COVID-19: How cash transfers can save lives and livelihoods

The Covid-19 pandemic will see more than a quarter of a billion people suffering acute hunger by the end of the year 2020, according to the World Food Programme (WFP). The pandemic is impacting households by reducing incomes and purchasing power, increasing unemployment, increasing expenses for health, increasing prices of critical commodities due to disruption of markets, as well as psychosocial and protection risks, including increasing violence against women and girls.

Negative impacts will be disproportionately higher for poor households, women, children, the elderly and chronically ill, and groups and communities already affected by hunger and other crises such as the forcibly displaced, migrants and households recovering from humanitarian crises.

Global Report on Food Crises 2020 indicate the lives and livelihoods of 265 million people in low and middle-income countries will be under severe threat unless swift action is taken to tackle the pandemic, up from a current 135 million.

According to the International Labour Organization (ILO) the COVID-19 pandemic could cause equivalent of 195 million job losses globally. Some 1.6 billion people employed in the informal economy – or nearly half the global workforce – could see their livelihoods destroyed due to the continued decline in working hours brought on by lockdowns to curb the spread of COVID-19. This is already visible in key developed and developing countries where the economies have taken a major hit.

Income losses as a result of COVID-19 are expected to exceed $220 billion in developing countries. With an estimated 55% of the global population having no access to social protection, these losses will deeply affect the poorest and most vulnerable communities in particular.

Livelihoods and economic security is key to COVID-19 recovery

Not just saving lives, saving livelihoods is also a huge imperative. Socio-economic disruptions will not only reduce the well-being and livelihoods of people, but also undermine the social safety nets, markets and food security on which life depends.

Economic security is the key driver to bring back the livelihoods of the most vulnerable people including women and girls particularly in the developing and fragile countries to normalcy. Food and income security will play a crucial role to meet the additional needs and services e.g. education.

Around 63 % of the world’s poorest people work in agriculture, the overwhelming majority on small farms. Most of the poorest, food insecure and most marginalized people live in rural areas and the response must recognise their vulnerabilities and unique needs in the mid and long term.

Economic growth in agriculture is two to three times more effective at reducing poverty and food insecurity than growth in other sectors. 

How cash transfer can play a critical role in COVID-19 recovery

Cash and voucher assistance (CVA) also known as cash transfer is one of the most effective ways to support people during a crisis. Evidence has shown that in the right circumstances, giving people cash is a superior and less expensive way to meet their needs.

Evidence from past global financial crises and epidemics, and conflicts, forced displacement and a range of environmental emergencies indicate that cash transfers help to maintain access to healthcare, protect consumption, support protection and recovery of livelihoods, and sustain investments in human capital. One of the strongest and most consistent findings regarding the cash transfer programmes is their contribution to reduce hunger insecurity.

Globally, governments are introducing, leveraging and expanding social protection programmes through cash transfers in response to COVID-19. The U.S. passed a $2 trillion stimulus package, part of which will provide cash transfers to a significant portion of the population. India similarly announced it would provide 1.7 trillion rupees (US $22.5 billion) to support its citizens, with cash transfers to vulnerable families making up a share of the funds.

Humanitarian gender-sensitive cash transfers have a critical, complementary role to play in the response to COVID-19, supporting continuity and safety in the delivery of humanitarian assistance.

Unconditional /multipurpose cash as a preferred form of assistance to affected population that provides choice, dignity and the greatest flexibility for women to resume economic activities when it is safe for them to do so.

Globally, combinations of cash and in-kind (cash plus approach), service delivery through awareness-raising like discussion groups or training and community-level activities like community asset-building, savings and lending groups, have been shown to be the most promising for lasting impact for women.

Cash can also save lives

Access to cash can also help people manage psychosocial distress. One way in which cash transfers save lives is by reducing suicides. Analysis by Hensel finds that in Indonesia, cash reduced suicides by 18% of the mean suicide rate. In Brazil, the decrease in deaths due to cash transfers was between 3.4% and 7.9%. There is a consensus in the academic literature that mental health disorders are influenced by the economic circumstances faced by individuals. At the same time, anti-poverty social protection programmes, including cash transfers, can alleviate mental health disorders. There have been livelihood interventions by peer agencies in conflict affected locations of Asia through cash transfers to achieve mental health and protection outcomes where livelihoods are seen from occupational therapy lens vis-a -vis economic security.

Mona Zobayer a Syrian refugee in Egypt said “since the spread of the pandemic, they have no income as her husband was working in a restaurant which is closed now, the cash assistance helped her and her family in purchasing protective kits and purchasing food.

Cash delivery should reduce the need for affected persons to leave their homes to collect and use cash; older persons, persons with disabilities and individuals with underlying health conditions will be at increased risk of illness and mortality if they have to travel to collect cash from cash/voucher distribution points.

Door-to-door distributions that adhere to a survivor-centered approach, maintain anonymity and confidentiality should be prioritized. Cash distribution is generally 25-30% more cost-efficient that in-kind distribution. This can increase to up to 90% more cost-efficient if digital platforms or mobile delivery mechanisms such as mobile money that reduce proximity and can deliver cash quickly.

By Syed Mohammed Aftab Alam, Global Lead on Cash Programming, Plan International. He may be reached at [email protected]