Shock-responsive social protection in practice: Kenya’s experience in scaling up cash transfers

Introduction and background

In the wake of the 2011 drought crisis, the Government of Kenya (GoK) pledged itself to ending drought emergencies by 2022. This commitment is set out in its Ending Drought Emergencies (EDE) Framework which – for the first time – recognises that drought emergencies have their roots in poverty and vulnerability. Kenya’s National Drought Management Authority (NDMA) is charged with implementing the EDE framework and believes that social protection has an important role to play in reducing vulnerability and risk throughout the drought cycle. As such, the Government is committed to designing scalable social protection systems to be used to prevent frequent drought events becoming crises.

The Hunger Safety Net Programme (HSNP) is the Government’s flagship social protection programme. Implemented by the NDMA, it aims to build resilience and reduce household vulnerability in four of the poorest and most drought-prone arid counties in northern Kenya: Turkana, Marsabit, Mandera and Wajir. Currently in Phase 2, HSNP provides regular, electronic and unconditional cash transfers (CTs) of Kshs 2,700 (approx.US$27/£19) per month to up to 100,000 of the poorest households (referred to as Group 1). Payments are made through a fully transactional bank account and fully functioning bank card.

Additionally, Phase 2 of the HSNP has been designed with the specific objective of being able to act as a scalable safety net in times of crisis, such as during droughts or floods. It can expand provision of cash assistance to greater proportions of the registered population as needs dictate. This was the primary purpose of registering all 374,806 households in the four Counties at the beginning of the programme. Following intensive efforts in 2014-15 to activate accounts for all households, the vast majority As of October 2015: 82% of routine (Group 1) and 76% of non-routine (Group 2) beneficiary households have active accounts.  This represents an overall bank account coverage of approximately 78%.  now have active bank accounts. The HSNP infrastructure is available for any other GoK body or donor to deliver emergency or regular cash transfer payments within the 4 counties.

During 2015, HSNP scaled up four times to provide emergency cash transfers to over 207,000 additional households beyond its regular beneficiary households), as Table 1 below shows. The first three of these payments were in response to drought. However, in October 2015, payment was made to all non-routine beneficiary households as a crisis preparedness payment in advance of anticipated El Niño rains and possible flooding.

The principles behind HSNP scalability

During 2014-15, NDMA staff and key external stakeholders developed four key principles that would guide decisions in expanding cash transfer coverage, i.e. scaling up, as a weather-related shock response instrument.

1. ‘No Regrets’ early responses: The HSNP infrastructure enables cash to be transferred to any or all HSNP households via their bank accounts within approximately 2 weeks of a decision being made. This is a far quicker large scale response than any other humanitarian distribution mechanism currently in place on the continent.
2. Objective triggers: Decisions to scale up (or down) in response to drought are triggered automatically using objective, pre-agreed, quantitative and auditable indicators for which reliable, time series data exists (see below). Using such data removes any possibility that subjective analysis or political influence can affect decisions during scale up.
3. Scale up to pre-defined sets of households on the basis of poorest first: Households in the drought affected Sub-Counties are selected from the HSNP register in wealth order All registered households in the four counties have been wealth ranked using a combination of community wealth ranking (known as Community Based Targeting, or CBT) and proxy means testing (PMT) based on the household information collected during the registration process. . This avoids the delay that arises by re-targeting as a crisis unfolds and ensures the poorest get resources first.
4. Independent monitoring: Early responses based on pre-targeting and objective triggers may not be perfectly correlated to local impacts but are faster than any other current mechanism. The programme uses monitoring and an independent evaluation to assess the impact of such swift payments and examines how the process can continue to be improved.

The HSNP Scalability Framework

With these principles in mind, an operational framework was agreed that answered the following key questions:

• What should trigger a scale up?
• Which geographic areas?
• Which households?
• How much?
• How often?
• For how long?

Discussions were led by NDMA senior managers and technical staff, the UK’s Department for International Development (DFID) (the primary donor) and other key agencies, particularly those involved in the Government of Kenya National Social Protection Programme (NSNP) such as the World Bank and World Food Programme (WFP).

Table 2 shows the currently agreed framework.

In designing the framework the critical importance of financing became clear. Any combination of parameters could be agreed in theory but regular implementation would ultimately depend on the availability of guaranteed long-term funding. A model was required that could calculate the financial implications for any combination of parameters.

What should trigger scale ups and how often?

