Assessment Of Financial Service Providers – CVA In Yemen

In 2020, 24.3 million people in Yemen (approximately 80% of the population) needed some form of humanitarian and protection assistance, and half the population suffered acute food insecurity.1 Cash and Voucher Assistance (CVA) is a critical part of the humanitarian response in Yemen, bringing relief to households impacted by crisis, displacement, poverty and disease.  

In January 2021, a study by the CALP Network found that while the scale of cash programmes is a positive achievement, it remains fragmented, causing inefficient use of humanitarian resources, inadequate assistance for the most vulnerable, and inappropriate and sub-optimal risk mitigation. One aspect of the study related to financial service providers and cash delivery mechanisms. 

As a result, the CALP Network, REACH and the Yemen Cash and Market Working Group (CMWG) conducted an assessment that brought together the perspectives of the main stakeholders to increase understanding between CVA actors and generate an updated mapping of the CVA landscape. From April to May 2021, interviews were held with key informants from affected communities, humanitarian organisations and financial service providers (FSPs) to discuss available CVA delivery mechanisms, FSPs, challenges, risks and mitigation measures.  Here are some of the findings. 

CVA delivery mechanisms and FSPs available in Yemen 

• Delivery via agents was the mechanism most commonly used by humanitarian and FSP key informants, followed by paper vouchers. This preference seems to be a direct result of Yemen’s working environment where targeted communities live in hard-to-reach areas; financial infrastructure is limited and there are high rates of (financial) illiteracy.
• Mobile money, e-vouchers, and bank transfers are newly emerging mechanisms that are being used by some humanitarian organisations. Multiple FSPs are available and many have the experience to be able to implement CVA programmes. 
• Assessed communities commonly use hawala agents and exchange offices to send/receive money and they prefer to receive CVA via these actors. This preference and familiarity could be leveraged to serve delivery via agents, but also other mechanisms such as mobile money and value vouchers.  

How the Yemeni context affects CVA 

• In the assessed communities, the conflict did not appear to directly influence individuals’ ability to access FSPs, but CVA practitioners were faced with roadblocks or were not granted permission to implement programmes or access some areas. To mitigate risks posed by the conflict, social tensions or corruption, humanitarian organisations and FSPs focused their efforts on building relationships and communication with local stakeholders. A best practice noted by humanitarian agencies was preparing and training on Standard Operating Procedures together with FSPs. 
• Despite the ongoing liquidity crisis, liquidity was not an issue commonly reported by FSPs. But the ongoing economic crisis was increasing transfer prices and fluctuating exchange rates presented a shared challenge for both humanitarian organisations and FSPs. 
• The distance to FSPs was one of the main obstacles for vulnerable groups to collect assistance and the main reason why communities disliked any given delivery mechanism. Minimizing distance to FSPs will increase beneficiaries’ protection and satisfaction.  
• Data protection is a risk as FSPs do not have a clear data protection watchdog and lacked clarity about which regulations to follow. As a result, third parties could request access to beneficiary data. E-payments or tokens could bring more data security in the short run.  
• Displacement and/or inability to renew documents means some people do not have the standard identification documents (IDs) usually needed for Know Your Customer (KYC). In response, FSPs demonstrated flexibility in terms of accepting a wide range of ID types to enable people to access CVA programmes. 
• Focused attention is required to guarantee inclusion. For example, women may benefit from there the presence of female distribution staff or by programmes paying extra attention to the sensitivity of passport photos or iris scans. Similarly, women, illiterate, poor or older people often risked exclusion from communication or delivery due to difficulty to use or access phones. It may be important to maintain personal communication and support channels for specific groups.  

Opportunities for improving CVA in Yemen 

• Around half of the interviewed humanitarian actors expressed the need for greater collaboration, coordination and knowledge exchange. Findings suggest that humanitarian organisations share their grievances about FSPs amongst each other, but individual mitigation practices could be amplified for the benefit of all. Some humanitarian actors suggested that joint negotiations with FSPs may be an effective way to address challenges with exchange rates or the low coverage of financial infrastructure. 
• Tokens are observed as a low-tech, simple solution that could bring digital tracking of payments and faster reconciliation for delivery through agents. Potentially, tokens could also limit the sharing of beneficiary lists with FSPs, which could reduce the implementation time and act as a data protection measure. 
• SMS messaging, to inform beneficiaries of the collection time and location, increased the privacy of beneficiaries and prevented crowding at distribution sites. The majority of communities had good mobile network coverage, and in 83% of communities, the majority possessed a phone.  
• In some areas, communities are receptive to digital delivery mechanisms given the sufficient coverage of ATMs/branches, network connectivity and/or mobile money agents. In a small number of communities, preference for CVA via mobile money services was reported.  
• E Communities’ familiarity with agents may be used as a potential stepping stone towards financial literacy and digital financial inclusion if digital delivery mechanisms are tied to agents. At the same time, humanitarian organisations were concerned about risks related to agents, though closer collaboration with FSPs on the selection and management of agents could mitigate these risks.