Economic aspects and vouchers

Sarah Levy

Calibre Consultants

This presentation…

Poverty of beneficiaries

Food security of beneficiaries

Level of the benefit

Expenditure patterns of cash and voucher recipients

Problems with vouchers

Beneficiary poverty profiles were worse at final impact than at baseline

0 10 20 30 40 50 60 70 80

1

2

3

4

5

Po

vert

y ca

teg

ori

es

% of beneficiary households

Final Impact

Baseline

Food security of beneficiaries did not increase as a result of the project

0 10 20 30 40 50 60 70 80

Food secure

Food insecure

Extremely foodinsecure

% of households in poverty categories 1 & 2

Non-beneficiaries

Beneficiaries

Why did poverty worsen and food security not improve?

Benefit was too low at MK550/month owing to big increase in food prices

Benefit only lasted 1-2 weeks• MK550 would have bought 93 kg of maize in

March 2001 but only 19 kg in March 2002

There were 6-week gaps between deliveries in January-March 2002

Price of maize at Chimbiya

0

10

20

30

40

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2001 2002

MK

Expenditure patterns of cash and voucher recipients and problems with vouchers

Maize, maize milling (cash) maize flour (vouchers)SoapSugarSalt ( in hungry period)Vegetables (but not in hungry period)FishParaffin & matchesContributing to funerals ( in hungry period)Giving to church/mosque ( in hungry period)Chitenjes (post-harvest only)Blankets (post-harvest only)

Main items bought by cash & voucher beneficiaries

Vouchers (1) Distortions in purchasing patterns because:

Availability restricted in some retailers Maize flour only after December 2001 No sugar at Alinafe in February Limited choice of soap

Retailers tried to decide what and when beneficiaries bought (Muderanji)

Price differentials and/or poor quality In February, Alinafe was selling only special

cream of maize flour at MK46-MK48 per kg Chitenjes higher price; blankets worse quality

Expenditure on maize & maize flour

0

20000

40000

60000

80000

100000

120000

140000

1: 25Sep

2: 02Nov

3: 03Dec

4: 19Dec

5: 04Feb

6: 16Mar

7: 08Apr

8: 06May

9: 28Jun

10: 06Aug

Distribution (no. and date)

Tot

al e

xpen

ditu

re (

MK

)

Maize flour

Maize

Expenditure on sugar and soap

0

5000

10000

15000

20000

25000

30000

35000

1: 25Sep

2: 02Nov

3: 03Dec

4: 19Dec

5: 04Feb

6: 16Mar

7: 08Apr

8: 06May

9: 28Jun

10: 06Aug

Distribution (no. and date)

Tot

al e

xpen

ditu

re (

MK

)

Sugar

Bathing soap

Washing soap

Choosing for beneficiaries - Muderanji

133123124N =

Distribution (no. and date)

4: 19 Dec3: 03 Dec2: 02 Nov1: 25 Sep

Re

ceip

t va

lue

551

550

549

548

547

546

545

544

543

11491079

1000

1001

Vouchers (2)

Market/price distortions could be reduced by competition (Chimbiya, Veke)

But voucher scheme tends to give retailers a monopoly due to lack of retailer capacity in rural areas & unforeseen withdrawals

Two-tier retail structure

? rent-seeking by potential ‘insiders’

Conclusion

Level of benefit needs to be flexible Cash is preferable to vouchers because

it gives beneficiaries the chance to maximise their benefits

Vouchers tend to give monopoly power to retailers and lead to uneven development of retail sector