Transfer Modalities
MBRRR Training
Session 2.2
Transfer Modalities: Overview
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When to use transfers
Types of transfers
Deciding between transfer types
Conditionality
Group work: Determining appropriate transfer
modalities
When to use transfers
1. EMERGENCY NEEDS
2. PROTECT ASSETS
3. RESTORE ASSETS
4. BUILD ASSETS
Types of transfers
• In-kind Transfers. The direct provision of goods to
targeted households. The goods can be purchased locally
or regionally, or shipped from donor countries.
• Cash Transfers. The provision of money to targeted
households, with no conditions on how or where the
money is used. However, it may be assumed that the
cash will be used to meet needs identified in
assessments.
• Vouchers. Paper or electronic card that can be
exchanged for a set quantity or value of goods or
services. Vouchers are redeemable with preselected
vendors.
Cash-based programs
Possible Advantages
Possible Disadvantages
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Cost efficient
Choice
Multiplier effects
Avoids disincentive effects
Fewer costs for recipients
Dignity
Inflationary risks
Anti-social use
Security risks
More difficult to target
More prone to diversion
Disadvantages women
Less available from donors
Consumption/nutrition
Comparing cash and in-kind food
transfers
Food transfers generally recommended when:
1. Markets do not function well
2. Beneficiaries don’t have physical or social
access to markets
3. Food intake is prioritized for nutritional
purposes (including targeted feeding and
micronutrient objectives), or certain
nutritional foods are not available in the
local markets
4. Intra-household dynamics favor food over
other transfers that might not go towards
improved child and household welfare
5. Inflationary risks are a significant concern
6. Security conditions favor transfers of food
over other resources (i.e., food
commodities are highly visible)
7. Targeting of beneficiaries through inferior
goods
8. Quality concerns with local foods
Cash /voucher transfers generally
recommended when:
1. Markets function well
2. Supply is able to meet the demand
generated by cash transfers
3. Affected populations are net buyers of food
4. Households have non-food needs
5. Beneficiaries have physical and social
access to markets; markets are a main
source of food for targeted households
6. Production disincentives due to food aid
delivery are a significant concern
7. Security conditions permit (i.e., cash is less
visible but offers greater incentive for theft)
8. Political acceptance of these modalities
9. Cost and time savings through lower
logistical and management overhead
10. Cash transfer systems exist, e.g. pathways
for remittances, micro-finance institutions,
Comparing cash and vouchers
When cash may be more appropriate
1. HH have multiple and varied needs
2. HH prioritize purchases that meet
program objective(s)
3. HH do not require behavior change
to meet objective(s)
When vouchers may be more
appropriate
1. Project has specific objective(s) that
likely won’t be met with cash
2. Behavior change required to meet
objective(s); introduce new products
3. Concerns over anti-social use of cash
4. Do not need to target within hh
4. Want to target transfer within hh
5. Beneficiaries prefer cash
5. Beneficiaries prefer vouchers
6. Beneficiaries are mobile
6. Want to target specific value chains
or market actors
7. Good quality products in market
8. Want to include more/small traders
9. Limited security/corruption concerns
with cash
7. Concern over supplies; induce
demand for certain products
8. Concerns over quality
10.Delivery mechanisms available
9. Targeting cash difficult
11.Need to assist quickly
10. Security concerns over cash
Conditionality
• Unconditional transfers –
• Conditional transfers –
Conditionality
• Unconditional transfers – provided to recipients solely
because of their situation, e.g. malnourished, poor,
drought-affected. No conditions or work are imposed to
receive the transfer.
• Conditional transfers – provided to recipients after
certain conditions have been met, e.g. work/labor on
public works, school enrollment, vaccinations.
Conditionality
Conditionality Pros
Conditionality Cons
1. Attractive where labor markets
fail or jobs are scarce
2. Self-targeting, particularly
where wage is set below regular
cash wages
3. Secondary benefits, e.g.
infrastructure, health visits,
vaccinations, skill development
4. (Less risk of dependency)
1. Costly
2. High management costs
3. Harder to go to scale compared
to unconditional transfers
4. Can exclude highly vulnerable
groups
5. If not planned well, can distort
labor markets or overburden
services, or compete with other
hh activities
6. Rare in emergencies
Exercise: Selecting response options
What would Dina do??
