Delivering finance better in a humanitarian relief operation: Lessons learned from the Somali Region of Ethiopia

• by Brenda Oyugi, Edward Obiko and Endashaw Tesfaye
• Apr 2, 2025
• 4 min

This blog shares key lessons from a Cash Voucher Assistance initiative in Ethiopia’s Somali Region. It highlights effective agent management, digital finance integration, and stakeholder collaboration for inclusive humanitarian financial services.

The United Nations Capital Development Fund is leading an initiative to enhance the capabilities of Financial Service Providers (FSPs) engaged in humanitarian efforts, focusing on digital payments and agent network services. Our on-the-ground assessment revealed a gap between the needs of humanitarian aid services and the current capabilities of FSPs, prompting a new pilot with MicroSave Consulting that seeks to improve the delivery of Cash Voucher Assistance in a UN World Food Programme relief operation for 65,000 people in the Somali region.  Here’s what we’ve learned. 

In a previous blog highlighted our team’s recent implementation of a project to digitalize Cash Voucher Assistance (CVA) in Ethiopia’s Somali Region. This second blog focuses on the lessons learned throughout the initiative implemented in partnership with MicroSave Consulting (MSC) under the Digital Finance for Resilience (DFS4Res) Programme, funded by the European Union and the Organization of African, Caribbean and Pacific States (OACPS). 

The initiative emphasized the importance of well-established financial service access points, and the challenges related to distribution and the readiness of digital payment service providers. Local agents are crucial in ensuring that individuals without direct access to digital services can receive aid, which improves the efficiency, security, and financial inclusion of the cash transfer process. 

Training and capacity-building efforts have strengthened the network of agents involved in delivering CVA. Key developments from this initiative include fostering connections between agency banking, business banking, and performance measurement within humanitarian assistance. While some institutions have clear business models for agency banking, many still lack awareness at the district and branch levels. The initiative has successfully onboarded over 300 new active agents with the support of the project, particularly through effective agency banking strategies.

Key Lessons 

• • Agency Network Management Processes: Effective management is critical for advancing financial inclusion. Our approach integrates theoretical frameworks, international best practices, and on-ground findings. 
  • Agent Recruitment and Onboarding: Recruiting reliable agents is fundamental to a robust network. Comprehensive training on banking products, service delivery standards, compliance protocols, and customer engagement strategies is essential. Successful practices are seen in countries such as Kenya and India. 
  • Float and Liquidity Management: Maintaining transaction liquidity is crucial for operational efficiency. Effective float management involves monitoring float levels, timely cash replenishments, and providing tools for management, with successful implementations seen internationally. 

• Monitoring Agent Performance: Regular evaluations and continuous feedback are vital for maintaining service standards and compliance. Ongoing assessments ensure agents meet performance expectations. 

•  Agent Support Service: Support services, including help desks and real-time troubleshooting, are essential for maintaining service quality and addressing operational challenges. 

•  Agent Retention: Incentive structures and regular communication are key to retaining high-performing agents. Successful models in countries such as Ghana and Bangladesh illustrate effective retention strategies. 

Key Developments 

• Periodic Reporting: Most banks have established mechanisms for monitoring agent performance, with regular reports generated by management teams. 

• Performance Evaluations: Continuous oversight is achieved through regular evaluations conducted by branch and digital managers, ensuring adherence to performance standards. 

Key Challenges 

• Cumbersome KYC and Eligibility Requirements: Agents face burdensome KYC requirements slowing onboarding processes, which hinders network expansion, especially in rural areas. Many businesses are unregistered, limiting potential agents, and compliance burdens can discourage participation, particularly among women. 

• Liquidity Management Challenges: Agents often struggle to maintain float levels due to access issues at banks or ATMs. Insufficient cash availability during humanitarian distributions can lead to service interruptions. Additionally, agents limit transactions primarily to airtime sales due to low incentives from other cash services. 

• Mapping Service Delivery Points with Beneficiaries: Thorough research is needed to align financial services with the needs of beneficiaries. A lack of agents in specific areas limits service delivery, necessitating the recruitment of additional agents to ensure a sustainable ecosystem. 

The training and strategy development provided by UNCDF and MicroSave Consulting, along with the efforts of banks, lay the foundation for a more inclusive financial ecosystem that enhances economic resilience among vulnerable populations. While initially piloted in the Somali region, the intervention has the potential for expansion across Ethiopia, requiring collaboration with humanitarian agencies, government bodies, and beneficiaries to streamline service delivery. 

Humanitarian agencies are not only clients of financial service providers but also play pivotal roles in digitization efforts supported by policies established by DG ECHO. Moreover, telecom operators contribute to infrastructure development, ensuring access to essential services for last-mile beneficiaries. 

The commitment and ongoing efforts of all stakeholders highlight the transformative potential of coordinated action in achieving broader economic development and poverty alleviation goals. 

In conclusion, the insights gained from the Cash Voucher Assistance initiative in the Somali Region illustrate the necessity of fostering a well-structured financial ecosystem. While collaboration among stakeholders is essential for addressing compliance challenges and enhancing liquidity management, commitment to learning and adapting from these experiences is critical. By building on these successes, Ethiopia can serve as a model for future humanitarian interventions, ultimately contributing to poverty alleviation and economic development. 

For more about the project’s context, please click here