Cash Crisis and Some Ideas of
How to Deal With It for CBT
Current Situation and Outlook – Part 1
• USD in Cash will remain scarce, the situation is likely
to become worse.
• Federal Reserve Bank is allocating Cash. Humanitarian
and Development actors will theoretically be
prioritized, but in practice this is of little use if the
banks do not have the hard cash. The situation is
especially serious in relatively remote locations.
• The bonds, if they really appear in October, will
certainly lose much of their value almost immediately.
A black market for USD in Cash will develop. The
domestic banking sector will be bypassed whenever
possible.
Current Situation and Outlook – Part 2
• Most of commercial transactions between traders and
other players in the market will take place either in
hard cash, through bank transactions abroad, by
barter trade or through informal channels based on
trust.
• With the current cash crisis, mobile money or card
based distributions become difficult, as traders have
only limited access to USD in cash and most likely will
refuse to get paid via transfers to their bank accounts,
fearing they will not be able to withdraw hard
currency.
Present Status of
WFP’s Cash Distributions
• As long as Standard Chartered will be able to provide
major amount of USD in cash, distributions of cash via
SECURICO will remain feasible, but with associated
security risks.
• Mobile Money: Last distributions just concluded. No
more distributions are planned for now. It has become
difficult for agents to get hold of sufficient cash. If
agents also run a shop stocking food items,
beneficiaries can use their allocation to buy food
directly.
• Card based systems (SmartCard): Pilot has been in
preparation for some time, will probably be started this
month (June), with 50 retailers. With cash crisis,
retailers do not want to get paid to their bank
accounts. They might have to be paid in cash, but this
is obviously not a sustainable solution.
Search for Alternatives – Part 1
• Interviews of beneficiaries of cash distributions show
that almost all of the cash is spent on few essential
food items, plus school fees and, to a minor degree,
on various other livelihood items.
• WFP is trying to avoid simply switching back to
traditional food distributions.
• Therefore it makes sense to design a system that
allows beneficiaries to acquire essential food items
without using cash, but still maintaining free choice
and possibility to acquire other essential items for
livelihood.
Search for Alternatives – Part 2
• There are ideas of switching to a mixed mode CBT +
In-Kind, but without doubling the logistical challenges.
• One solution might be using a card based system
allowing beneficiaries to “buy” food commodities at
sales outlets including GMB.
• Beneficiaries could also use the cards at shops of
participating retailers to buy additional items, up to
the amount loaded on the card.
• Many challenges remain, including the question of how
to pay the retailers.
…and now your ideas?
World Food Programme