DRAFT
Guidance for DFID country offices on maximising VfM in cash
transfer programmes
Objective
To provide guidance to DFID country offices on measuring value for money in
cash transfer programmes through the rigorous analysis of costs and benefits,
as far as possible, at the design stage and through programme
implementation and completion. This project is driven by DFID’s expansion of
support to cash transfer programmes, its strong emphasis on ensuring
programmes are delivering value for money, and strong country office
demand for specific advice and guidance.
The Recipient
This guidance is aimed in the first instance at advisers in DFID country
offices, but should be written so that it is also of use to others designing or
implementing cash transfer programmes (donors, partner governments and
NGOs) and those monitoring and evaluating them (including implementing
organisations, auditors, researchers and evaluators).
The Scope
The geographical focus for DFID cash transfer programmes is low income
and lower-middle income countries in sub Saharan Africa and South
Asia. Guidance should be focussed on these country contexts. This is also
an increasing geographical area of focus for other donors including the World
Bank.
Method
A technically robust and highly user-friendly guidance note should be
produced of no more than 20 pages plus annexes. The guidance is aimed at
DFID advisers and staff in country offices in the first instance, but also
practitioners in donors and partner governments who may not have an
analytical background. The use of plain English, checklists, worked examples
and simple illustrations will be extremely important.
The guidance needs to reflect the realities of addressing donor corporate
needs while aiming at aid effectiveness objectives. It needs to cover the
assessment of programme costs and benefits at different stages of the
programme cycle including design, implementation and evaluation.
An initial suggested outline of the areas to be covered in the guidance note is
set out below. This is not set in stone and can be changed and added to as
appropriate.
Summary - checklist of recommendations for practitioners
Introduction to VfM
 Economy, efficiency and effectiveness
Minimising costs
 Why is it important to minimise costs?
 Measuring input costs
o Recommended approach and metrics
o International examples of input costs
 Measuring output costs
o Recommended approach and metrics
o International examples of output costs
 Other costs
o Private costs e.g. opportunity costs
o Incentive costs e.g. labour market effects
o Social costs
o Political costs
 Comparing costs at programme design stage
o Targeting
o Delivery mechanisms
 Analysing cost drivers: breaking down programme components
Maximising cost effectiveness
 When to use cost effectiveness analysis
 How to measure programme cost-effectiveness
o International examples of cost effectiveness
Maximising rates of return
 When to use cost benefit analysis
 Approaches to cost benefit analysis
o Choice of cost benefit analysis approach
o Identifying evidence on impact including impact on poverty
o International examples of rates of return
o Peer reviewing
Monitoring and evaluation
 Monitoring costs and benefits during implementation
o How to follow the money
o Developing government systems
o Being realistic and proportionate
 Evaluation
o Measuring final impact and costs
o Learning and disseminating lessons
Managing risks for programme costs
o Fiduciary risk and mitigation (separate note)
o Other drivers of cost inflation and mitigation
o Analysing programme sustainability
Other issues
 Balancing donor requirements with aid effectiveness objectives
 Value for money in humanitarian contexts
Conclusion
Input costs include all the labour and capital costs of setting up and running
the cash transfers programme e.g. the staff, hardware, software and training
costs of the transfer payment mechanism, or the system to identify and
confirm the identity of beneficiaries. Output costs are an aggregated measure
of costs to achieve outputs, usually measured in terms of the number of
households receiving cash transfer payments.
It would be helpful to use a large number of examples of where cash transfer
programmes have successfully minimised costs especially through new and
innovative methods e.g. through the use of new technologies.
Frequent reference will need to be made to DFID guidance and other external
guidance that contains more detail on, for example, carrying out cost benefit
analysis and impact evaluations. If reference is made to DFID internal
guidance this should be made fully accessible to non-DFID readers.
Fiduciary risk should be referred to in the report but does not need to be
covered in detail as a separate DFID guidance note on this has already been
published.
Reporting and timeframe
It is anticipated that this will require 4 to 6 weeks of work in total, allowing for
consultation and amendments. The guidance note should be provided to
DFID in draft by end October 2011 and in final form by end November 2011.
A draft outline of the note should be provided to DFID by end August and a
final outline agreed with DFID by 9 September. Findings will be presented at
DFID HQ after the finalisation of the note. They will also be presented at
another meeting of donors and experts in academia, most likely in London.
DFID Co-ordination
The consultant will report to DFID’s Economic Adviser in the Poverty and
Vulnerability Team, Policy Division, DFID. A wider DFID interest group within
DFID, and possibly the World Bank and academia, will be consulted at
appropriate points in the guidance note drafting.
Background
DFID is expanding its support to cash transfer programmes and at the same
time pushing continually to achieve greater value for money from all its
programmes. There is strong demand from DFID country office for guidance
on value for money metrics and approaches, including with regard to cash
transfer programmes.
There are a limited number of rigorous cost benefit analyses that have been
carried out for cash transfer programmes (see World Bank presentation to
South-South Learning Forum 2011: Building Resilient Safety Nets,
presentation on June 3 by Ruslan Yemtsov ‘The Productive Role of Social
Protection’ slide 4 on World Bank website).
There are more examples for cost effectiveness analysis (see for example
Social Protection in Africa, Ellis, Devereux and White, page 90). This
imbalance between cost effectiveness analysis and cost benefit analysis
reflects the difficulty of quantifying the impacts of cash transfer programmes.
Cost information is generally more accessible than information on benefits but
there are still huge challenges. The recent DFID cash transfers evidence
paper noted that unit cost information was not available for three quarters of
existing DFID-supported cash transfer programmes.
The guidance note is part of an ongoing initiative within DFID to increase
rigorous analysis of costs and benefits in the management of programmes
supported by DFID and more widely, as part of a wider strategy to increase
the value for money delivered by international development assistance.