Cash Feasibility Assessment 2020

CASH FEASIBILITY ASSESSMENT 2020 North-West Syria This study was commissioned by the International Organization for Migration (IOM), conducted in collaboration with the Cash Working Group (CWG) for North-West Syria and funded by the European Commission Directorate General for Humanitarian Aid (ECHO). The opinions expressed in the report are those of the authors and do not necessarily reflect the views of any of these organizations. The designations employed and the presentation of ma- terial throughout the report do not imply the expression of any opinion whatsoever on the part of any organization concerning the legal status of any country, territory, city or area, or of its authorities, or concerning its frontiers or boundaries. IOM is committed to the principle that humane and orderly migration benefits migrants and society. As an intergov- ernmental 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. International Organization for Migration The UN Migration Agency - Syria Cross-Border Mission Gaziantep Office Güvenevler, 29115. Cd. No:1, 27560 Şehitkamil, Gaziantep, Turkey Tel: + 90 342 220 45 80 E-mail: [email protected] Website: www.iomturkey.net Report content and design by Camille Strauss-Kahn Layout by Burak Cerci Cover Image: Use of an e-voucher card in a clothing shop in Azaz - courtesy of Syria Relief & IOM. © 2020 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. EXECUTIVE SUMMARY This executive summary provides a summary of the main findings and recommendations of the study. A more comprehensive set of recommendations and findings is included at the beginning and end of each section of the document. An extended review by topic of the recommendations and findings is also provided in Conclusion. MAIN FINDINGS [CONTEXT] With no recognized authorities, no formal financial infrastructures, and no pre-existing social protection systems as well as with all the logistical complications associated with remote management, NWS presents a complex set of operational constraints and challenges for cash-based programming. Yet, cash and voucher assistance may need to be scaled-up more rapidly and sooner than anticipated, given the level of needs as well as the uncertainty about the future of the cross-border humanitarian response and the recent evolutions of the situation in NWS in general. [NEEDS] The needs of populations affected by the conflict in NWS are not only extensive, they are fundamentally mul- tisectoral, with high variation across locations, across households and over time. Cash-based programming, and in particular unrestricted cash assistance, provides the appropriate flexibility and adapt- ability to meet such diverse needs, especially for IDP populations that have high levels of mobility. The impact of cash and to a lesser extent voucher programs is also likely to be higher than in-kind, insofar as there are fewer concerns about the sale of assistance. [APPROPRIATENESS] Prior experience and current behaviors of affected populations all speak to the appropriateness for them to receive unrestricted cash assistance. Cash assistance is by far the modality preferred by the recipients as it respects their dignity and increases their autonomy. There are ways in which cultural norms can both foster and hinder the inclusiveness of cash and voucher programs. Var- ious targeting and coverage strategies for cash-based programming as well as the use of mixed modalities and the com- bination of various types of cash-based assistance can help address the differential needs of most vulnerable subgroups in recipient communities. [MARKETS] Local markets in NWS have been exceptionally functional, accessible, responsive and resilient throughout the crisis and they are expected to remain so in the foreseeable future. With the local economy remaining generally cash-deprived, the only concerns about cash-based programming with regard to markets include the limited foreign currency liquidity in NWS that can already be noted with some denominations in USD as well as the possibility in the future of growing tensions with non-beneficiaries due to external factors of inflation [PRACTICES] The vast majority of assistance in NWS is still distributed in kind. Yet, over the past few years, all sorts of cash and voucher programs have been successfully implemented both in opposition-held areas and in Turkish-admin- istered areas. All the organizations with experience in cash-based programming in NWS recommend the implementation of cash assistance, with as little restrictions to the transfers as possible. Organizations with experience of digital tools for cash and voucher programs, in particular e-vouchers and e-tokens for money-tracking, are unanimous on the positive impact that technology has on the efficiency and effectiveness of their interventions. [FUNDING] In line with their commitments to the Grand Bargain agenda, the major donors for NWS are willing to fund more cash and vouchers programs. Most of them are also in favor of increasingly programming unrestricted cash transfers. CASH FEASIBILITY ASSESSMENT | 2020 3 Yet, all donors also agree that in a context like NWS aid organizations need to have already developed strong, robust monitoring systems and demonstrated their capacity for cash-based programming prior to engaging in full-scale cash- based interventions. [CAPACITY] Overall, there is a large capacity of humanitarian organizations to increase the volumes of their cash-based programming through both the scale-up and the diversification of their cash and voucher programs in the medium and long-term. Special attention should be given to the technical capacity-building of support functions such as M&E, pro- curement and finance. The main challenge for the scale-up of the cash response will be the rapid pace at which it is likely to happen and the short time horizon to prepare for it. Additional challenges include high volatility in individual organization’s cash capacity due to staff turnover as well as the need for cash coordination structures to effectively improve and grow at the same pace. [SERVICES & INFRASTRUCTURES] The distinction between international financial services (how the money flows into Syria) and delivery mechanisms (how beneficiaries redeem the assistance they are entitled to) is important in NWS. The same actors – hawala agents – can be used for either or both purposes. In terms of financial service providers (FSP), there are only two options available both currently and in the foreseeable future: hawala networks and Turkish PTT services. Both are currently widely used for all humanitarian interventions – in kind as well as in cash and vouchers –, and both have some capacity to absorb a gradual shift from in-kind towards cash programming. Yet, there are apprehensions about working with either FSP exclusively. Beyond specific misgivings about the workings of hawala networks, the main concern in the use of either type of financial service providers is the lack of competition. The use of hawala networks as FSPs is often perceived as an exposure to risks of aid diversion by terrorist groups, al- though the real risks can arguably largely be mitigated. By contrast, the use of individual hawala agents as delivery mechanisms in cash distributions presents no such risk: it is in fact a mitigation mechanism for security risks related to money transport and an identified best practice. [SYSTEMS & PARTNERSHIPS] Overall, cash-based programming in NWS is already held to higher standards than in-kind assistance in terms of implementation and monitoring systems. There are in practice fewer issues with cash and voucher assistance than with in-kind assistance in both internal checks and beneficiary feedback. However, this finding could to some extent be called into question by an arguably detrimental reporting culture. Requirements for independent oversight in remote management have resulted in the systematic use of segregation of duties and double-control procedures for cash and voucher programs’ implementation. In practice, this means that the success of cash programming also depends critically and ultimately on effective partnerships between organizations with implementation capacity and organizations with oversight capacity. Where systems are already in place, cash-based programming is the easiest modality to scale-up dramatically – arguably much more easily than in-kind programming. There are also important economies at scale and increasing returns on investments in cash systems over time. [RISKS & RISK MANAGEMENT] Cash is not inherently riskier than other modalities. But risk perception is a major inhibitor to cash-based programming in NWS. In particular, cash assistance continues to be disproportionately perceived as more subject to reputational risks than in-kind distributions. In practice, residual risks of diversion in cash and voucher assistance are arguably lower than for in-kind assistance, due to the closer scrutiny and higher implementation standards placed on cash-based programming by agencies and donors. Sim-

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