4. Programme Design
Once the preliminary assessment and analysis (Section II above) has been conducted, CARE staff should adhere to the following process in designing a CBI intervention:
- Decision on the appropriateness of CBI;
- Decision on the CBI modality;
- Decision on the grant amount and frequency;
- Decision on the payment mechanism.
CBI is a dignified and relevant way to deliver emergency projects if the context is appropriate and some conditions are fulfilled, namely:
- Functional and accessible markets:
- Markets are functioning and integrated;
- Vendors, especially women traders, have safe physical access to the market with their products;
- Communities are used to access markets to cover their basic needs;
- Products are available at regional, local levels or within an acceptable distance;
- Traders are willing and able to participate;
- Target group, including women, has physical access to shops/markets;
- Social acceptance of cash (within the community and by the authorities);
- An efficient payment mechanism accessible by all community members and safe for both the community and CARE team members;
- A team trained in CBI.
The decision tree, developed by CARE (in Annex), can be used to support the decision-making process on the appropriateness of CBI. The Country Director or the Emergency Team Leader is responsible for making the decision to use CBI or not to deliver CARE response.
Below is a table with the potential advantages and disadvantages of each CBI modality, those should be contextualized.
| Potential advantages of CBI delivery | Potential disadvantages of CBI delivery |
| Choice and dignity – cash allows recipients to decide what they should spend the money on. This enables people to choose what they most need, and allows for this to vary from person to person | Less control from the women – women may be less able to keep control of cash than alternatives such as food. If this challenge is overcome by distributing the cash or the voucher to women, protection risks should be closely monitored. |
| Cost effectiveness – for CARE and the beneficiaries as logistics costs are lower. | Lack of skills – in context where CBI has not been used before, the team may not be fully proficient hence creating delays in the set up of the project. Lack of knowledge can also lead to resistance from the team to use CBI to deliver the project. |
| Multiplier effects – distributing cash can have knock-on economic benefits for local markets and trade if the money is spent locally, and it may stimulate agricultural production and other areas of livelihoods | Risk of inflation – if the market has not been properly assessed or if market monitoring is not done or does not lead to appropriate operational decisions, prices for key goods can rise, negatively impacting both beneficiaries and non beneficiaries. |
| Avoids disincentive effects – unlike in-kind distribution CBI is unlikely to discourage local trade or production. | Security risks – Despite the lack of evidence of CBI being more risky than in-kind, the perception of risks may be higher for beneficiaries and CARE team members. |
| Enhanced accountability – to beneficiaries due to higher scrutiny of CBI. | Higher scrutiny of CBI – may increase costs and time spent to set up the project.
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| Limit opportunities for corruption – Grants or vouchers pass through fewer hands than in-kind aid, cutting out the number of intermediaries who have the opportunity to use the resources for private gain. | Higher risk of political manipulation – because CBI are popular, they are more prone to be used for political manipulation, especially when the targeting mechanism is not strong or transparent enough. |
The grant amount can be calculated based on the project objective. Several methodologies described below are commonly used:
- Cash for food amount is usually calculated based on the cost of a Food Basket.
- Multipurpose cash assistance can be calculated by using one of the two main approaches:
- Minimum Expenditure Basket (MEB) – a compilation of monthly costs of various items included in MEB.
- Income vs. expenditure gap – the grant amount constitutes the difference between household income and household expenditures. The aim of the grant is to close the gap.
- Cash interventions for livelihood activities quantify the needs through a business plan that the beneficiaries put together. Beneficiary capacities to provide some of the assets (e.g. if they already have them) can also be factored in.
- Cash for work wage rates vary between skilled and unskilled workers but should not vary based on participants’ gender. They are usually set at 10‐20% below market rates26. Such a rate helps to ensure that the employment opportunities created by the project do not entice people away from their regular livelihood activities.
The following factors are taken into account to decide on frequency:
- the urgency of the need;
- the protection risks for beneficiaries when receiving large payment;
- the capacity of the payment agent;
- the project objectives.
The decision on the grant amount and the payment frequency is the responsibility of the CARE Project Manager and the Team Leader.
This decision is two-fold:
- Choosing the payment mechanism or payment agent: bank, post office, mobile phone company, transfer company, cooperatives, traders, direct cash distribution by CARE or its implementing partner.
- Choosing the payment instrument: direct cash, ATM card, check, wire, mobile phone or voucher. The choice of the instrument will be dictated by the choice of the payment mechanism but some payment agents can offer several instruments (e.g. a bank can offer direct cash, check, ATM card or wire).
| Payment agent | Payment instrument | Potential advantages | Potential disadvantages | Appropriate context |
| CARE Implementing partner | Direct cash | – Quick to initiate
– Rapid access to cash for beneficiaries – Variable and flexible distribution points – No transaction fees |
– High safety risk for staff and beneficiaries
– Higher risk of fraud and corruption (or suspicion) – Labour intensive and time consuming in terms of planning for CARE or the partner – Long waiting line for beneficiaries |
Failing banking system and absence of other reliable payment agents.
