Analysis of Concern Worldwide Malawi Food and Cash Transfer (FACT) Project

Executive Summary

This report examines the application of the general principles of the project management to the analysis of Concern Worldwide Malawi Food and Cash Transfer (FACT) Project which was realised in three central districts in Malawi from December 2005 to April 2006.

The report examined the subject of emergency food and cash transfer projects, their key characteristics as well as their main differences from the commercial projects.

Through the study of the literature related to the subject, the key stages of project development were identified in the application to such charity projects of emergency response.

Then, FACT project was analysed more in detailed using available official reports prepared by both Concern Worldwide itself and the independent organisations. The performance of Concern Worldwide in the delivery of FACT project was also compared in some points to the performance of Oxfam in a similar project run in Malawi during the same period of time.

In course of this analysis some areas for improvement were identified as well as some suggestions for the implementation of such improvements were offered based on the information gained from the literature review as well as on the application of key principles of project management.

Table of Contents

Executive Summary 2

1. Introduction 4

2. Cash and Food Transfer Charity Projects 4

3. Analysis of FACT project of Concern Worldwide in Malawi from the project management perspective 8

3.1 FACT Project Overview 8

3.2 Project Planning 8

3.3 Project Implementation 10

3.4 Risk Management 12

3.5 Stakeholders Management 13

4. Conclusion 13

5. References 15

1. Introduction

This report is dedicated to the analysis of Concern Worldwide Food and Cash Transfer Project (FACT) in Malawi, December 2005 – April 2006, from the project management point of view.

The analysis of FACT project was based on the available literature related to the subject of food and cash transfer in emergencies and the evaluating reports on FACT project prepared by both Concern Worldwide and by an independent evaluating team. FACT project was also compared to a similar cash transfer project of Oxfam which also run in Malawi during the same period.

2. Cash and Food Transfer Charity Projects

Cash and food transfer charity projects are a common way to send aid in emergency situations. There are three variations of such projects:

• Distribution of food in the areas affected by natural disasters (hurricanes, floods, earthquakes, etc), famine or military conflicts;

• Distribution of cash in the affected areas;

• Combination of both;

While there are some tendency to indicate food distribution as the most appropriate choice as aid in emergency, however many sources say that such preferences are often dictated by the donors and existing prejudices in public and charities’s opinion regarding the cash distribution instead of food. (Peppiatt et al., 2001; Kreander et al., 2009).

The option of cash transfer in emergency currently receives much better understanding that before , becoming much more acceptable by donors and other stakeholders. (Creti & Jaspars, 2006)

Some organisations , such as Oxfam, are strong advocates of cash transfer programmes over the food transfer. (Creti & Jaspars, 2006; Witteveen, 2006)

The practice of using cash transfers in response to emergencies is not so new and proved to be effective in many cases: in Ethiopia (1984-1985), Ghana (1994), Guatemala and Nicaragua (1998), Kosovo Crisis (1999) and others. (Peppiatt et al., 2001)

Some of the reasons to use cash instead of food in response to famines, natural disasters and other emergencies are (Peppiatt et al., 2001, Atchell, 2006; Harvey & Savage, 2006; Savage & Umar, 2006):

• Speed, as it is usually much faster to transfer cash to the affected people that to deliver food to those areas;

• Cost effectiveness as it does not require logistics, storage and other costs related to the delivery of food

• Impact on local market and trade, as cash would stimulate activities in the market

• Empowering effect on the beneficiaries

• People can make their own choices of which kind of food or additional goods/ services to buy; they may need cash to mill the grain they got as the food aid, to buy wood to be able to cook food, or to invest in some tools and assets;

However, when choosing between cash or food, many aspects should be taken into consideration, such as availability of food in the targeted areas, and some advantages of cash transfers listed above might not be viable in certain circumstances. Thus, while the distribution of cash is usually much cheaper than the distribution of food due to elimination of many logistics operations associated with the transportation, storage and distribution of food, in some cases cash transfers could be very expensive, as it was the case during the Oxfam’s cash transfer project in Zambia in 2006, when the non-cash costs of the project amounted to 30% of the value of distributed cash. (Harvey & Savage, 2006).

Besides, there are some disadvantages and additional risks associated with cash transfers as opposed to food distribution. The most important risks are those related to the safety and security of the distribution and improper use of cash. (Peppiatt et al., 2001).

There is also a problem of targeting, as it is believed that it is much more difficult to identify beneficiaries for cash aid than for food aid. (Peppiatte et al., 2001) However, many authors say that the problem of targeting is common for all emergency response projects as not specifically associated with cash distribution. (Harvey & Savage, 2006; Creti & Jaspars, 2006)

The risk of inappropriate use of cash, while mentioned in most of the sources, has little practical evidence in its support. (Peppiatt et al., 2006; Harvey & Savage, 2006; Creti & Jaspars, 2006).

