While the distribution of commodities continues to dominate humanitarian assistance, there is growing interest and research in cash and voucher transfers to support people affected by natural or man-made disasters and more thought is being placed on how organizations and donors can use cash and vouchers effectively, rather than whether or not cash and vouchers are a better choice. Commodity-based assistance is not always able to meet the unique needs of household sometimes leading beneficiaries to sell them in markets for raising cash to cover other needs.
When basic food and non-food items are available in local markets, cash and vouchers are perceived as the most-efficient way of delivering assistance, transferring choice in the hands of people and supporting local traders, suppliers and economy. However, before deciding on a cash or voucher intervention, it is necessary to carry out a contextual analysis of some pre-conditions to ensure the suitability and effectiveness of such interventions.
- Is there a market in the area, is it functional and are basic food and non-food items available at stable prices?
- Is the market close to the community?
- Can traders meet the demand?
- Are traders in local markets willing to participate in case of a voucher programme?
- Is there a reliable system through which payments can be made to the traders? (voucher programme).
- Is there political acceptance to cash and voucher transfers?
- What are the policies of the donors?
- Are there financial institutions such as banks operating in the area? (banks can be utilized to disburse cash to beneficiaries and to reimburse traders against their vouchers).
- How is the security situation in the area?
- Will the cash/voucher transfer be more cost-effective compared to commodity-based assistance?
- Does the organization have the required technical and implementing capacity?
- How will the project benefit most vulnerable groups of the society such as women, men, members of the transgender community, children, elderly, minorities, chronically sick and disabled?
- What would be the exit strategy?