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The Use of Cash Transfer for Livelihoods: Considerations and Lessons Learned

As the use of cash transfer programming increases, questions of how it can be used both to meet short-term relief needs and to contribute to recovery and longer-term development become more pertinent. In particular, the use of cash transfers to meet livelihoods objectives can be a highly effective means of supporting economic recovery, and of bridging humanitarian and development programming. This article presents two guidance notes published recently by CaLP based on workshops in Dakar and Guatemala City.

What is the potential role of cash transfers in livelihood protection, recovery, and enhancement? How can cash transfers in emergencies link with longer-term development programming? What are the key elements of analysis required throughout the project cycle to ensure that cash transfers appropriately consider livelihoods, and that cash transfers can be designed with livelihoods objectives in mind? CaLP would like to present two new publications derived from learning workshops which addressed these questions, held in Dakar and in Guatemala City, 2015, and which bring together expertise from West Africa and Latin America respectively. While both publications are context-specific, in conjunction they provide insights applicable to other settings.

Cash Transfer Programming and Livelihoods: The Inter-Dependence

Livelihoods programming has traditionally been considered to sit within the remit of recovery or development programming. As a result there is somewhat of a lack in understanding, experience, and knowledge around the use of cash transfers for livelihoods. Those working in the sector of livelihoods may have limited experience of cash transfers, and, conversely, those with experience of the use of cash transfers may lack an understanding of the importance of the livelihoods analysis. Both the Latin American and West African regions suffer from recurring and ongoing crises, including chronic food insecurity, malnutrition, institutional crises, and drought.

These factors present a serious challenge to people’s livelihoods and any interventions to support these livelihoods, and therefore require robust and adaptable methods of response. In view of these challenges, the question is whether or not cash transfer programming can be used in these kinds of settings to face short-term needs and to contribute to longer-term development.

Cash Transfer Programming for Livelihoods: Considering Markets

CaLP’s new publications highlight some of the key factors and considerations which contribute to extending the impact of cash transfer programming through the short term and into the long term. Both papers emphasise the importance of understanding commodity, service, and labour markets; successful cash transfer programming depends on the existence of functioning markets, and markets are key in terms of the protection and resilience of livelihoods.

The importance of understanding labour markets is highlighted in both papers - this kind of analysis can provide invaluable information on how livelihoods are derived in a given situation, the actors involved, the impact of crises, and what kind of response will be most appropriate, long and short-term. For more information, see Save the Children, Mercy Corps, and IRC’s recent publication on labour market analysis here.

Cash Transfer Programming for Livelihoods: Considering Transfer Value

The guidance notes also address the particularities of accurately setting transfer values in livelihoods programming. Using the Household Economy Approach (HEA), the publications demonstrate how the transfer value can be set by calculating a threshold for survival and a threshold for subsistence in conjunction with an assessment of unmet needs, allowing values to be set which meet requirements of populations in crisis but which also have longer-lasting projections.

                                 Photo Credit  Rainer Schwenzfeier/Save the Children

Recommendations and Lessons Learned

Finally, these guidance notes leave us with some key recommendations.

  • The context of recurrent and institutional crises is a limiting factor for secure livelihoods and means having to deliver interventions which support resilience in the face of shock. This situation underlines the value of an integrated approach which systematically considers the use of cash transfers to support livelihoods protection. For an illustration of the importance of an integrated approach in livelihood programming, see Save the Children’s ‘Integrated Livelihoods’ video here.
  • When calculating payments, it is recommended to systemise the use of thresholds and actual cost information based on market analysis

The guidance notes are both written by Cedric Elluard and are available on the CaLP website here, in English, French, and Spanish. They are aimed in particular at those involved in the design and implementation of cash transfer with little knowledge of livelihoods, and at livelihoods experts who have limited experience of cash transfer programming. The guidance notes were produced with financial support from ECHO.

More information on cash and livelihoods are available on our thematic area.

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