LOCAL AND REGIONAL PROCUREMENTCase study of Kyrgyzstan cash program and

General lessons learned

Penelope Anderson, Director of Food SecurityIFADC, Kansas City

June 29, 2011

Context: Impact of Conflict

• Ethnic conflict begins June 10, 2010

• 100,000 refugees into Uzbekistan

• 300,000 people displaced within Kyrgyzstan

• 765,000 people remained in affected areas unable to access services and markets.

• 560,000 in need of food assistance.

Map of kyrgMap of kyrg

•Internally Displaced Persons (IDPs) moved to villages surrounding Osh and Bishkek to stay with relatives.

Community NeedsGroups:

•Returning IDPs: supplement lost livelihoods

•Non returning IDP host families: assistance to support additional members

•Those living or returned to targeted areas who cannot continue their livelihoods due to security concerns

Food Security Context:•1/3 of the population food insecure

•80% of household income spent on food

• Remittances fell by 22% from 2008 to 2009

Other humanitarian responses

• Tent and blanket distribution• Food distribution (flour,

beans, oil and salt) by WFP, Red Crescent and local NGOs

• Materials and assistance to rebuild houses

• Grants for lost businesses from MFIs

Cash advantages

• promotes empowerment and

dignity

• provides choice

• allows for variation in need

• can be efficient, timely & cost-

effective

• fewer recipient costs (transport)

• multiplier effects; knock-on

economic benefits

• provides assets

• avoids disincentive effects

Cash disadvantages

• inflationary risks

• security risks

• may be more difficult to target

• may be more prone to diversion

• less available from donors

• anti-social use concerns

• does not meet consumption/ nutrition objectives

• may be more difficult to monitor

Was cash right for Kyrgyzstan?

Cash distributions are appropriate when:

Kyrgyzstan context

people previously purchased essential goods &

services through market mechanisms

Especially in urban areas, markets were the primary source of food purchases.

a shock has caused inability to meet basic needs

and/ or adoption of negative coping strategies

Ethnic conflict in June, 2010

sufficient goods available locally Yes

markets are accessible & functioning or

expected to be soon

Markets were functioning 10 days after the conflict. Cash distribution contributed to market re-establishment.

delivery can be done safely and effectively Through Kompanion, who has 90 offices around target areas and experience with cash transfers.

people prefer it over other response options This is true from focus group discussions and PRAs.

Methodology: Cash Distributions

• Unconditional cash transfers

• $35 per month (increased to $56 per month for the third tranche to account for price increases) over 9 months

• Distributed in three tranches

• Cash transfers distributed through Mercy Corps’ partner, Kompanion Microfinance

FINDINGS

1. Time

2. Cost

3. Effect/Impact

4. Do no harm

Finding 1: TIME• Food provided by Title II

programs typically take up to 4 to 6 months to reach those in need.

• MC started distributing cash after 26 days of the agreement through existing partnership with Kompanion.

• Other NGOs implementing LRPs in Kyrgyzstan were able to get food to beneficiaries faster than traditional food aid would take

Finding 2: COST

Food purchased through LRP cash program in Kyrgyzstan shows a 24% cost savings when compared to the same food basket through a Title II program ($3.0 million v. $3.9 million, respectively)

– The Title II program figure includes commodity costs, shipping and inland rates.– Does not include additional distribution costs, ie warehousing, human labor, etc.

However:

Other considerations– Kompanion costs

vs bank costs– Rising global food

prices

Finding 3: Effectiveness/ Impact

Cash is Effective for Food Security

• Because markets were functioning around 10 days after the conflict, people could buy things they needed at the bazaar or at local mini-markets.

• 87% of beneficiaries used the cash to purchase food. They purchased flour and oil, meat, sugar, milk and eggs.

• Cash spent on electricity or coal for cooking also contributes significantly to food security.

• 87% of households reported having food stocks after the cash transfer, whereas before, only 64% had food stocks.

Finding 4: Do no harm• 1st quarter: market prices of staple foods did not increase

significantly

• 2nd quarter: food prices increased in concert with world food

prices.

III. LRP Lessons Learned

I. Mercy Corps’ LRP programs

Program name Country LRP mechanism Donor Timeframe

Localized Immediate Drought Response (LIDR)*

Niger Procurement/ distribution and voucher

USDA 6/2010-9/2011

RESPOND Niger Procurement/ distribution and voucher

OFDA 5/2010-9/2010

Localized Emergency Assistance Response in Niger (LEARN)

Niger Procurement/ distribution and voucher

USAID/FFP 6/2010-12/2010

Kimbe-La (Hang in there)* Haiti Voucher/ Mobile money pilot

USAID/FFP 7/2010-6/2011

Emergency Food Assistance (EFA)* Kyrgyzstan Cash transfer USAID/FFP 7/2010-6//2011

LRP of Food Aid for Community- Based Nutrition Intervention to Food Insecure

Households

Kyrgyzstan Procurement/ distribution USAID/OFDA 2/2009-7/2009

Zimbabwe Urban Feeding Program Zimbabwe Procurement/ distribution USAID/OFDA 2/2009-12/2009

Local/Regional Procurement Tajikistan Procurement/ distribution USAID/OFDA 9/2009- 4/2009

Lessons learned: General• Coordination among programs can

enhance the benefits.

• Ensure that program methodologies are appropriate for all targeted beneficiary populations.

• Foster partnerships for sustainable impacts.

• Create transparency in the selection of beneficiaries as much as feasible.

Lessons learned: Cash

• Pay attention to safety concerns for cash handling in large amounts (look for alternatives for cash distribution mechanism i.e. bank accounts or mobile transfers)

• Match cash transfers with times of greatest food security vulnerability (need to do seasonal calendar)

• Program flexibility in times of price volatility is important to continue meeting beneficiary needs

• Coordination among programs can enhance the benefits.

Lessons learned: Voucher

• Be realistic about the potential benefits of using this type of program- vendors become a beneficiary group as well.

• Manage the expectations of vendors participating in the programs.

• Integrate a business training/ planning component for vendors for more sustained benefits.

• Where possible, allow more choice for beneficiaries in their use of vouchers.

Lessons learned: Procurement/distribution

• Ensure capacity and reliability of food quality and safety testing.

• Recognize trade offs between using larger more reliable vendors and smaller vendors for whom participation might benefit more.

THANKS! THANKS! For more information:For more information:

Penelope AndersonPenelope Andersonpanderson@dc.mercycorps.orgpanderson@dc.mercycorps.org