Transfer Modalities MBRRR Training Session 2.2

Transfer Modalities: Overview When to use transfers Types of transfers Deciding between transfer types Conditionality Group work: Determining appropriate transfer modalities

When to use transfers 1.EMERGENCY NEEDS 2.PROTECT ASSETS 3.RESTORE ASSETS 4.BUILD ASSETS

Types of transfers In-kind Transfers. The direct provision of goods to targeted households. The goods can be purchased locally or regionally, or shipped from donor countries. Cash Transfers. The provision of money to targeted households, with no conditions on how or where the money is used. However, it may be assumed that the cash will be used to meet needs identified in assessments. Vouchers. Paper or electronic card that can be exchanged for a set quantity or value of goods or services. Vouchers are redeemable with preselected vendors.

Cash-based programs Possible Advantages Cost efficient Choice Multiplier effects Avoids disincentive effects Fewer costs for recipients Dignity Possible Disadvantages Inflationary risks Anti-social use Security risks More difficult to target More prone to diversion Disadvantages women Less available from donors Consumption/nutrition

Comparing cash and in-kind food transfers Food transfers generally recommended when:Cash /voucher transfers generally recommended when: 1.Markets do not function well 2.Beneficiaries don’t have physical or social access to markets 3.Food intake is prioritized for nutritional purposes (including targeted feeding and micronutrient objectives), or certain nutritional foods are not available in the local markets 4.Intra-household dynamics favor food over other transfers that might not go towards improved child and household welfare 5.Inflationary risks are a significant concern 6.Security conditions favor transfers of food over other resources (i.e., food commodities are highly visible) 7.Targeting of beneficiaries through inferior goods 8.Quality concerns with local foods 1.Markets function well 2.Supply is able to meet the demand generated by cash transfers 3.Affected populations are net buyers of food 4.Households have non-food needs 5.Beneficiaries have physical and social access to markets; markets are a main source of food for targeted households 6.Production disincentives due to food aid delivery are a significant concern 7.Security conditions permit (i.e., cash is less visible but offers greater incentive for theft) 8.Political acceptance of these modalities 9.Cost and time savings through lower logistical and management overhead 10.Cash transfer systems exist, e.g. pathways for remittances, micro-finance institutions, mobile telephone technology

Comparing cash and vouchers When cash may be more appropriateWhen vouchers may be more appropriate 1.HH have multiple and varied needs 2.HH prioritize purchases that meet program objective(s) 3.HH do not require behavior change to meet objective(s) 4.Do not need to target within hh 5.Beneficiaries prefer cash 6.Beneficiaries are mobile 7.Good quality products in market 8.Want to include more/small traders 9.Limited security/corruption concerns with cash 10.Delivery mechanisms available 11.Need to assist quickly 1.Project has specific objective(s) that likely won’t be met with cash 2.Behavior change required to meet objective(s); introduce new products 3.Concerns over anti-social use of cash 4.Want to target transfer within hh 5.Beneficiaries prefer vouchers 6.Want to target specific value chains or market actors 7.Concern over supplies; induce demand for certain products 8.Concerns over quality 9.Targeting cash difficult 10. Security concerns over cash

Conditionality Unconditional transfers – Conditional transfers –

Conditionality Unconditional transfers – provided to recipients solely because of their situation, e.g. malnourished, poor, drought-affected. No conditions or work are imposed to receive the transfer. Conditional transfers – provided to recipients after certain conditions have been met, e.g. work/labor on public works, school enrollment, vaccinations.

Conditionality Conditionality ProsConditionality Cons 1.Attractive where labor markets fail or jobs are scarce 2.Self-targeting, particularly where wage is set below regular cash wages 3.Secondary benefits, e.g. infrastructure, health visits, vaccinations, skill development 4.(Less risk of dependency) 1.Costly 2.High management costs 3.Harder to go to scale compared to unconditional transfers 4.Can exclude highly vulnerable groups 5.If not planned well, can distort labor markets or overburden services, or compete with other hh activities 6.Rare in emergencies

Exercise: Selecting response options

What would Dina do??

