Feasibility study on a capital-based income generation scheme for ...

CASH FOR RECOVERY
3. Options for supplementing
livelihood recovery efforts with
cash/capital transfers
The analysis of livelihood recovery needs, and of government and donor responses, given in
the preceding sections, identified a number of gaps between assistance offered to tsunamiaffected
households and assistance required. The following four scenarios describe these
gaps in detail, outline options for cash/capital transfer projects tailored to fill these gaps, and
assess the pros and cons of each option.
3.1. Medium-term monthly cash transfers to
mitigate shock when relief programmes terminate
When the cash transfers and food transfers provided by the GoSL and WFP are
discontinued, transfers will still be needed by the 40 per cent of households that have not yet
recovered from the tsunami.
Despite several announcements that it will discontinue cash transfers, the GoSL has so far
continued to pay them to all affected households, except to those receiving salaries from
employment as public servants and those who received a GoSL grant for rebuilding their
houses. At the time of writing, it is not yet certain if and when they will be discontinued, but
observers believe that it will happen at the end of 2005. It was not possible to get any official
statement on this issue. However, discussions with WFP representatives revealed that WFP
will definitely stop providing food rations at the end of 2005.
When transfers stop, recipient households will face a shock. Those that have not recovered
will experience serious problems meeting their basic needs, and are likely to become food
insecure. A cash transfer of approximately the amount now paid by the GoSL (Rs200 per
person per week) and targeted at non-recovered households, would reduce this shock. It
would also give them time to start their economic recovery by, for example, participating in
one of the many income generating activities promoted by the NGOs (see Appendix 7).
Transfers are expected to protect households from food insecurity, which is a precondition
for successfully engaging in income generating activities. Without transfers, a number of
these households could become (increasingly) indebted and destitute.
However, as such a project would be limited to a two-year period, and some households may
require transfers beyond that period, the concept would have to be linked to a GoSL’s social
protection programme. It would have to be designed so that the GoSL programme would
gradually take over the implementation and funding: Save the Children’s exit strategy.
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