REVIEW OF USAID/MOZAMBIQUE’S CASH TRANSFER PROGRAM FOR FLOOD VICTIMS Purpose: This paper reviews lessons learned from USAID’s Resettlement Grant Program for victims of the 1999-2000 floods in Mozambique. The information comes from program evaluations,1 IG audits,2 other literature, and interviews with USAID 3 staff . Lessons Learned from A Review of Donor Experiences literature4 of most cash relief programs implemented h caution. y and more empowering to local communities than traditional food distribution. tool. lus producing areas, can g n exceed local capacity, thereby causing delays (i.e. Ethiopia and t of food or non￾ay make attempts to run an equitable cash distribution program problematic. ndering cash on alcohol or gambling was not found in any of the cases studies.6 I. Key Lessons Learned from USAID/Mozambique’s Resettlement Grant Program7 1. Program Design8 neediest flood￾atic approach to ed. It was a necessary, but complex and time-consuming task. I. A comprehensive review of the since the 1970’s revealed that: • Using cash following a disaster has been an infrequent donor tool of emergency aid. In general this type of aid has been controversial and treated wit • Experience to date suggests that direct cash distribution, in the right circumstances, with careful planning and monitoring, can be timelier, less costl The review notes certain conditions are needed for cash transfers to be an effective • Cash distributions, in pockets of deficit close to surp bring about an inflow of food at reasonable prices.5 • The administrative burden imposed by the program (especially on the bankin system) ca Albania). • Monitoring and accounting needs to be more stringent than tha food items, and was found to be inadequate in some projects. • The fact that certain groups in society may already be excluded from economic activity or ownership m Impacts on beneficiary groups • Beneficiaries tend to use cash for social and productive investment only after consumption needs have been met. Evidence of squa I Background • USAID provided a one-time cash transfer of $92 to 107,000 of the affected households as direct help to recover their livelihoods.9 • Nearly all beneficiaries (96%) earned their income principally from agriculture. • Correctly identifying the beneficiary population required a system locating and registering the population of the area to be assist • PPC/DEI/ESPA:JKerley:1/7/05 1 Implementation Lessons Learned • To ensure an equitable cash program, upfront time must be spent to identify and register the complete population, establish clear eligibility criteria, and plement them fairly. . Timing in time for the second harvest in the south and in the lean season in the north. st, including those who had received the least eriences of signing and waiting for flood assistance that never materialized. Monitoring and Accounting a anagement Unit (PMU) to oversee the grant distribution or in Mozambique to distribute local currency to displaced families. • Administrative costs of the program equaled ten percent of the program budget. me standard of monitoring and accounting used in the Mozambique program. . Cash versus Vouchers in Emergency Situations im 2 Background • The uncertainty of when and how much money was going to be available delayed planning and implementation. The floods occurred in February 2000; the grants were distributed in February 2001, Findings • The time lag had unforeseen positive and negative impacts. The lag allowed the project to reach the needie amount of relief assistance. • Many affected families were excluded as they didn’t register for the program. They were discouraged from previous exp 3. Background: • USAID Mozambique provided strong monitoring and accounting systems to ensure that the $10 million in cash grants was given only to targeted recipients. o The Regional Inspector General’s Office in Pretoria (RIG/Pretoria) conducted a concurrent audit of the program. USAID auditors were present when the cash distributions were made to the beneficiaries. o A contract was given to a U.S. affiliated accounting firm to establish Program M program. o USAID provided the money to the Government of Mozambique which used the commercial banking sect Findings • The accounting controls ensured that the grants reached the targeted recipients. Implementation Lesson Learned • Use the sa 4 Background: • The use of vouchers in Mozambique was entertained and discarded because: PPC/DEI/ESPA:JKerley:1/7/05 2 o A cash voucher system was thought to have been too easily abused. o A commodity voucher system required an analysis to identify items most secondary market for vouchers would stem required that relationships with shops and rt survival.” ice within the households. o Develop the local economy. . Economic Impact of the Cash Distributions on producer goods (equipment, livestock, and seed) were oney on construction materials and labor (principally ent for food, a critical need for some atterns of expenditure reflected normal spending patterns of households. ttached, households would make prudent use of the money was en very significant, oney helped rebuild commerce through the purchases of the addressed the concerns raised by the initial review of such programs. the caveat that implementers must be cognizant of the conditions for its use. needed. o Concerns were expressed that a develop, negating their intent. o A commodity voucher sy vendors be established. • Cash transfers were chosen in order to: 10 o Help people recover livelihoods, rather than simply suppo o Put purchasing power and cho 5 Background • Households used the money to replace critical assets. • Expenditures substantial. • Households also spent m for home construction). • A smaller part of the money was sp families, months after the disaster. • Geographic p Findings • The fundamental principle of a cash grant program, that without any conditions a confirmed. • The food inflation effect of the program may not have be given the pattern of purchases of items other than food. • The flow of m households. • By all accounts, this was a very successful use of cash transfers, which Implementation Lesson Learned • Cash transfers as a relief to development tool are very useful, with PPC/DEI/ESPA:JKerley:1/7/05 3 PPC/DEI/ESPA:JKerley:1/7/05 4 1 Mozambique 1999-2000 Floods Impact Evaluation: Resettlement Grant Activity Emergency Recovery: Agriculture and Commercial Trade (ER: ACT). U.S. Agency for International Development (USAID). Abt Associates Inc.(with Afrisurvey and Caresoft Lda.) URL: http://www.dec.org/pdf docs/PDABX449.pdf. Agricultural Policy Development Project (APD)USAID Contract No. PCE-I-00-99-00033-00 Task Order No. 803. Impact Assessment: Machanga District, Sofala Province. World Vision Mozambique Emergency Flood Relief, World Vision, 2000. A Preliminary Assessment of Damage from the Flood and Cyclone Emergency of February-March 2000. World Bank, March 2000. 2 Audit Report USAID Resources Managed by the Project Management Unit/Deloitte & Touche. Sithole Chartered Accountants, SA, draft 12/01. Concurrent Audit of USAID/Mozambique’s Resettlement Grant Distribution Activity, Office of USAID Regional Inspector General. July 31, 2001. 3 Jay Smith (DAA/EGAT), James Watson (Maputo/PDT), Michele Gross (Maputo/PDT), and Ian MacNairn (OFDA). 4 British Red Cross. Emergency Nutrition Network. Field Exchange August 2001: Cash Transfers in Emergencies: A Review of Recent Experiences. British Red Cross article.. 5 British Red Cross. Emergency Nutrition Network. Field Exchange August 2001: Cash Transfers in Emergencies: A Review of Recent Experiences. British Red Cross. 6 Social Safety Nets for Poverty Alleviation in Southern Africa. ESCOR Report R7017. Institute for Development Studies, Sussex. Devereux. S. 2000a. 7 Summary data on cash transfer programs in Ethiopia, Cote d’Ivoire, Cameroon, and Chad are found in Mozambique 1999-2000 Floods Impact Evaluation: Resettlement Grant Activity Emergency Recovery: Agriculture and Commercial Trade (ER: ACT). P. 38. URL: http://www.dec.org/pdf docs/PDABX449.pdf.. 8 The U.S. Federal Emergency Management Agency’s (FEMA) grant-making program for victims of natural disasters in the U.S. was an important model for USAID’s planning. 9 Detailed findings on the design and implementation process are found in the “Information Memorandum” to the Deputy Administrator on Mozambique’s Flood resettlement Program. January 3, 2005. 10 Emergency Nutrition Network. Field Exchange August 2001: Cash Transfers in Emergencies: A review of Recent Experiences. British Red Cross.