Shifting from cash in the midst of crisis: Electronic transfers in the Democratic Republic of Congo

For families displaced by armed conflict or natural disaster, receiving some form of money gives them choice: Do we buy milk for the children or a warmer coat? Do we buy food in this town, or continue to press on to somewhere safer?

While physically handing out cash is known to help families recover from crisis, the process can present challenges for both recipients and relief workers. Manual delivery of cash in envelopes can be difficult to scale, is often complicated by security and corruption threats, and can be expensive to administer.

Relief workers are eager for technology that can help surmount these urgent challenges. Electronic transfers (e-transfers) offer promise, but how relevant are these solutions right now? And can they improve humanitarian aid in places where basic infrastructure is weak to begin with and damaged from recent disasters or conflict?

These were the questions Mercy Corps set out to answer through research conducted in the Democratic Republic of Congo (DRC), where two decades of conflict have displaced 2.6 million people,destroyed livelihoods and damaged physical infrastructure, financial institutions and markets of an already poor nation. The DRC remains a predominantly cash-oriented society, with minimal access to formal financial services; only four percent of the population has an account at a formal financial institution. At 17.5 percent, the penetration of mobile phone subscribers exceeds the reach of financial services.

With support from the MasterCard Center for Inclusive Growth, Mercy Corps undertook a nine-month study to determine which methods of distributing cash were most expedient and cost-effective in this challenging context. As part of the study 3,355 people in Eastern DRC received assistance from Mercy Corps in the form of either electronic vouchers[1] (e-vouchers), mobile money or physical cash distributions. Mercy Corps’ report “Cheaper, Faster, Better?” provides some surprising results from the study.

In exploring whether e-transfers are cheaper, we found that when evaluating all program costs – including set up, distribution, and monitoring – e-vouchers (with an administrative cost of $222 per transfer) were the most expensive mechanism to deliver assistance in eastern DRC. Mobile money (at $106 per transfer) was the next most expensive, and direct cash (at $77 per transfer) was the least expensive way to deliver aid, when measured by cost per transfer and when transfer values were standardized. Despite offering lower transaction fees, mobile money transfers were more costly for Mercy Corps to implement in this program than direct cash because they required more time and oversight from Mercy Corps staff due to limited mobile money infrastructure.

Total Program Administrative Costs by Spending Category

Cost Per Transfer

Looking at deployment speed, e-vouchers were the quickest mechanism to screen, select and contract in this program, requiring 160 hours of Mercy Corps staff time. Cash was also relatively quick to set up, requiring 179 Mercy Corps staff hours. Mobile money in this instance proved to be the slowest disbursement mechanism in the DRC, taking 540 staff hours – nearly three times longer to set up than either e-vouchers or physical cash distribution. This lengthy start-up period was related to time consuming negotiations required to clarify terms of service, operating procedures and contracts with the mobile money operator. The unreliability of the mobile money service provider– who often failed to show up for scheduled registration and cash-out events – and the dearth of cash-out locations in rural areas of the DRC posed additional challenges.

Hours Required for Deployment

In exploring whether e-transfers are better for program participants in the DRC, we found that e-vouchers were the most intuitive. Seventy six percent of participants readily understood how to use them on the first try. They also allowed us to deliver aid reliably to the target population. Mobile money, by contrast, caused significant delays both in the overall program timeline, and during distribution events organized for participants. Cash-outs using mobile money were extremely difficult for participants, and only five percent of mobile money recipients in this study were able to enter their PIN codes without help during initial disbursement rounds.

What do these findings mean for Mercy Corps’ humanitarian work? While we are committed to using electronic transfers whenever possible, we see that in the short-term, there will still sometimes be a role for cold, hard cash, depending on the region and availability of service providers. We have created a comprehensive guide to help humanitarian agencies decide when e-transfers are appropriate and likely to advance humanitarian goals.

In the long-term, we are working with payment providers, like MasterCard and others, to improve the quality and availability of electronic transfers even in the toughest environments. The humanitarian challenges we face, and opportunities and benefits presented by e-transfers, are too great to solve alone, and too pressing to leave for tomorrow.

Sara Murray is the electronic cash transfer program manager for the global humanitarian agency Mercy Corps.

[1]E-vouchers used in the DRC replaced paper vouchers with “smart” credit cards embedded with a chip. This study used an e-voucher system from sQuid, a U.K.- and Kenyan-based contactless payments company. The e-voucher system operates in offline, low-power environments using battery operated point-of-sale (POS) devices that use SIM cards to transmit transaction data to a centralized, cloud-hosted platform.