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

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

Why did poverty worsen and food security not improve? Benefit was too low at MK550/month owing to big increase in food pricesincrease 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

Expenditure patterns of cash and voucher recipients and problems with vouchers

Maize, maize milling (cash) maize flour (vouchers) Soap Sugar Salt ( in hungry period) Vegetables (but not in hungry period) Fish Paraffin & matches Contributing 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 2001only No sugar at Alinafe in February Limited choice of soapsoap Retailers tried to decide what and when beneficiaries bought (Muderanji)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

Expenditure on sugar and soap

Choosing for beneficiaries - Muderanji

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 withdrawalscapacity 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