Cash transfers enable small businesses to grow in Somalia displacement camp

BAIDOA, Somalia — Hassan Affey Ali spends his afternoons tapping his feet on the iron pedal of his secondhand Singer sewing machine under the shade of a tree. He sets up his machine every day among the hand-constructed tents made of branches and tarps in the Buuloduuf camp, which rests on private land in the outskirts of Baidoa, in Southwestern Somalia. He is making and repairing clothes for the residents of the internal displacement camp.

Ali found himself in Buuloduuf 10 months ago, after the regional drought dried up his farmland and claimed the lives of his 10 camels, 10 cows, and 28 goats. With no other choice, he abandoned his land, and walked for nine days, with his eight children, wife and 50 other families in his community, as they sought food and water.

The rains have failed to come in full force for four consecutive seasons in Somalia which have pushed over 1.4 million people out of their homes in Somalia since 2016, along with the conflict that has plagued the nation for decades. The Bay region has received the highest number of arrivals, with over 263,000 landing in Baidoa, the capital of the Bay region. This region is considered one of the nation’s breadbaskets, so when the rains didn’t come it put many of the areas farmers and pastoralists out of work.

When Ali and his family arrived in Baidoa, the Norwegian Refugee Council registered them for a cash transfer program, which started in May. It has been their lifeline ever since. Each month they receive a sum of money, which they have used to buy food, cholera medication when their children fell ill, among other needs. But during those initial months, Ali also squirreled away a portion of the funds. After several months, he had enough money to buy his $100 sewing machine. He now gets about 60 customers per week. It’s the only livelihood his family has left.

“My business has spread through word of mouth. I get customers from this settlement, plus the settlements in the surrounding area.”

Somalia saw a massive scale-up in the use of cash transfers in 2017, which is an alternative to distributing food and other items to people in need. With unconditional cash transfers, which is one of the types of transfers the humanitarian sector uses, funds are directly transferred to a person’s phone, who can then decide how to use the money. This type of distribution is seen as a more efficient way of providing aid and can help to overcome some of the logistical access issues associated with operating in a conflict zone such as Somalia. Around 80 cents of every dollar reaches the beneficiary in Somalia, Calum McLean, global thematic coordinator for cash and basic needs for the European Commission Directorate General for Humanitarian Aid and Civil Protection, or ECHO, told Devex. In-kind food aid is only around 60 cents. Cash transfers allow people to decide what is most important for their families, whether it be food, medicine, items to build a shelter, or whatever else.

In Somalia, cash transfers have been distributed by a variety of organizations. One of those includes an alliance of six nongovernmental organizations, including the Norwegian Refugee Council, Concern Worldwide, Danish Refugee Council, Cooperazione Internazionale, Save the Children International, and ACTED, that coordinates its cash transfer distributions to ensure that there are no overlaps in distributions and that all of the organizations are using the same standards. Around 3 million people, which is around a quarter of the population, are receiving some type of cash assistance, Johan Heffinck, head of office Somalia for ECHO, told Devex.

Ali is just one of many entrepreneurs in Baidoa’s displacement camps who turn the cash transfers into small businesses. Merrow Hussein Mohamed, a mother of nine, started a small shop in the Mogoriyomanyow camp in Baidoa. She also had a shop in her village 60 miles away, but because of the drought her customers could no longer afford her goods, and she had to close. Hared Ali Nur, father of eight, bought a solar panel for $80 and now he is charging residents in the camp $3.50 to charge their cell phones. Bishara Adan Issack, a mother of nine, buys firewood and sells it for $1.20 a bundle.

Many in the camp hope to eventually go home. But there is no end in sight to the drought which has endured in the region for two years and is expected to continue. Hared Ali Nur went home in October to try his luck with his land. He planted seeds but the rains didn’t come, and so there was no harvest. If poor rains continue, famine is likely in Somalia, according to the Famine Early Warning Systems Network. The large scale humanitarian response has so far staved off famine in Somalia.

At the beginning of last year, there were hopes amongst the humanitarian sector that mid-year, the worst of the disaster would be over and programming could transition into resilience-based programming, such as those based on asset creation, Lijana Jovceva, head of program for the World Food Programme’s Somalia office, told Devex.

“But when we approached May and June and looked at the outlook, it was very clear that the conditions were not right to go in that direction,” she said.

Despite effort by some residents of the displacement camps to make the transfers more sustainable through starting small businesses, many communities are still largely dependent on the cash transfers, without a clear plan for survival if they were to stop. Ali’s sewing business won’t sustain his entire family, though he would ultimately like it to. He says he would need more investments in his business before his family could break its dependency on cash transfers.

The cash transfer program is also not completely dependable for these residents. The transfers are approved in cycles that last several months. This current round of ECHO cash transfers have been approved until May, but “finances have become scarcer and increasingly difficult to maintain this high investment,” said Heffinck. Families can also be dropped from the program if they are determined to no longer fall in the “vulnerable” category.

“Cash transfers have improved and saved many lives, there is no doubt of that,” Mohamednur Mohamed Abdirahman, food security and livelihood deputy program manager for Save the Children in Bay and Bakool regions, told Devex. “But there is not any resilience to shock. We need more investments in these communities, such as livelihood investments.” This could include income generating activities, vocational trainings, or providing agricultural and livestock support, among other activities.