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What are the impacts of cash transfers in humanitarian settings?

Posted 19th August 2022

The UN Refugee Agency, UNHCR, has just published an Endline Report on GiveDirectly, a charity making unrestricted cash transfers via a mobile money payments platform to some of the world’s poorest people.

The report contains the results from the first-ever study of cash aid in a refugee setting – the Kiryandongo Refugee Settlement in Uganda – and found sizable increases in consumption, business ownership, assets, and psychological well-being.

GIF partnered with Give Directly in 2019, awarding a $2.1 million grant allocated to direct cash transfers: the costs of facilitating the transfers, operational costs including personnel, software, equipment and travel, and communications and dissemination activities.

Many studies have shown that large, unconditional cash transfers (UCTs) reduce poverty and improve quality of life, at least in the short run. However, this study sought to address an evidence gap in the understanding of the effects of large-sized cash transfers in contexts of protracted displacement – would UCTs be as successful in refugee communities, where residents face larger barriers to income-generating opportunities? Would they have similar effects in the context of the dual shocks of COVID-19 and aid cuts?

$1,000 was delivered to approximately 10,000 refugee households in the Kiryandongo Refugee Settlement and about 5,000 host community households in the nearby district, over three years. By rolling out the programme over multiple years, GiveDirectly was able to enrol households and disburse transfers sequentially. Households enrolled early formed the “treatment” group within the study, and households enrolled later formed the “control” group.

By the endline survey, treatment households owned more assets, consumed more goods and services, and earned more business income compared to the control group. The report states that the cash transfers enabled refugees to establish larger and more durable homes, invest in land, consume more preferred foods, purchase medications, and improve mental health.

The key findings include:

  • Refugees in Kiryandongo used the $1,000 transfer to improve their houses, purchase land, and start businesses. Treatment households had 11% ($32.3 above the control mean of $296.9) higher monthly consumption at endline.
  • Transfer recipients were 8.6 percentage points more likely to own household businesses, and total monthly business revenue was 64% higher compared to control households ($14.3 above the control mean of $22.3). Recipient households did not have higher agricultural production or revenue compared to non-recipients.
  • Households used the transfer to invest in land and home improvements. At endline, recipient households had assets worth 60% ($1,386 above the control mean of $2,286) more than non-recipients.
  • While most recipients planned to spend the transfer on education, the long, pandemic-induced school closures in Uganda led to no significant changes on education spending.
  • The GiveDirectly transfer aided refugees in improving their psychological well-being: our composite psychological well-being index was 0.28 standard deviations higher for recipients compared to non-recipients. Despite the increase, both the treatment and control groups show signs of depression and moderate stress.

Two unique features of the study were: GiveDirectly providing cash transfers in a protracted (rather than an immediate emergency) context, and the transfers being large and one-off (rather than small and frequent). Additionally, Uganda’s large refugee population and progressive policies provided a unique opportunity to test the impact of large, unconditional cash transfers in an environment where refugees have relative freedom to invest.

Although it was noted that Kiryandongo is a unique context for the GiveDirectly programme due to its stability, proximity to markets, and fertile land, the report concluded that findings may motivate practitioners and policymakers to consider large cash transfers as a mechanism for poverty alleviation in other areas of protracted displacement.

Visit the UNHCR data portal to access the Endline Report: Unconditional cash transfers in Kiryandongo refugee settlement.

Image courtesy of GiveDirectly.