15 April 2020

What is the role of CVA in the context of COVID-19?

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BY Basile Rambaud, Cash and Markets Technical Adviser, Cash and Markets 

 

 

On top of having an impact on the health of people around the world, the crisis caused by COVID-19 will also have a huge direct and indirect impact on their economic resilience and livelihoods. New strict measures are already restricting the economic activities of at least half the world’s population. Even in high income countries, with strong social safety nets, the most marginalised people are already experiencing significant loss of income sources. The economic impact on households will be even greater, where the informal sector takes a big role in the economy and in states where social protection systems are fragile. According to CaLP: “[...] as we saw in the West Africa Ebola epidemic, the economic impacts caused more deaths than the disease itself”.

To respond to this loss of income and to continue to meet their basic needs people are already being forced to adopt negative coping strategies with some that are likely to have an irreversible effect on their resilience and livelihoods. These include for example reducing meals, reducing funds available for education and selling productive assets. 

How can CVA help?

Multi-purpose cash can help to facilitate ongoing access to key basic services such as health, education and water (either through maintaining access or supporting indirect costs such as transport and fees) and to protect people’s livelihoods while reducing the use of negative and irreversible coping strategies. These could have a long-term impact months or years after the crisis, and it is key to offer people timely support
Importantly, cash also provides a lower risk of transmission to staff, volunteers and communities, with digital payments (mobile money, e-vouchers, bank transfers, pre-paid cards, etc.) as a solution to deliver assistance. 
Cash is also a particularly agile tool that can be adapted to each specific context, with the possibility to redefine the frequency of the transfers and amounts to mitigate the risks of contamination.

Can markets cope with the crisis?

We are seeing already that markets are adapting and responding to the crisis, particularly at the local level. Supply chains are still functioning, and as long as the demand is there, markets will be able to respond sometimes in new and innovative ways. Where this is not the case, in selected contexts cash can be an enabler to help markets to kick start by working directly with retailers and wholesalers, supporting the flow of information, or facilitating the introduction of market-based interventions and even vouchers. 

Of course, cash is not a silver bullet on its own but should be used as a major complementary component to health and sanitation interventions when possible. Where done early, provision of cash will protect the coping capacity and economic resilience of people, and reduce the indirect impact of the crisis on vulnerable households as well as contain the longer-term impact on the economy. 

What is the role of CVA in the context of COVID-19?