Selecting response options In-kind Cash transfer VoucherOther Unconditional Conditional

What would Dina do? (1) A very poor harvest earlier in the year severely reduced household food stocks and income. Food is available in the market but households can’t afford it. To buy food, households are forced to abandon work on their own fields to earn wages in the city or on others’ farms.

What would Dina do? (3) Floods have damaged local food stocks and isolated the targeted area. The markets are not expected to function until the area has been drained and roads are rehabilitated.

What would Dina do? (4) Drought and high food prices have led to emergency levels of child malnutrition. Nutritious foods are available in the market, but households are not accustomed to consuming these types of foods.

What would Dina do? (5) Deteriorating natural resources and poor agricultural practices have reduced yields in recent years. This year households require food assistance several months before the planting season to reduce negative coping strategies. Food is available in the markets, but there are no banks in the area and concerns with security issues.

What would Dina do? (6) Hurricanes have destroyed homes in a coastal village. An assessment reveals that households prioritize home repairs as their biggest need, but they also have other emergency needs in the immediate aftermath of the disaster. Both local and imported construction materials are available in the markets.

What would Dina do? (8) 2,000 refugees have crossed the border into a sparsely populated area in a neighboring country. They are in need of both food and non- food items, such as blankets and cooking pots. There are a few traders that serve the local population, but they do not have the capacity to meet the needs of the large numbers of refugees who are setting up camp.

What would Dina do? (11) Food is available at the household level, but poor sanitation practices result in high levels of diarrhea and malnutrition for children under five years.

What would Dina do? (2) Following the harvest, households are faced with high levels of debt incurred during the lean season (to buy food and agricultural inputs). To pay back the debt, they are forced to quickly sell their limited harvest at low prices as there are few other options to earn income at this time of year.

What would Dina do? (7) Cassava production has been decimated by a highly virulent cassava disease. The national agricultural research institute has developed and multiplied disease-resistant planting material that could greatly improve household yields. Cassava cuttings are not typically sold in the market; households use their own cassava cuttings or access them freely from their neighbors.

What would Dina do? (9) Pastoral and agro-pastoral households lost high numbers of livestock in the recent drought, in part due to poor resource management and animal health practices. An assessment identifies the need for restocking for vulnerable hh, surplus livestock numbers by wealthier households and local traders, as well as training on improved livestock practices.

What would Dina do? (10) Cholera has infected local water supplies. Safe, potable water is sold at “water kiosks” by commercial traders, although it is only wealthier residents who typically buy their drinking water. Poor households targeted by the project do not normally purchase water on the market.

What would Dina do? (12) Persons displaced by conflict in the north have arrived in the capital, and require assistance to meet immediate needs such as food, water, clothes and rent. The capital is not directly affected by the conflict and has highly functional markets, banks and mobile money transfer systems.

What would Dina do? (13) A recent conflict between ethnic groups has traumatized adolescent girls who remain afraid to leave their households to go to school or carry out their livelihoods activities.

What would Dina do? (14) Malaria is a main killer of children during the rainy season. The WHO recommends the use of treated mosquito nets which are not readily available in the local markets. Households do not typically use mosquito nets or seek formal medical care for treatment of malaria.

What would Dina do? (15) Country XX is highly dependent on tourism for revenue and jobs. Fighting in the country has caused a sharp decrease in tourism, causing many businesses to close. Many households have lost their source of income, while prices for both food and non-food items are on the rise. The government does not expect tourism to resume for at least six months. The fighting damaged public infrastructure, such as roads, irrigation canals and schools.

Key Messages In-kind, cash or voucher transfers can all be appropriate responses; the decision to use one over the others should be based on the context. The different types of transfers can be given unconditionally or conditionally, depending on the target population, the objectives of the program and/or the timing of the transfer within the seasonal calendar.