported by humanitarian steps to ensure that counter-terrorism measures do not including Cash, Learning Partnerships (CaLP’s) recent review for the most vulnerable households; actors to MoLSA, undermine the valuable role played by national and local of cash and risks in Yemen and Mali and other locations,52 humanitarian actors; • Market access in a few hard-to-reach locations of the • Three-month MPCA assistance has limited impact on it was highlighted that it is important to: (1) separate risks country (especially Diyala Governorate and areas close people’s lives in protracted displacement, perceived versus real, (2) identify risks specific to cash from • Counter-terrorism laws and measures adopted by States to the Syrian border), different assistance modalities, (3) ensure that monitoring and intergovernmental organizations should include • Difficulty to limit use of cash for purchases on products made indicators and proposed solutions related to minimizing or exceptions for humanitarian action which is undertaken • Some Iraqis do not have IDs which makes enrolment difficult, in Iran, particularly important for organizations receiving funds ensuring that assistance is not provided to assist terrorist at a level intended to meet the humanitarian needs of the from the US, which puts these restrictions in agreements. • Difficulties of identifying terrorist agents and affiliates among networks are discussed and agreed at inter-agency coordi- person concerned; nation meetings with donors. These discussions will demand • Counter-terrorism laws and related measures adopted Table 6: Risks identified and risk mitigation measures to CBI in Iraq a careful analysis between reducing risk and compromising by governments and relevant intergovernmental bodies on humanitarian neutrality and impartiality. Across the world, should exclude ancillary transactions and other arrange- RISKS PROBABILITY IMPACT MITIGATION MEASURES for instance, in Afghanistan, Somalia, Gaza and the West ments necessary for humanitarian access, recognizing Bank53, organizations struggle with ensuring compliance Spending on not-intended items that humanitarian actors operate in areas under control Medium/ Restrict the Cash, Post-Distribution Monitoring with counterterrorism requirements as well as humanitarian when providing sector-based Low of groups designated as terrorist; High (PDM), agree on % acceptance unconditional/unrestricted cash neutrality and impartiality. It is critical to engage in a frank dialogue with donors, seeking guidance how to meet coun- • Humanitarian organizations should work together to more Cash mismanagement by either SOPs, MEAL unit to ensure Post-Distribution Low High FSP or UN/NGO staff Monitoring, Feedback Mechanism terterrorism demands while providing life-saving assistance effectively demonstrate and strengthen the implemen- in areas of risk. tation of the different policies, procedures, and systems Beneficiaries are requested for Low High Protection Monitoring, Feedback Mechanism used to minimize aid diversion to armed actors, including something in exchange of cash Humanitarian actors should discuss this issue in the broader those designated as terrorist, and better communicate Security of and safety of UN/NGO staff Low High Outsourcing to FSP, SOPs, Security Support, PDMs humanitarian community – including at the level of the HCT how they weigh such efforts against program criticality and IASC. This dialogue could serve to engage and educate Low/ Protection Monitoring/ Assessment/ MEAL process Security of and safety of beneficiaries High and humanitarian need; Medium monitoring and feedback mechanisms donors to inform them about the challenges posed by coun- Low/ Protection Monitoring/ Assessment, Feedback ter-terrorism law and policies to principled humanitarian • Donors and intergovernmental bodies should avoid Protection concerns (SGBV, intra-HH) High Medium Mechanism (such as call centres/ hotlines) action. OCHA and NRC commissioned a study in 2013 on promulgating on-the-ground policies that inhibit Outsourcing terrorist list screening to FSP, Feedback humanitarian action and counter-terrorism which made the engagement and negotiation with armed groups, including Mechanism (such as call centres/ hotlines), security, following recommendations:54 those designated as terrorist, that control territory or Cash supporting terrorist networks Medium High liaise with CWG actors, frank discussions with HCT access to the civilian population. and donors to harness solutions • The humanitarian community and donors should engage Restrict cash (but even then, risks remain!), discuss in sustained and open policy dialogue on how to better with donor how they expect UN/INGO to monitor reconcile counter-terrorism measures and humanitarian Low to Low/ Purchase of items from Iran this, liaise with CWG actors, frank discussions with Medium51 Medium action. This should take place across sectors within donors on indicators/ approach. Seek other donor government (security, justice, financial, and humanitarian) support with reduced political requirements for CBIs and between States and humanitarian community at HQ Impact on inflation (market not Prices stable, Joint Price Monitoring Initiative (JPMI), Low High and field level; able to meet demand) REACH, CWG, CCI

