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

8 JULY 2020

Protecting livelihoods can save lives during COVID-19 response, blogs Cash Based Programme in Emergencies Specialist Syed Mohammed Aftab Alam.

The response to COVID-19 must be to protect livelihoods as well as save lives. The damage the virus will wreak in many countries is still uncertain, but we can be sure that people will not survive if they have no money and no food.

Countries such as the U.S. and India have provided stimulus packages to support their citizens. The benefits of cash transfers during crises to people in smaller countries, vulnerable people and those in marginalised communities, cannot be overstated. 
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 lockdown to curb the spread of COVID-19. 

Economic security has a knock-on effect on many other issues such as protection and safety, especially on girls and young women. We know that girls and young women are likely to be worst hit by the secondary impacts of the pandemic, so initiatives that mitigate these risks must be built into the global response. 

Families with cash flow are more likely to be able to keep their children in education, as well as access other essential needs and services, from health care items to the bus fare that may keep their daughter safer on her journey to school.

What’s the economic impact of COVID-19?

The pandemic is impacting household finances through an increase in unemployment, a reduction in incomes and the growing cost of health care items and critical commodities as markets are disrupted.

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

The Global Report on Food Crises 2020 indicates the lives and livelihoods of 265 million people in low and middle-income countries will be under severe threat unless swift action is taken and the World Food Programme estimates a quarter of a billion people could be suffering acute hunger by the end of 2020.

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

Around 63 % of the world’s poorest people work in agriculture, the overwhelming majority on small farms. It has been shown that economic growth in agriculture is two to three times more effective at reducing poverty and food insecurity than growth in other sectors. So it is vital we support these people and there can be no delay. 

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, more cost-effective way to meet their needs than in-kind assistance.

Cash and voucher assistance is one of the most effective ways to support people during a crisis.

Evidence from past emergencies indicates 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 reducing hunger.

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. 

Cash flow, dignity and saving lives 

“We are washing our hands with soap properly, wearing the masks and staying at home to protect ourselves from COVID-19 infection,” says Arfina, mother of a Plan International sponsored child in Bangladesh.

“My husband is a day labourer. Now he has no work due to the lockdown. We will purchase food and other essentials with this money. Thank you Plan International Bangladesh for providing this financial support.” 

Far from being a handout, cash transfers allow people afflicted by crisis to maintain a sense of normalcy, allows them to support their families and affords them dignity during the COVID-19 pandemic, just as we would wish for ourselves.