LOCAL AND REGIONAL PROCUREMENT Case study of Kyrgyzstan cash program and General lessons learned Penelope Anderson, Director of Food Security IFADC, Kansas City June 29, 2011

Context: Impact of Conflict Ethnic conflict begins June 10, ,000 refugees into Uzbekistan 300,000 people displaced within Kyrgyzstan 765,000 people remained in affected areas unable to access services and markets. 560,000 in need of food assistance. Map of kyrg Internally Displaced Persons (IDPs) moved to villages surrounding Osh and Bishkek to stay with relatives.

Community Needs Groups: Returning IDPs: supplement lost livelihoods Non returning IDP host families: assistance to support additional members Those living or returned to targeted areas who cannot continue their livelihoods due to security concerns Food Security Context: 1/3 of the population food insecure 80% of household income spent on food Remittances fell by 22% from 2008 to 2009

Other humanitarian responses Tent and blanket distribution Food distribution (flour, beans, oil and salt) by WFP, Red Crescent and local NGOs Materials and assistance to rebuild houses Grants for lost businesses from MFIs

Cash advantages promotes empowerment and dignity provides choice allows for variation in need can be efficient, timely & cost- effective fewer recipient costs (transport) multiplier effects; knock-on economic benefits provides assets avoids disincentive effects

Cash disadvantages inflationary risks security risks may be more difficult to target may be more prone to diversion less available from donors anti-social use concerns does not meet consumption/ nutrition objectives may be more difficult to monitor

Was cash right for Kyrgyzstan? Cash distributions are appropriate when: Kyrgyzstan context people previously purchased essential goods & services through market mechanisms Especially in urban areas, markets were the primary source of food purchases. a shock has caused inability to meet basic needs and/ or adoption of negative coping strategies Ethnic conflict in June, 2010 sufficient goods available locally Yes markets are accessible & functioning or expected to be soon Markets were functioning 10 days after the conflict. Cash distribution contributed to market re-establishment. delivery can be done safely and effectively Through Kompanion, who has 90 offices around target areas and experience with cash transfers. people prefer it over other response options This is true from focus group discussions and PRAs.

Methodology: Cash Distributions Unconditional cash transfers $35 per month (increased to $56 per month for the third tranche to account for price increases) over 9 months Distributed in three tranches Cash transfers distributed through Mercy Corps’ partner, Kompanion Microfinance

FINDINGS 1. Time 2. Cost 3. Effect/Impact 4. Do no harm

Finding 1: TIME Food provided by Title II programs typically take up to 4 to 6 months to reach those in need. MC started distributing cash after 26 days of the agreement through existing partnership with Kompanion. Other NGOs implementing LRPs in Kyrgyzstan were able to get food to beneficiaries faster than traditional food aid would take

Finding 2: COST Food purchased through LRP cash program in Kyrgyzstan shows a 24% cost savings when compared to the same food basket through a Title II program ($3.0 million v. $3.9 million, respectively) –The Title II program figure includes commodity costs, shipping and inland rates. –Does not include additional distribution costs, ie warehousing, human labor, etc. However: Other considerations –Kompanion costs vs bank costs –Rising global food prices

Finding 3: Effectiveness/ Impact Cash is Effective for Food Security Because markets were functioning around 10 days after the conflict, people could buy things they needed at the bazaar or at local mini-markets. 87% of beneficiaries used the cash to purchase food. They purchased flour and oil, meat, sugar, milk and eggs. Cash spent on electricity or coal for cooking also contributes significantly to food security. 87% of households reported having food stocks after the cash transfer, whereas before, only 64% had food stocks.

Finding 4: Do no harm 1 st quarter: market prices of staple foods did not increase significantly 2 nd quarter: food prices increased in concert with world food prices.

III. LRP Lessons Learned

I. Mercy Corps’ LRP programs Program nameCountryLRP mechanismDonorTimeframe Localized Immediate Drought Response (LIDR)* NigerProcurement/ distribution and voucher USDA6/2010-9/2011 RESPONDNigerProcurement/ distribution and voucher OFDA5/2010-9/2010 Localized Emergency Assistance Response in Niger (LEARN) NigerProcurement/ distribution and voucher USAID/FFP6/ /2010 Kimbe-La (Hang in there)*HaitiVoucher/ Mobile money pilot USAID/FFP7/2010-6/2011 Emergency Food Assistance (EFA)*KyrgyzstanCash transferUSAID/FFP7/2010-6//2011 LRP of Food Aid for Community- Based Nutrition Intervention to Food Insecure Households KyrgyzstanProcurement/ distributionUSAID/OFDA2/2009-7/2009 Zimbabwe Urban Feeding ProgramZimbabweProcurement/ distributionUSAID/OFDA2/ /2009 Local/Regional ProcurementTajikistanProcurement/ distributionUSAID/OFDA9/ /2009

Lessons learned: General Coordination among programs can enhance the benefits. Ensure that program methodologies are appropriate for all targeted beneficiary populations. Foster partnerships for sustainable impacts. Create transparency in the selection of beneficiaries as much as feasible.

Lessons learned: Cash Pay attention to safety concerns for cash handling in large amounts (look for alternatives for cash distribution mechanism i.e. bank accounts or mobile transfers) Match cash transfers with times of greatest food security vulnerability (need to do seasonal calendar) Program flexibility in times of price volatility is important to continue meeting beneficiary needs Coordination among programs can enhance the benefits.

Lessons learned: Voucher Be realistic about the potential benefits of using this type of program- vendors become a beneficiary group as well. Manage the expectations of vendors participating in the programs. Integrate a business training/ planning component for vendors for more sustained benefits. Where possible, allow more choice for beneficiaries in their use of vouchers.

Lessons learned: Procurement/distribution Ensure capacity and reliability of food quality and safety testing. Recognize trade offs between using larger more reliable vendors and smaller vendors for whom participation might benefit more.

THANKS! For more information: Penelope Anderson