The same can be said about gender discrimination: while in most sources it is stated that women are usually have no power in decision making inside their families and communities and for that reason cash aid must be given to male representatives of the households, Harvey & Savage (2006) disprove this arguments. In the Oxfam cash transfer projects in Zambia and Malawi analysed by Harvey & Savage, in most cases cash was handed to women, not men, and they say that women have a rather strong decision making power in those communities. (Harvey & Savage, 2006) However, the gender discrimination is strongly depends on the situation and the cultural traditions in the location of the affected population.

In some cases, however, cash distribution would not be appropriate. For example, in the situation of military conflicts or change of political regime without any clear political power and legal system in place, or where there are problems for the beneficiaries to reach the market due to destroyed roads, bridges, et, or due to lack of food supply in the targeted area. (Creti & Jaspar, 2006)

Some charities also use a combination of cash and food when replying to emergency needs, considering it as a more balanced approach. The food plus cash form of aid allow some flexibility of choice provided by cash while assure that the beneficiaries receive at least some amount of the food needed.

From the project management point of view, such humanitarian cash transfer projects impose a number of challenges to the managing team. First, charity projects in general have very different objectives from the commercial projects. Besides, many charity projects are heavily rely on the participation of temporary staff and volunteers, with completely different set of motivations as compared to commercial projects. The extensive use of temporary workers and volunteers may impose problems with quality human resources (sufficient number of people with a certain skills set) for the implementation of some projects, especially those located in remote under-developed areas if a charity try to use local staff or if a project in urgent (as it is the case in emergency responses to famine, natural disasters and military conflicts).

In spite of considerable differences from the commercial projects, the projects run by charities and other humanitarian organisations have to follow all the key elements of the general project management, such as:

• Problem identification

• Definition of project objectives

• Project planning

• Project implementation

• Project monitoring and evaluation in accordance with the defined objectives

• Risk management

• Stockholders management

While all these elements are very important for cash transfer projects, a special emphasis is place on the risk management part, first of all, addressing risks directly associated with cash distribution to beneficiaries. (Peppiatt et al., 2001; Harvey & Savage, 2006) Actually, detailed recommendations regarding the cash distribution security were given in all the sources used for the preparation of this report.

This area of risk management is extremely important for this type of projects as distribution of big amounts of cash can imply danger not only to the financial assets (cash itself) but also to the lives of the organisation members. The authors advise avoiding direct cash handling and transfer wherever possible, using instead such methods as banks transfer and others.

Thus, Gentilini (2007) suggests using “creative” approach to the existing financial mechanisms of money transfer, citing Jaspars (2006)

“In contexts where there are no formal banking systems, some relief agencies have developed innovative ways to distribute cash. These methods are based on local, traditional systems and require a good knowledge of the local context. In Somaliland, agencies have distributed cash through the local money-transfer system companies usually used for distributing remittances; the companies charged a 5 percent fee and accepted responsibility for any loss. In Haiti, Oxfam-GB made use of local shops to pay cash grants and cash-for-work wages on a fortnightly basis. In Afghanistan, Mercy Corps devised a method using the local hawala system to transfer the relatively large sums required to meet payroll needs in the field. Paymasters transferred the payroll cash to group leaders, who paid individual labourers, with Mercy Corps project engineers providing oversight”.

Another important aspect of such projects is a clear definition of project objectives, as well as project monitoring and evaluation of the results keeping those project objectives in mind (Gentilini, 2007; Creti & Jaspar, 2006; Harvey, 2007; Rauch & Herrmann, 2007). Thus, as such cash transfer projects usually play a role of short term interventions rather than long time support, the evaluation of project results should be done in accordance with those short time goals. However, some authors point out need for long term supportive programmes in the affected areas, which could be a next step following the first short term intervention programmes, reinforcing and developing its results for the affected communities

Additionally, the implementation of the project is indicated as being of paramount importance. Many authors point out that a special attention should be paid to the human resources, making all the efforts to assure that a sufficient number of people with a necessary set of skills is available for this project, (for example, in such areas as IT and finances, which proved to be critical for the implementation of cash transfer projects). (Gentilini, 2007; Rauch & Herrmann, 2007) Besides of the skills set, the overall administrative capacity of the project team, staff shortage or high staff turnover can also damage the process of project implementation. (Gentilini, 2007)

He argues that (Gentilini, 2007):

“Limited implementation capacity on the ground is often a major constraint no matter which deliverymechanism is selected.”

The most comprehensive guidance on the cash transfer project management is provided in the SDC Cash Workbook (Rauch & Herrmann, 2007), which cover all the steps of such projects in detail.