WFP Cash Transfer Pilot Project - Food Security Clusters

WFP Cash Transfer Pilot Project - Food Security Clusters

WFP Cash TransferPilot Projectin Buner District, KPK, PakistanJanuary – February 2010with implementing partnersNADRA, UBL and Save the Children-Allianceevaluated byKarl-Friedrich Glombitza, SDCKarl-Friedrich Glombitza SDC, on behalf of WFP CO Pakistan / 2010

Background of Cash Transfer Project since August 2009, more than 1 millionIDPs returned to Buner district aftercalmed down conflict between PakistanMilitary and Taliban in FATA and KPK very preoccupying food situationdue to big losses in crops and livestock WFP starting distribution of monthly foodrations to returning IDPs in Sept 2009 WFP and GoP decided to start CashTransfer Pilot Project (under on-going EMOP 10828.0)2

Objectives of Cash Transfer Project1. Which alternative (food or cash) is leastcostly (from the donor and beneficiaryperspective) in providing householdswith access to a minimum food ration?2. Which alternative results in the highestlevel of food consumptionamongst needy households?3. Which alternative is most market friendlyin terms of price stability?3

Project Set-up and Implementation WFP in cooperation with NADRA and UBL(National Database & Registration Authority, United Bank Limited) implementing partner: Save the Children→ community sensitization and monitoring duration of 2 month (Jan – Feb 2010) ~ 12,000 IDP households in Buner District(4 Union Councils in Tehsil Totalai) unconditional PKR 4,000/month (~ US$ 48) cash disbursed through 18 ‘Points of Sale’using debit card system4

Assessment of Results 2 rounds of survey: baseline survey before project start (by CC) final survey after project finalization (by SDF) 2 types of survey: household and market1.sample of 600 households ≈ 5% of beneficiaries(20 HH in each of 30 randomly selected villages) in 4 UCs receiving cash transfer / in 5 UCs food aid 24% non beneficiaries (control group)2.sample of 120 shopkeepers(12 SK in each of 10 randomly selected markets)3.separate interviews with wholesalers6

Limitations of Pilot Project and Surveys short implementation period→ only 2 months instead of 4 (as planned) different enumerators doing surveys(different companies and surveying teams) different HH samples in the surveys(not the same households interviewed) subjectivity of answers, possibly biased(beneficiaries aware of WFP involvement) paradox and/or inconsistent findings(e.g. average household size, food consumption score) limited reliability of survey results7

Which alternative (cash or food)results in the highest level of foodconsumption? Due to above mentioned limitations notpossible to answer this question reliably(results not consistent) 70% beneficiaries spent the cash on food Non-food expenses for: health (medical, sanitary) to pay utility bills and debts8

Food Consumption shift in food consumption preferencescompared to WFP food basket:→ less wheat flour and pulses→ more vegetable oil, sugar, tea, riceand other foodWFPFood BasketMean per HHJan-Feb 2010Wheatflour (kg)Veget. oil(Litres)Pulses(kg)Sugar(kg)Salt(kg)Tea(kg)Rice(kg)Others(kg)80 4.5 8 4 1 0.3 -- --62.4 5.7 3.1 6 1 1 3.1 1.2 no significant difference in number ofmeals per day (3 for adults, 4+ for children under 5 years)9

Which alternative (cash or food) is leastcostly in providing households withaccess to a minimum food ration? The amount of 4,000 PKR was sufficient tobuy the same amount of food in the localmarkets and pay for the transport costs Costs to WFP of food in kind distributionare 4% - 13% higher than costs of cashtransfer (depending on method of calculation, i.e. on what toinclude or not into LTSH and ODOC)10

Costs to WFPCost categoryFood ration(US$)Food ration(US$)Cashpayment(US$)Food basket per HH 40 40 -Cash payment per HH - - 48External transport 6 6 -Landside Transport, Storageand Handling (LTSH)9 11 -Other Direct Costs (ODOC) 5 7 5Direct Support Costs (DSC) 4 8 8Total WFP direct costs 64 71 61Indirect Support Costs (ISC) 4 5 4Total WFP costs 68 76 66Cost difference +4% +13%

Costs to Households the costs for beneficiaries receiving cashare much lower because of smallerdistance to markets to buy foodClusterTransportof personTransportof foodTotal CostDistance(km)Cost(PKR)Distance(km)Cost(PKR)(PKR)Food Aid(to Hub)Cash(to PoS / markets)10 15 10 62 7711 19 3 1534(-126%)

Which alternative is most marketfriendly in terms of price stability? Cash supported local markets(Food Security Market Assessment Survey Result) 80% of shopkeepers say: “Food aidhinders sales” (up to 40% decrease in turnover reported) markets flexible in coping with increasedfood demands in cash transfer project area Average price increase of ~ 5% for foodbasket observed in food and cash UCs→ seasonal ups and downs13

Beneficiary Preferences 60:40 in favour of cash(preference for cash rising while pilot project progressed)14

Benenficiary’s Argumentspro CashFree choice overspending (what & when)Convenience(shorter waiting period, nearermarket, less costly)Food aid has anegative impacton food marketsFood is not neededand therefore soldpro Food AidImportant forfemale headedhouseholdsSaved money spentto meet other needs(paradox)Fortified / betterquality food withhigh nutritionalvalue15

Conclusions (1) The pilot has shown that it is technicallypossible to implement cash for foodprojects in a cost efficient way All partners involved in the pilot showedhigh professionalism and flexibility Cash can be seen as an additionalresource transfer method/instrument ofWFP (in addition to food and voucher)16

Conclusions (2) Which instrument is used should be basedon its comparative advantage in meetingthe corporate food assistance objectives At early stages of return or immediatelyafter a natural disaster, food distribution(or voucher) has an advantage over cash At a certain moment, the advantages ofcash might be greater than those of foodor voucher (to be assessed)(in terms of cost efficiency, impact on markets, local foodproduction, beneficiaries preferences)17

Recommendations (1) The mixing and balancing of transferchoices is recommended as all resourcetransfer methods – food, cash & voucher –have equal status (WFP paradigm shift) A flexible approach is recommended,choosing the transfer method accordingto context and comparative advantages ofmethod→ close monitoring of markets andlivelihoods of target population to ensuretimely shift from food aid to cash transfer18

Recommendations (2) Based on the positive experience from thepilot project, Cash for Food could beimplemented on a larger scale and over alonger period of time Cash transfers through debit cards couldalso be efficient in: providing safety-nets to vulnerable people inurban areas who lost livelihoods for targeted early recovery activities in conflictaffected areas (cash for work)19

Thank you!20

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