1. Designing Cash and Voucher Programs MBRRR Training Session 4.1

2. Transfer value Money needed to meet objectives Costs of goods locally Level of vulnerability – what is the gap between what hhs need and what they can afford sustainably Additional expenses incurred by beneficiaries because of the project Changes in expected prices due to inflation or seasonal fluxes Consistency across agencies/programs “For work” projects – value should be slightly below daily wage rate

3. Variable vs. flat-rate grants

4. Frequency of transfer Cash/vouchers for livelihoods/assets – usually given in one or two larger installments Transfers for consumable items (food) – may be given repeatedly over period of time Less frequent (e.g. monthly)More frequent (e.g. bi-weekly) 1.Reduced transportation expenditures for beneficiaries 2.Larger sums of money allows for bulk purchases = cheaper per unit prices 3.Larger sums of money can be invested in livelihoods, reconstruction 4.Less costly (depending on delivery mechanism) 1.Ensure more consistent access to items throughout month 2.Small amounts may encourage food purchases 3.Small amounts may stay under control of women 4.Spread out demand in markets 5.Increased opportunities for beneficiary sensitizations/service provision 6.More costly (depending on delivery mechanism) 7.Subsequent transfers conditional on how previous transfers spent

5. Conditionality Unconditional transfers – provided to recipients solely because of their situation, e.g. malnourished, poor, drought-affected. No conditions or work are imposed. Conditional transfers – provided to recipients after certain conditions have been met, e.g. school enrollment, vaccinations, work. 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. productive assets, 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

6. Delivery mechanisms DELIVERY AGENTS Aid agencies Banks Post offices Mobile phone companies Micro-finance companies Security companies Local traders (hawala) DELIVERY METHODS Direct delivery (“cash in envelopes”) Delivery through banking systems Smart cards Debit cards Mobile phones

7. Targeting within households Who makes decisions about spending cash? Who makes decisions on what foods to buy? Who goes to the market? Do women or men have particular preferences for food assistance? Are there gender-related security issues related to cash or voucher targeting?  Are women at risk of attack or violence? Are men? Are young or adolescent girls?

8. Number of participating vendors Ideally, the more vendors the better More vendors = more consumer (beneficiary) benefit and more competition The higher the level of competition, the less traders can increase prices for voucher-holders or provide poor product quality or service May be negative impacts on traders excluded from project BUT, more vendors means increased administrative costs (contracts, payments) and monitoring

9. Criteria for vendors Willingness to participate Sells some to all of the items approved by project Proximity to beneficiaries Sufficient capital and supply chains to increase stocks to meet new demand Ability to accept vouchers in lieu of cash Products are of acceptable quality Proper sanitation Vendor has a trading license (where applicable) Vendor has bank account Vendor is literate (or has literate helper) to verify vouchers, record data Inclusion of men and women No “unwanted” links to particular groups (terrorist clause) Vendors of a certain size (e.g. intentionally target small traders)

10. Types of voucher programs Local shops Weekly markets Fairs A fair is an “organized” market where project beneficiaries can access specific goods from traders. Fairs are usually organized when people cannot easily obtain a specific commodity (seed, livestock), but which is available in sufficient quantities and quality within a reasonable distance to the affected area.

11. Vouchers redeemable in shops ADVANTAGESDISADVANTAGES Shops typically open 6-7 days per weekMay exclude certain products (vegetables) Beneficiaries can shop on their own time, reducing crowds and security risks May be few in number Participating vendors are easily identifiable by beneficiaries May exclude small vendors or producers Uses existing market structuresShops may be far from beneficiaries Goods can be stored in the shop Range of goods sold in shops Easy to collect vouchers and monitor

12. Vouchers redeemable in weekly markets ADVANTAGESDISADVANTAGES Beneficiaries typically shop for food items in weekly markets (where they exist) Difficult to include all vendors; small vendors may be excluded Many vendors, particularly womenGoods need to be transported to different markets each day Many products for saleMarkets open 1-2 days per week Uses existing market structuresMarkets are busy and attended by beneficiaries and non-beneficiaries Difficult to collect vouchers and monitor

13. Vouchers redeemable in fairs ADVANTAGESDISADVANTAGES Can be implemented close to beneficiaries where markets don’t exist Sets up parallel market system; can displace sales from existing market actors Can ensure sufficient supplies through inclusion of vendors from outside area Can be difficult to organize Can include producers with surplus products for sale Beneficiaries only have one day to use vouchers Often high competition between vendorsPreferred goods may run out before end of fair Limited to beneficiaries (easier to monitor; can measure quantities sold) Cost of goods may increase due to additional transport costs Offer opportunities for social mobilization and awareness-raising campaigns

14. Type of voucher Cash Vouchers. Entitle the holder to buy goods or services up to the cash value written on the voucher. The beneficiary can use the voucher to purchase any items approved by the project from participating vendors. Commodity Vouchers. Exchangeable for a fixed quantity of certain goods or services from participating vendors. The voucher can be for a single item or a fixed basket of several items. Benefits of cash vouchers:Benefits of commodity vouchers: 1.Give more choice to beneficiaries 2.Normal market processes determine prices, allowing beneficiaries to bargain for cheaper prices or better quality 1.Protect “ration” of beneficiary with rising food prices 2.Ensure consumption of specific items (e.g. nutritious foods); limit consumption of others 3.Can induce demand for specific products that might not otherwise be available from retailers

15. Defining allowable goods Open vouchers – exchanged for any items in participating shops Restricted vouchers – limited to the purchase of certain items Selection of approved items should match the objectives and target group(s) of the project Less restricted vouchers – provide more choice, may be more inclusive of traders, ease pressure on any one value chain More restrictive vouchers – can be targeted for certain value chains, can limit/restrict purchase of unavailable goods

16. No. vouchers/distribution Ideally, beneficiaries should receive multiple vouchers – Purchases can be spread out across vendors and across time – Increases beneficiary choice, promotes competition and keeps prices at market price – Can include smaller vendors who do not offer full range of products allowed by project However, more vouchers = more cost and more work for project staff

17. Voucher denominations Depend on items being purchased Smaller denominations allow for more flexibility Vouchers can be of varying denominations or of equal value – Consider literacy/numeracy of target population – Alignment with denominations/colors of local currency

18. Designing vouchers Required Local language Serial numbers – used for monitoring/tracking the distribution/redemption of vouchers Fraud prevention measures – basic steps to ensure vouchers cannot be easily replicated (special paper, water marks, stamps, etc.). Complexity of measures depends on risk. Program-specific / optional Name of beneficiary/ID Validity – date of expiration Allowable purchases Colors – can be used for multiple distributions (to prevent re-use) or for different denominations Messages to influence outcomes/behavior change Number for complaints mechanism

20. Printed on light orange paper 0000001 Agricultural Input Support to Households Affected by Typhoon Yolanda