UNRWA – Study of social transfer programmes and options in the Gaza Strip

UNRWA supported the Social Safety Net Programme in Gaza, which mainly relies on in-kind assistance.
To support UNRWA’s efforts to increase the use of cash, this study aimed to 1) map different cash-based assistance programmes in Gaza, 2) assessed the circumstances under which delivery modalities will have the best Value for Money, 3) created an overall decision tree to support UNRWA’s decision-making on which modalities to use, and 4) supported UNRWA’s response analysis process to delivering assistance.

In addition to conducting a desk review, FGDs, and a household survey, the KIIs with traders, importers and key market actors incorporated elements of the ICRC Rapid Assessment for Markets (RAM).

The study found that the use of Cash Based Assistance as such a large scale to deliver UNRWA Social Transfer is not appropriate in the Gaza strip, first and foremost due to the lack of community acceptance. Whereas in neighboring countries, cash acceptance is extremely high among crisis-affected households, the majority of refugee households in Gaza, despite being familiar with the modality prefers in-kind aid to cover their food needs. In addition, the use of CBA would not drastically increase the perceived value of the assistance for the refugee households. This is especially the case for the absolute poor group. Irrespective of the modality, the biggest benefit exists in the outcomes most directly linked to food security.

The use of CBA would also pose a risk in term of market functionality. The resilience of the markets in Gaza is undisputable, however, the only permanent supply route into Gaza is under the control of a foreign state who has the ability to promptly shut down this route. Unless there is an official commitment to allow food supply into Gaza, irrespective of the security and political situation, it does not seem appropriate for UNRWA to step away from supplying in-kind food items in the strip.

The unique financial environment in Gaza is also an important barrier to the use of CBA, and especially cash grants. Gaza does not issue currency and therefore solely depends on cash imports in order to meet its need for physical cash. Those imports, similar to food items, are also under the control of a foreign state. Any large-scale cash distribution in Gaza would necessitate a commitment that sufficient volume of physical cash can regularly enter the strip. Furthermore, transactions in Gaza take place in three different currencies: NIS, USD, and JOD. Certain currencies are preferred for certain types of transactions (e.g. food purchase in NIS, rent in USD). However, as the import of physical cash is constrained, financial service providers distribute cash to their clients in the currencies they currently have in stock, or with a mix of currencies, irrespective of the agreed currency. That results in important exchange loss for the end users, exacerbated by the fact that the value of a bank note also partially relies on its physical condition.

Using cash-based assistance in the Gaza strip to deliver assistance can be feasible on a small scale as it is unlikely it will have significant negative impact on the market or the cash supply chain. UNRWA undoubtedly has the capacity to deliver this. However, it is the authors’ opinion that such pilots would not be appropriate, nor would they present value for money. The communication and awareness raising efforts would have to be significant, irrespective of the size of the pilot, given the local resistance to CBA. The effects on the local economy or the potential efficiency gains due to the decrease of distribution costs are in turn likely to be minimal, especially considering the fact that adapting to a new system entails significant costs and adjustments up front.

Feel free to listen to this podcast, in Arabic, that summarizes the key findings:

https://soundcloud.com/user-536368429/podcast-unrwa-gaza

The full report available is here:

UNRWA_Social transfer study