Small scale pilots One off payment While CARE does not encourage this option, there are still cases where the CO had to resort to it. |
| Bank | Direct cash | – Safer than direct payment by CARE or partner
– Transfer risk of loss to a third party – Flexible time to redeem the cash for the beneficiaries – Quick if existing relationship with the bank – Not labour intensive for CARE or its partner – Solid audit and reconciliation process |
– Lack of branches in remote rural areas | Functioning banking system
Repeated payment
|
| Cheque | – Safer than direct payment by CARE or partner
– Transfer risk of loss to a third party – Flexible time to redeem the cash for the beneficiaries – Solid audit and reconciliation process |
– Lack of branches in remote rural areas
– Long writing time for the cheques – Fastidious signature process for the cheques – Unfamiliarity of the beneficiaries with this mechanism |
Functioning banking system
Repeated payment Small scale project |
|
| Bank account | – Safer than direct payment by CARE or partner
– Transfer risk of loss to a third party – Flexible time to redeem the cash for the beneficiaries – Quick if existing relationship with the bank – Increased financial inclusion of beneficiaries – Not labour intensive for CARE or its partner – Solid audit and reconciliation process – Possibility of saving in the bank account |
– Lack of branches in remote rural areas
– Bank account opening and operating fees – Lack of ID documents by beneficiaries to open a bank account |
Functioning banking system
Repeated payment When complemented with training on financial inclusion |
|
| ATM Card | – Safer than direct payment by CARE or partner
– Transfer risk of loss to a third party – Flexible time to redeem the cash for the beneficiaries – Quick if existing relationship with the bank – Increased financial inclusion of beneficiaries and usually high acceptance from beneficiaries – Not labour intensive for CARE or its partner – Solid audit and reconciliation process – Possibility of saving on the card |
– Lack of ATM in remote rural areas
– Long and expensive set up cost (ATM Card cost) – Loss/theft of the ATM Card |
Urban area with pre existing ATM system
When complemented with training on financial inclusion and use of the ATM card |
|
| Mobile phone | Mobile phone | – Safe and usually discrete way of transferring cash
– Transfer risk of loss to a third party – Not labour intensive for CARE or its partner – Flexible time to redeem the cash for the beneficiaries – Possibility of saving in e-wallet |
– Lack of access to mobile phone by beneficiaries – especially women (or extra costs of mobile phone distribution)
– Unfamiliarity of the beneficiaries with the mobile money – Lack of stable mobile network – Long and expensive set up costs (SIM card cost, etc.) – Loss/theft of phone or change in mobile number – Possible error (sending to the wrong number) – No donor visibility |
Repeated payment
Failing banking system or when bank services are more expensive Area with reliable mobile coverage Pre existing mobile money system When complemented with training on how to use mobile money |
| Transfer company | Direct cash | – Transfer risk of loss to a third party
– Flexible time to redeem the cash for the beneficiaries – Not labour intensive for CARE or its partner -Can already be familiar to beneficiaries (e.g. remittance) |
– Lack of branches in remote rural areas
– Expensive commissions – Rapid set up but then low capacity to deliver the cash to a high number of beneficiaries |
Repeated payment
Failing banking system or when bank services are more expensive Where transfer company are regularly used by beneficiaries |
| Post office | Direct cash | – Transfer risk of loss to a third party
– Flexible time to redeem the cash for the beneficiaries – Not labour intensive for CARE or its partner – Often aligned with government policy -Often seen as a public sector service provider rather than private sector provider |
– Lack of post office in remote rural areas
– Lack of cash flow – Delays due to internal bureaucracy |
Repeated payments
Areas with good post office coverage |
| Trader | Direct cash | – Transfer risk of loss to a third party
– Flexible time to redeem the cash for the beneficiaries – Low set up and transaction costs – Higher multiplier effect on the local market |
– Poor record keeping:
+ increased risk of fraud + need for additional finance team member within CARE or implementing partner for prompt reconciliation – Initial lack of interest from the traders |
No banking system, post office, transfer company or mobile coverage. |
| Voucher | – Transfer risk of loss to a third party
– Flexible time to redeem the cash for the beneficiaries – Low set up and transaction costs – Higher multiplier effect on the local market – CARE or its partners can easily influence recipient choice and promote certain practices |
– Limit beneficiaries choice on where to spend the money
– Poor record keeping: + increased risk of fraud + need for additional finance team member within CARE or implementing partner for prompt reconciliation – Initial lack of interest |
Cash grant not appropriate. |