Selecting response options
In-kind
Unconditional
Conditional
Cash
transfer
Voucher
Other
What would Dina do? (1)
A very poor harvest earlier in the year severely
reduced household food stocks and income.
Food is available in the market but households
can’t afford it. To buy food, households are
forced to abandon work on their own fields to
earn wages in the city or on others’ farms.
What would Dina do? (3)
Floods have damaged local food stocks and
isolated the targeted area. The markets are not
expected to function until the area has been
drained and roads are rehabilitated.
What would Dina do? (4)
Drought and high food prices have led to
emergency levels of child malnutrition.
Nutritious foods are available in the market, but
households are not accustomed to consuming
these types of foods.
What would Dina do? (5)
Deteriorating natural resources and poor
agricultural practices have reduced yields in
recent years. This year households require food
assistance several months before the planting
season to reduce negative coping strategies.
Food is available in the markets, but there are
no banks in the area and concerns with security
issues.
What would Dina do? (6)
Hurricanes have destroyed homes in a coastal
village. An assessment reveals that households
prioritize home repairs as their biggest need, but
they also have other emergency needs in the
immediate aftermath of the disaster. Both local
and imported construction materials are
available in the markets.
What would Dina do? (8)
2,000 refugees have crossed the border into a
sparsely populated area in a neighboring
country. They are in need of both food and nonfood items, such as blankets and cooking pots.
There are a few traders that serve the local
population, but they do not have the capacity to
meet the needs of the large numbers of
refugees who are setting up camp.
What would Dina do? (11)
Food is available at the household level, but
poor sanitation practices result in high levels of
diarrhea and malnutrition for children under five
years.
What would Dina do? (2)
Following the harvest, households are faced
with high levels of debt incurred during the lean
season (to buy food and agricultural inputs). To
pay back the debt, they are forced to quickly sell
their limited harvest at low prices as there are
few other options to earn income at this time of
year.
What would Dina do? (7)
Cassava production has been decimated by a
highly virulent cassava disease. The national
agricultural research institute has developed
and multiplied disease-resistant planting
material that could greatly improve household
yields. Cassava cuttings are not typically sold in
the market; households use their own cassava
cuttings or access them freely from their
neighbors.
What would Dina do? (9)
Pastoral and agro-pastoral households lost high
numbers of livestock in the recent drought, in
part due to poor resource management and
animal health practices. An assessment
identifies the need for restocking for vulnerable
hh, surplus livestock numbers by wealthier
households and local traders, as well as training
on improved livestock practices.
What would Dina do? (10)
Cholera has infected local water supplies. Safe,
potable water is sold at “water kiosks” by
commercial traders, although it is only wealthier
residents who typically buy their drinking water.
Poor households targeted by the project do not
normally purchase water on the market.
What would Dina do? (12)
Persons displaced by conflict in the north have
arrived in the capital, and require assistance to
meet immediate needs such as food, water,
clothes and rent. The capital is not directly
affected by the conflict and has highly functional
markets, banks and mobile money transfer
systems.
What would Dina do? (13)
A recent conflict between ethnic groups has
traumatized adolescent girls who remain afraid
to leave their households to go to school or
carry out their livelihoods activities.
What would Dina do? (14)
Malaria is a main killer of children during the
rainy season. The WHO recommends the use of
treated mosquito nets which are not readily
available in the local markets. Households do
not typically use mosquito nets or seek formal
medical care for treatment of malaria.
What would Dina do? (15)
Country XX is highly dependent on tourism for
revenue and jobs. Fighting in the country has caused
a sharp decrease in tourism, causing many businesses
to close. Many households have lost their source of
income, while prices for both food and non-food
items are on the rise. The government does not
expect tourism to resume for at least six months. The
fighting damaged public infrastructure, such as roads,
irrigation canals and schools.
Key Messages
• In-kind, cash or voucher transfers can all be
appropriate responses; the decision to use
one over the others should be based on the
context.
• The different types of transfers can be given
unconditionally or conditionally, depending on
the target population, the objectives of the
program and/or the timing of the transfer
within the seasonal calendar.