Cash Delivery Mechanisms in Tsunami-Affected Districts of Sri Lanka
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Humanitarian Policy Group HPGHPG Cash delivery mechanisms in tsunami-affected districtsResearched, written and ofpublished Sri by the LankaHumanitarian Policy Group at ODI M. M. M. Aheeyar An HPG Background Paper March 2006 About HPG The Humanitarian Policy Group at the Overseas Development Institute is dedicated to improving humanitarian policy and practice. It conducts independent research, provides specialist advice and promotes informed debate. Britain’s leading independent think-tank on international development and humanitarian issues Overseas Development Institute 111 Westminster Bridge Road London, SE1 7JD United Kingdom Tel: +44 (0) 20 7922 0300 Fax: +44 (0) 20 7922 0399 Email: [email protected] Websites: www.odi.org.uk/hpg and www.odihpn.org Acknowledgements The author would like to thank Paul Harvey, Lesley Adams and Kevin Savage for their constant support, guidance and encouragement throughout the study. Special thanks are due to Navarro Isidro of Oxfam GB Sri Lanka, Jose Lopez of Save the Children Sri Lanka and Ben Mountfield of British Red Cross Sri Lanka, who serve as the members of the steering committee provided immense support and guidance. Vichithranee Gunawardane of Oxfam GB and Oxfam’s field staff provided logistics and administrative help and organised the field work. Thanks to all the humanitarian and other agencies who supported the study by providing information and being so generous with their valuable time. About the author M. M. M. Aheeyar is a Research Associate at the Hector Kobbekaduwa Agrarian Research and Training Institute in Colombo. He can be reached at [email protected] or [email protected]. Contents Executive summary .............................................................................................................................5 1. Introduction......................................................................................................................................7 1.1 Background ...............................................................................................................................7 1.2 Objectives of the study..............................................................................................................7 2. Research methodology....................................................................................................................8 2.1 Study sites.................................................................................................................................8 2.2 Data collection procedures .......................................................................................................9 3. Review of commodity based interventions....................................................................................10 3.1 Trends and preferences..........................................................................................................10 3.2 Quality and level of satisfaction ..............................................................................................10 4. Review of cash transfer experiences ............................................................................................12 4.1 Usefulness and preferences ...................................................................................................12 4.2 Types of cash intervention ......................................................................................................12 5. Approaches to cash delivery in tsunami-affected areas of Sri Lanka...........................................15 5.1 Cash delivery mechanisms .....................................................................................................15 5.1.1 Direct distributions ...........................................................................................................15 5.1.2 Direct delivery through partner organisations .................................................................15 5.1.3 Direct delivery through community-based organisations ................................................17 5.2 Delivery through formal banking systems...............................................................................17 5.2.1 Commercial banks...........................................................................................................17 5.2.2 Development banks.........................................................................................................18 5.2.3 Delivery through existing state welfare mechanisms ......................................................18 5.2.4 The post office network ...................................................................................................19 5.3 Pros and cons of different cash delivery mechanisms ...........................................................19 5.3.1 Direct payment by donors................................................................................................19 5.3.2 Cash transfers through POs............................................................................................20 5.3.3 Cash transfers through CBOs .........................................................................................20 5.3.4 Cash delivery through formal banking systems ..............................................................20 5.4 Cost differences between delivery mechanisms ....................................................................21 5.4.1 Beneficiary selection........................................................................................................22 5.4.2 Cash transfer ...................................................................................................................22 5.4.3 Direct transfer through POs/CBOs..................................................................................22 5.4.4 Delivery through formal banks.........................................................................................22 5.4.5 Micro-finance institutions.................................................................................................22 5.4.6 Post offices ......................................................................................................................22 5.5 Issues/agreements that need to be negotiated in making partnerships with different financial institutions......................................................................................................................................23 6. Conclusions and recommendations ..............................................................................................24 6.1 Summary of major issues........................................................................................................24 6.1.1 Commodity-based interventions......................................................................................24 6.1.2 Cash-based interventions................................................................................................24 6.1.3 Cash delivery mechanisms..............................................................................................24 6.1.4 Cost differences...............................................................................................................24 2 6.1.5 Suitability of approach .....................................................................................................24 6.1.6 Issues/agreements ..........................................................................................................24 6.2 Recommendations...........................................................................................................25 Annex: Formal and informal financial institutions..............................................................................26 3 List of abbreviations ADB Asian Development Bank BOC Bank of Ceylon CBO Community Based Organization CFW Cash for Work DS Divisional Secretary GN Grama Niladari (Grass Root Administrative Officer) GOSL Government of Sri Lanka HNB Hatton National Bank I-NGO International non-governmental Organization L-NGO Local non-governmental Organization MFI Micro Finance Institutions MOU Memorandum of Understanding MRRR Ministry of Relief, Reconstruction & Reconciliation NDA Nawajeewana Development Alternatives NGO Non-governmental Organization NIC National Identity Card NSB National Savings Bank PO Partner Organization SASL Samurdhi Authority of Sri Lanka SDB Sarvodaya Development Bank SDBL SANASA Development Bank Limited SEEDS Sarvodaya Economic Enterprise Development Service SOWSA Social Welfare Society Akkaraipathu SWOAD Social Welfare Organization in Ampara District UNDP United Nations Development Programme WFP World Food Programme YMCA Young Men’s Christian Association 4 Executive summary Sri Lanka had never before experienced a disaster of the magnitude of the Indian Ocean tsunami of December 2004. Over 35,000 people were killed, 516,000 displaced. Some $900 million-worth of assets were destroyed, and around 200,000 people lost their livelihoods. About 75% of the fishing fleet was destroyed, and 23,449 acres of agricultural land salinated. The initial emergency response was based largely on commodities. As the immediate emergency phase passed, agencies began to explore ways to restore livelihoods in affected communities, and some agencies have given cash grants to restart economic activities. This paper documents the experiences of different cash delivery mechanisms implemented after the tsunami in order to develop guidelines and recommendations for future cash programming.