52 http://www.cashlearning.org/cash-transfer-programming-and-risk/key-resources 48 The Republic of Iraq, The Ministry of Planning (2018), National Development Plan Summary, 2018-2022. 53 HPN/ ODI, Sherine El Taraboulsi-McCarthy (August 2018), A humanitarian sector in debt: Counter-terrorism, bank de-risking and financial access for NGOs in 49 Due to not straightforward due to lack of capacity and disagreements around targeting approaches. the West Bank and Gaza. 50 As well as targeting between MPCA and government Social Protection floor not fully matching and harmonized. 54 HPN ODI, Jessica Burniske, with Naz Modirzadeh and Dustin Lewis (November 2014), Network Paper HPN Humanitarian Policy Group Humanitarian Practice 51 Probability is low to med because Iranian imports amount to only 15% of total imports into Iraq Network at ODI Number 79, Counter-terrorism laws and regulations: What aid agencies need to know, page 14.

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MAIN REFERENCES AND BIBLIOGRAPHY

• IOM Iraq (2018), 2018-2020 Strategic Priorities and Plans. • UNHCR Multi-Purpose Cash Assistance (March 2018). IOM Iraq (2018), Mission Overview. IOM (June 2017), • UNHCR, Financial Service Provider Review, Iraq. Obstacles to Return in Retaken Areas of Iraq. IOM (July 2017), Shelter/ NFI and CCCM Programme 2017-2018. • WFP, IRAQ Market Monitor Report Issue No. 23 June 2018, IOM Iraq (March 2018), Community Revitalization https://snap.vam.wfp.org/main/. Programme (CRP), Community Assessment Report. • WFP (May 2018) Evidence from WFP Multi-Purpose Cash • DTM Iraq Online Portal, 15 October 2018 http://iraqdtm. Operations Pre/post outcome results of MPCA in Mosul. iom.int/. • Hasan Latef K. Alzobaidee (December 2015) Social • The Republic of Iraq, Ministry of Planning (2018), National Protection and Safety Nets in Iraq. Development Plan Summary 2018-2022. • ODI, Kristin Smart (March 2017), Challenging the system: • World Bank (2018), Republic of Iraq. humanitarian cash transfers in Iraq.

• World Bank (Fall 2018), Iraq Economic Monitor Toward • ODI and Centre for Global Development (CGD), Reconstruction, Economic Recovery and Social Cohesion (September 2015), Doing Cash Differently: How cash transfers can transform humanitarian aid Report of the • World Bank (Fall 2018), Iraq Economic Monitor from War High Level Panel on Humanitarian Cash Transfers. to Reconstruction and Economic Recovery. • ODI, Bailey and Harvey (2017), Time for Change: • World Bank (15 June 2018), Jobs in Iraq: a primer on job Harnessing the Potential of Humanitarian Cash Transfers. creation in the short –term. • ODI (2015) High Level Panel on Humanitarian Cash • OCHA Iraq (February 2018), Humanitarian Response Plan Transfers. (HRP) 2018. • The Global Public Policy Institute (GPPI), Steets, Binder, • Shelter and NFI Cluster, Iraq (2018), Several Cash Derzi-Horvath, Kruger, Ruppert (April 2016), Drivers and Guidance Notes (see footnotes). Inhibitors of Change in the Humanitarian System - A • The Cash Learning Partnership (CaLP) (2018), Cash Political Economy Analysis of Reform Efforts Relating to Consortium of Iraq (CCI), Case Study Findings. Cash.

• CaLP (2018), State of the World’s Cash Report. • HPN, Bailey (2011), What cash transfers tell us about the international humanitarian community. • CaLP (2018), The Power of Financial Aid, http://www. power-of-financial-aid.org/scaling-up-financial-aid/. • Safer Homes, Stronger Communities: Handbook for Reconstruction, Chapter 6: Reconstruction Approaches. • DFID, ECHO, OFDA (2018), Humanitarian Cash Assistance in Iraq: Short-Term Priorities for Alignment and Advocacy. • The World Bank in Iraq (2018), Overview, website: https:// www.worldbank.org/en/country/iraq/overview. • Cash Working Group (June 2018), Survival Minimum Expenditure Basket (SMEB). • IBRD (2018), Project Appraisal Document on a Proposed Loan in the Amount of US$200 million to Iraq. • UNHCR, Matthews and Mitchell (2018) Harnessing Social Protection for Displaced People in Iraq.

Families receiving CBI have a broad spectrum of different needs that are difficult to assess on a large scale and in a timely manner. Photo: IOM Iraq

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