Accountability of aid: making cash transfer programmes work for donors and recipients

1
Accountability of aid making cash transfer
programmes work for donors and recipients

• ECHO partner meeting 9th 10th December -
  Brussels

2
Why now?

• Recent ECHO evaluation No evidence was found of
  erroneous decisions about the use of cash, of
  objectives not having been achieved, or of
  negative impact
• Development of ECHO policy on cash programming
• Cash based programming moving from theory in to
  action
• ECHO existing commitment to aid effectiveness
  GHD
• Insufficient breadth of donors accepting wide
  scale use of cash programming

3
Why use cash in emergencies?

• Principles
• Choice
• Dignity
• Empowerment
• Practically
• Cost effectiveness
• Flexibility
• Multiplier effects / economic recovery
• Effective in linking relief activities to
  recovery and longer term development programming
  (LRRD)
• BUT these strengths can also be weaknesses,
  highlighting the
• need for Case-by-case feasibility studies!

4
Assumed risks

• Misuse of cash
• Will money be spent wisely?
• How can we avoid money being spent on beer, wine
  and women?
• Diversion of cash
• Will the cash reach the correct beneficiaries?
• Will it benefit the most vulnerable in the
  community / household?
• Inflation
• Will the project have an inflationary affect on
  local markets?
• What if food prices surpass the value of the
  transfer?
• Accountability
• How can we account for the money?
• How do we know what the money is spent on?

5
Feasibility assessment

• Scale of need and other interventions within the
  area
• Partner plans and capacity and coherence of
  intended programme with other response activities
  
• Suitability of cash vs. vouchers
• implications on community and social structures.
  Community capacity to manage programme
• Financial infrastructure in country
• Availability of secure transfer system, i.e.
  banking systems, mobile banking and post offices.
  In country security
• Market analysis
• Capacity / experience of in country team
• Number of programme and finance staff in country
  team with specific cash based programming
  experience. Level of technical / finance staff
  available
• Organisational technical capacity
• Technical support available / needed from head
  office or the region for specific country /
  project

6
Project Design

• Modality of transfer (i.e. open cheque, bank
  accounts, direct transfer)
• Security and level of NGO engagement in transfer
  modality strength, experience and reputation of
  distribution partner cost effectiveness of
  different modalities.
• Number, frequency and value of transfer
• Suitability of available transfer systems to
  deliver over proposed period, with limited set up
  where necessary possibilities to streamline
  processes
• Scale of intervention
• Number of beneficiaries period of time
  geographical area
• Inflation
• Inflation rate trends in country over the
  previous years / months. Trend forecast country /
  region
• Availability of experienced management staff
• Speed of recruitment / deployment of technical
  and skilled staff

7
Market-Led Livelihoods Recovery, Kashmir (SC and
Oxfam)

• Cash grants to facilitate recovery of 5,100
  households
• Cash to support 375 traders re-establish business
• Markets not seen as exogenous
• Diverse use of grants livestock, sewing
  machines, road-building
• Peer support via workshops helped minimise misuse

8
Cash transfers in Drought Response Swaziland
(SC)

• Monthly cash grants to 7,500 households through
  private bank accounts
• Monthly transfer value based on market value of
  essential food and non food items
• Money was used by households to purchase many
  items including food (ave. 75 of expenditure),
  hygiene items, transport, education healthcare
• Increase access to financial services for poor
  illiterate rural population

9
WV-Lesotho Cash Food Transfer Programme

• Monthly cash to 4.100 households cash and food
  to 2.400 households through G4S
• Monthly transfer value based on market value of
  essential food items, increase after 4 months due
  to price increases
• Almost all (94 ) of cash only and 66 of cash
  food households bought staple food
• Increase flexibility for other priority needs
  (grocery, healthcare, education, etc.)

10
Appropriate staffing

• Projects dedicated finance manager skills
  appropriate to scale and nature of intervention
  i.e. specific banking skills if accounts will be
  used, etc.
• Monitoring staff with finance experience
• Careful and sufficient resourcing and realistic
  time planning to avoid overburdening
  inexperienced staff and early training

SWAZILAND Drought Response SCUK
DFID Recruitment of a financial manager with
previous corporate experience was crucial for
appropriately managing the partnership with
Standard Bank Partnership Agreement Working
relationship and shared lesson learning
11
Segregation of duty

• Clear scheme of delegation, roles and
  responsibilities of team
• Assignment of different staff for identification
  of beneficiaries and delivery of cash
• Double checking of all financial transactions and
  counting

Kashmir Earthquake Response Staff who registered
and identified beneficiary households were not
involved in monitoring or transferring
funds Roles and responsibilities were shared with
the community Community committees assisted in
the handling of complaints / enquiries
12
Financial monitoring / verification

• Onsite monitoring of transfers
• Regular control of partner capacity
• Monitoring of household expenditure
• Community / beneficiary involvement in monitoring

• South Lebanon vouchers to 1.500 most vulnerable
  families after the Israeli withdrawal (WV)
• Vouchers for food (42,- ), for hygienic items
  (37,- ) and for cooking gas (10,- ) per family
  and month through local traders
• Biweekly reports and reimbursement of stores
  according to vouchers obtained
• Complete files kept on each store and village
• Complete report on finances (as required by
  donor) and family data compiled monthly
• Random visits to families to report changes in
  needs, and discover and eliminate irregularities
  at stores

13
Market and commodity tracking

• Budgeting to account for increase in costs over
  time (inflation, food price rises)
• Careful and systematic monitoring / tracking of
  market prices and reviewing transfer value

LESOTHO World Vision 6500 households received
monthly payments over 6 months through direct
cash delivery Prices of a basket of commodities
was monitored over the 6 month period. When
prices rose over 20 of their original cost the
payment was amended
14
Quality programming

• Sufficient investment in community training and
  mobilising, careful targeting, community
  involvement in project monitoring and development
• Encourage appropriate use of funds through
  detailed needs assessment prior to targeting and
  ongoing visible monitoring
• Financial literacy training to vulnerable
  households

SWAZILAND Drought Response cash transfers
through bank accounts A detailed needs assessment
carried out nationally defined targeting criteria
existing community structures were used to
target beneficiary households and SC verification
supported this. Financial Literacy training was
carried out at community level a cardboard ATM
machine introduced people to accessing their
funds through the bank
15
Internal Audit

• Adequate documentation of processes critical,
  e.g. in WV Lesotho there was an operational audit
  and a financial audit that covered the project
  life
• WV FPMG has set Audit guidelines and a standing
  Audit team
• Cash transfers systems were adapted from the food
  systems, this gave the project a head start while
  building on established controls
• Monthly Financial reports to track cash-flows
  were produced and reviewed by at least 3 senior
  staff

16
How do we move forward?

• Greater sharing of learning amongst donors and
  agencies on accounting for cash based programming
  and controlling risks
• Stronger Monitoring and evaluation
• Getting targeting right for humanitarian
  efficiency.
• Minimum Standards feasibility study, clear
  beneficiary information (including basic
  financial literacy as part of awareness and
  preparedness)
• NGO / partner capacity building appropriate
  investment
• Clear and consistent donor policies and practices
• Country level preparedness
• Advance joined up work in areas prone to rapid
  onset or chronic onset strengthens
  appropriateness / timeliness of response /
  capacity

17
Resume

• Cash and Voucher programs should be seen as two
  options among a number of options each of which
  are appropriate in different contexts. The
  tendency to think of cash and vouchers as
  distinct and special has distracted attention
  from an efficient way of helping households meet
  their needs in a given context