July 29, 2020 | Read Time: 3 minutes
The economic impacts of social distancing and stay-at-home orders are also being felt in developing nations where most people lack significant savings and governments don’t provide meaningful social safety-net programs. To aid people who are struggling, many humanitarian organizations are distributing cash, a practice more and more groups have adopted over the last several years.
Some developing nations are better set up for such cash distributions than we are in the United States. In some countries, people routinely use their phone to receive and spend money, bypassing cash almost entirely. “In Somaliland or in Kenya, for example, most people don’t have cash anymore. It’s a cashless society in some areas, way ahead of the west,” says Ben Phillips, a humanitarian officer with Oxfam. “It’s just a click of a button and money is transferred to the mobile phone.”
These systems make it easy for Oxfam, Save the Children, and other groups to provide financial aid to individuals during Covid-19 lockdowns. Groups are finding that if they do give out cash this way — often with agreements with certain vendors who will accept the funds — they need fewer staff on the ground to manage their programs, making them more cost-effective, says Jennifer Brass, associate professor at the Paul H. O’Neill School of Public & Environmental Affairs at Indiana University.
CARE has been working on another type of financial-aid system for many years that it hopes will also be helpful during this current crisis. It has helped to create savings groups — a sort of informal credit union where members, no more than about 25 people, come together to deposit funds, take out loans, and make payments. They even have small insurance funds that they rely on for emergencies.
The groups often do much more than banking. They have addressed social issues like child marriage and gender-based violence and help with food security. During this crisis, they have been making and distributing masks and keeping their communities informed about the pandemic and measures people can take to be safe. The groups are also helping to ensure that their villages have enough food. Under normal circumstances, the staff at CARE would work face-to-face with the members of these groups, most of whom are women.
“That ability to physically see and interact with everybody has a positive effect,” says Christian Pennotti, global director of savings groups at CARE. “It’s really effective for transparency when you’re working in low-trust environments.”
But now those meeting are impossible as are the contacts with CARE. The groups are adapting in different ways. Some are meeting less frequently while keeping a safe distance and washing hands frequently. Older members, who are more vulnerable to the most severe symptoms of the virus, are sending younger ones to meet in their place. Others are going one-by-one to deliver and pick up funds from a single individual over the course of several days.
Many of the groups are now using the messaging platform WhatsApp to communicate with each other in areas where they have access to devices and networks. CARE employees are also using WhatsApp to communicate with the groups where they can. Even if only one person in the group has a phone, that individual can get in touch and then communicate public-health information and other messages individually to other members of the group.
“If one person in that group has WhatsApp and we can reach that person and they can reach us, you’ve created a channel to the 25 people in that group and everyone in their extended families,” says Pennotti. “You now have this way of communicating between the communities and the organization.”
CARE is likely to continue to use technology to communicate with the groups, Pennotti says. It has a goal of getting 60 million people into its savings groups by 2030. It was using digital technology before the pandemic, but Covid -19 has pushed the group to move more quickly. “This has been a massive acceleration of that effort,” he says. “I expect that a lot of what we’re learning now becomes standard in terms of our approach.”
