Dispelling The Myths Part 2: In the Digital Age, International Development is Done with Cash…

So, if it isn’t hedging, which tools DO INGOs really need from the Finance sector? IPT Africa recently spent two days at AidEx 2023, ‘The Global Humanitarian Aid Event’, held at the Palexpo, Geneva. It served as a great showcase for a variety of private sector suppliers, from aviation logistics to aid kit distributors and water treatment solution designers to pharmaceutical suppliers, whose goal was to speak to INGOs from around the globe. The one constant in the engagement we had from attendees was incredibly telling: “Do you do cash?” 

Every INGO who engaged with the IPT team had the same question, suggesting that true last-mile delivery remains the biggest challenge when working in difficult or high-risk jurisdictions. Whilst the challenge of navigating correspondent banking into certain countries is big enough in itself, many INGOs are faced with an even larger hurdle in terms of the further distribution of funding into remote, risky, or unbanked regions. If a charity is only using a core banking provider for cross-border funding dispersal, their limitations quickly become apparent when it comes time to truly deliver to the end beneficiary i.e., crossing the last mile, especially in disaster response scenarios where local banking infrastructure is damaged or completely offline.

Looking around at AidEx, the encouraging news is that there are certainly last-mile tools available, whether it’s Stellar Foundation’s blockchain technology, where cash payout is available at any one of Moneygram’s 300,000+ agent locations, or Paycode’s hugely innovative next-gen biometric offline digital solution, which is currently enjoying largescale success across Africa and parts of the Middle East. And, of course, the Western Union cash network, with over 500,000 locations around the world, and whilst expensive in the eyes of many AidEx attendees, remains possibly the most accessible cash delivery tool for a large number of charities across the globe. But beyond formal means of moving money and voucher programs etc., local money markets like Hawala networks remain the default cash disbursal method in the most challenging countries. 

Historic and current relief/development efforts in Northern Syria, Afghanistan, Yemen, and Iraq (to name a few) have been heavily dependent on Hawala due to various sanctions regimes and a lack of risk appetite from “formal” Fis to offer up more regulated, or “safer” solutions. Whilst western banking frowns upon Hawala-related payment activity, INGOs have no choice but to deploy Hawala services as they’re given no alternatives, which is something of a paradox. Banks and FIs are reluctant to help in these scenarios, citing heightened risk, thus putting INGOs in desperate situations whereby Hawala is the only alternative… who then incur the wrath of banks for using Hawala or other risky means of moving cash! 

As 2024 fast approaches, it’s clear that the overwhelming demand in international aid distribution is still for cash or, more broadly speaking, true last-mile payment solutions. These are still the financial tools INGOs desperately need as the missing piece in their funding delivery chain. We know that these solutions are out there, but looking through the lens of financial inclusivity, the next question is, how broadly accessible are they? 

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