The UN Capital Development Fund (UNCDF) is enhancing Cash Voucher Assistance (CVA) delivery in Ethiopia through strategic partnerships and innovations in digital payments. Its approach demonstrates a commitment to using public and private finance to address urgent humanitarian needs, while also working to stimulate local economies, open markets, and reduce poverty.
Digital payments are becoming increasingly important in humanitarian aid, offering faster, more secure, and scalable solutions. While Ethiopia’s CVA distribution began under the Productive Safety Net Programme in 2005, mobile money was only introduced in 2015. Despite growing account ownership, rural populations and women still face access barriers. Expanding digital payments offers an opportunity to increase financial inclusion and economic resilience, aligning with UNCDF’s broader strategy for sustainable development.
Through its Digital Finance for Resilience (DFS4Res) Programme, funded by the EU and OACPS, UNCDF has worked to bridge key service gaps in the capacity of Financial Service Providers (FSPs). Together with MicroSave Consulting, it assessed FSP challenges in CVA delivery, finding that most agencies are transitioning to mobile money, though many still rely on mixed delivery channels. Major gaps include agent network limitations, inefficient liquidity management, and cumbersome onboarding procedures.
To address these issues, UNCDF launched a pilot in Ethiopia’s Somali region involving three banks—Commercial Bank of Ethiopia, Shebelle Bank, and Cooperative Bank of Oromia—in partnership with the World Food Programme (WFP), reaching 65,000 individuals. The pilot focused on building strong agent networks, training over 300 new agents, promoting gender-inclusive financial access, and strengthening agent capacity to handle liquidity and compliance.
The pilot highlighted critical lessons. Agent recruitment and retention are vital, requiring training and incentives. Managing liquidity effectively prevents service interruptions. Simplifying onboarding and compliance can expand networks and boost participation, particularly for women and informal businesses. Moreover, coordinated efforts among aid organizations, telecoms, and government bodies are essential for sustainable outcomes.
Though focused on the Somali region, the pilot’s findings are applicable nationwide. Scaling the model will depend on continued stakeholder collaboration to refine systems and ensure lasting impact. By strengthening financial ecosystems, UNCDF is improving aid efficiency while laying the groundwork for long-term economic development and resilience in vulnerable communities.
