Dedza Safety Nets Pilot Project DSNPP learning lessons about direct welfare transfers for Malawi’s National Safety Nets Strategy

What is the DSNPP?  A ‘pilot’ designed to test a system of Direct Welfare Transfers to the work- constrained rural poor: Elderly, orphans, disabled/sick, etc  The M&E component is key, since the point is to learn lessons for scaling up.

Types of transfer 1.Cash: MK550 per household per month; 2.Vouchers worth MK550 per month to buy goods at selected retailers; and 3.In-kind transfers: a package of goods worth MK2,750 in September followed by maize flour worth MK550 between October and April – and nothing from May to August.

 Distribution dates so far: 23 September; 2 November; 3 December; 19 December; 30 January  CU delivers to distribution centres  5-person village committees collect the transfers & distribute them Distributions

Village committees There are three types of village committee: Led by the Village Head with members nominated by the VH Democratically elected at a meeting of the whole village Formed by the beneficiaries or their carers

Concern Universal Village Committee Beneficiary Retailer Transfer of cash Delivery of cash at Distribution Centre Distribution of cash to beneficiaries and administration and control including de- registration and registration of new beneficiaries

Concern Universal Village Committee Beneficiary Supplier Transfer of goods and food Delivery of packs to Village Committee Administration and control including de-registration and registration of new beneficiaries Procurement of goods and food according to CU specifications Contract to supply goods

Concern Universal Village Committee Beneficiary Participating Retailer Transfer through vouchers Return of vouchers and receipts Payment on submission of vouchers and receipts Delivery of vouchers at Distribution Centre Distribution of vouchers to beneficiaries and administration and control including de- registration and registration of new beneficiaries Use of vouchers at retailers

Learning the lessons (1)  The impact on beneficiaries, using: baseline and a final impact survey quarterly monitoring of a smaller sample  Aim: To find out what is the impact of the different transfers on beneficiaries’ well-being – especially food security and other basic needs.

Learning the lessons (2)  The process, as managed by the village committees, using: self-monitoring by committee members; external monitoring by CU personnel/local government officers.  Aim: To find out whether village committees can manage the transfers, and which type of committee is best.

Learning the lessons (3)  The logistics/costs, as managed by CU, using: Project Officers’ records of their interactions with village committees, retailers, suppliers, ADCs, etc. – including problems & solutions CU’s accounts for the project, with expenditure divided into budget categories.  Aim: To assess overall management and logistical requirements, including costs.

Learning the lessons (4)  The expenditure pattern associated with the transfers, using: a section on expenditure in the survey questionnaires; analysis of voucher receipts.  Aim: To study the pattern of expenditure associated with DWTs to inform retailers about consumer demand under a scaled-up DWT programme.

Learning the lessons (5)  The impact of the project on the local economy (especially retailers), using: Project Officers’ notes Analysis of voucher receipts  Aim: To find out what is the impact of different types of transfer on the retail sector.

Level of monitoring  Closely monitored villages Regular visits by Project Officers and local government officers Quarterly monitoring surveys  Hands-off villages Visits after 9 months/1 year to simulate ‘real life’ situation in which village committees would manage transfers on their own, with spot checks

Interventions under trial Transfer Management Committee Monitoring Vouchers Cash In-kind Village head Democratic Beneficiary/Carer Closely monitored Hands-off

Interventions under trial Hands-off Beneficiaries Closely monitored Hands-off Democratic Vouchers Closely monitored Hands-off Village Head Closely monitored

Interventions under trial Hands-off Beneficiaries Closely monitored Hands-off Democratic Vouchers Closely monitored Hands-off Village Head Closely monitored Hands-off Beneficiaries Closely monitored Hands-off Democratic Cash Closely monitored Hands-off Village Head Closely monitored Hands-off Beneficiaries Closely monitored Hands-off Democratic In-kind Closely monitored Hands-off Village Head Closely monitored 18 different interventions 3 villages with each type 54 villages

Sampling  386 villages in Linthipe and Kabwazi  54 villages selected at random for the study  Restrictions: 27 villages from each EPA 18 villages for vouchers within 10 km radius of participating retailers The rest selected at random from the remaining villages.

Sampling VouchersCashIn-kindTotal Linthipe Kabwazi Total18 54

Village committee  Village Head Committees Nepotism Transparency and accountability problems Cases of theft of transfers  Democratically elected committees Most effective and efficient Demanding to be paid allowances Cases of theft of transfers (less than VH)

Village committee  Beneficiary/carer committees Don’t need allowances No cases of theft Not so capable – need external support  Our recommendation: Beneficiary/carer committees with support from VDCs Definitely avoid VH committees

Cash transfers  Choice of what to buy and where  Easy to understand  Don’t have to travel long distances  Balanced development of the local retail sector  Simple to manage and low cost  Security is a problem, but not difficult to solve  Theft by village committees is a problem but not if beneficiary/carer committees

In-kind transfers  Simple to manage  Cheap to deliver  Popular with the beneficiaries – in particular the maize flour Cash cannot necessarily buy flour if supplies not available BUT  don’t contribute to balanced development of the local retail sector

Voucher transfers  Advantages security – can be traced using serial numbers

Voucher transfers  Disadvantages Restricted choice of goods to buy Retailers raise prices Try to make beneficiaries spend all at once The most vulnerable – find vouchers difficult to use Few shops meet requirements, so: some beneficiaries have to walk long distances congestion And…

Voucher transfers  Disadvantages A division between ‘included’ and ‘excluded’ retailers leading to… uneven development opportunities for rent-seeking staffing requirements: retailer liaison officers, accountants Delivery costs are high Forgery is possible when programme scaled up Vouchers do not prevent stealing by village committees ………...!!

Delivery costs not including overheads E.g. transport, security, printing of vouchers and receipts, commission to retailers. Cash MK 14 In-kindMK 29 VouchersMK 103

% of total project cost – including overheads - that gets to beneficiaries In-kind 69% Cash 71% Vouchers 63% - but this would be lower in expansion phase

 Our recommendation Not vouchers! Type of transfer Go for: Cash OR In-kind OR A combination of both

Well-being of beneficiaries  DWTs make a major contribution to food security and other basic needs

Well-being of beneficiaries  Eating around two meals per day (nsima and snacks) - at time of Q2 survey  Not much difference between type of transfer But:  sub-set of beneficiaries have not avoided serious food insecurity

Consumer demand  We can predict consumer demand as project expands:  Cash (vouchers similar)  maize and maize milling, salt and soap  seed in the planting season  sugar, fish, paraffin and cooking oil  In-kind  items in transfer, e.g. maize flour, blankets, soap

Impact on the local economy (retail sector)  Cash spread the benefits locally  Vouchers benefit certain shops locally, but others excluded  In-kind concentrate the benefits with big suppliers in Dedza or Lilongwe

Village heads did not do a good job – over-registration  We recommend: democratically elected committees OR open village meeting Selection of beneficiaries

We recommend: Sliding scale Multiple beneficiary households It is possible – but we register name of household head AND name of beneficiary/ies Careful monitoring would be needed to prevent abuses