A model was developed with support from NDMA’s early warning team to assess the costs of the options being discussed. In trying to establish the annual average costs of scaling up, the key issue was the frequency with which a scale up is likely to be triggered.  For consistency and coherence, NDMA chose to link scale ups to its existing drought phase classification using the Vegetation Condition Index (VCI) – see Table 3 below. This index is derived from remotely sensed satellite imagery, produced every ten days and made available immediately. VCI is the only indicator NDMA currently uses that meets the established principle of being objective, quantitative and auditable data. Furthermore, VCI also meets the needs of potential risk financing providers who insist on the use of data of this quality as the trigger for scaling up payments.

The other advantage of VCI is that reliable time-series data exists for the past 14 years, which were used to generate annual average cost estimates. It is now agreed that HSNP scales up in during months when the VCI ‘severe’ and ‘extreme’ drought thresholds are reached in any Sub-County. This is likely to result in relatively frequent payouts.  On the basis of past VCI trends it is likely that on average at least 4 (out of 22) Sub-Counties in the HSNP area will hit severe drought threshold each year.

Figure 2 shows the monthly VCI score of one typical HSNP Sub-County, Wajir West, for the last 14 years. While costs fluctuate significantly between years, the total average annual cost of financing scale ups is estimated to be US$6-7m – using the framework outlined in Table 2.

Who should receive a scale up payment?

Once triggers are met, a Sub-County quota of households to receive an emergency CT is calculated on the following basis:

• 50% of Households in Sub-Counties in severe drought; and
• 75% of Households in Sub-Counties in extreme drought.

The initial proposal was that only additional households in the Sub-Counties hitting the Severe and Extreme VCI thresholds would be eligible to receive an emergency payment. It was subsequently acknowledged that many communities in other Sub-Counties classified overall as Moderate, but adjacent to Sub-Counties classified as Severe or Extreme, were equally affected by drought. As a result, two different approaches for reallocating quotas have been tested, which enable some households in Moderate drought areas to receive a scaled up CT. In line with the principles agreed and outlined above, households are pre-selected from the HSNP register in wealth order up to the quota allocated to every Sub-Location. This avoids the delay that arises by re-targeting once a payment is triggered.

It should also be noted that scaled up payments are currently only paid to beneficiaries not already receiving routine payments. Routine HSNP households simply continue to receive regular payments.

What is the payment value and duration?

The non-routine, emergency, scaled-up CT is the same monthly rate as the routine transfer i.e. currently Ksh2,550 (approx. $25/£17) However, the payment schedules are slightly different. Emergency payments of Ksh2,550 are made every month, while regular payments of 5,100 Ksh are made every two months. . The payment is made in the month after any Sub-County has hit the severe or extreme trigger; if it does not, payments are stopped.

Findings and lessons learned to date

Post-distribution monitoring findings following the April and May 2015 scale ups:

• The majority (66%) of all payments received (routine and scaled up) were not for the standard payment but just below the standard payment level, which may indicate widespread withholding of some of the payment by bank agents.
• The majority (58%) of expenditure was on food items. After food, school fees and expenses represented the greatest proportion of expenditure (13%).
• A review of the NDMA early warning data shows that, following the payments, there were no significant fluctuations in the price of staple food products, such as maize.

Key lessons learned to date:

1. The value of the mass registration and bank account opening exercise. Although resource-intensive to put in place, the marginal cost of all additional transfers is now negligible. This is a key advantage over other drought responses, such as food aid, which incur significant logistic costs for each distribution.
2. Early warning can translate into early action. The Kenya experience is proof that a single, scientifically objective indicator is sufficient to trigger an early, “no regrets” action. It works efficiently and without controversy because the trigger and response were embedded in wider guidelines, established through prior negotiations, before a scale up was required.
3. Financial and budgetary instruments should be the servant of the plan – not the other way around. Financial models were developed using past VCI trends to facilitate agreement on the frequency and levels of scale up required. This encouraged ex-ante thinking on trade-offs, as the decisions were not based on any immediate budget but on longer term feasibility. Having said this, an adequate financial instrument guaranteeing pre-defined payments is yet to be established.
4. Scientific and speedy approaches do not ensure political acceptability. There will always need to be modifications in response to political sensitivities, however, politicians do appreciate having objective rules to support decisions.

The other advantage of VCI is that reliable time-series data exists for the past 14 years, which were used to generate annual average cost estimates. It is now agreed that HSNP scales up in during months when the VCI ‘severe’ and ‘extreme’ drought thresholds are reached in any Sub-County. This is likely to result in relatively frequent payouts.  On the basis of past VCI trends it is likely that on average at least 4 (out of 22) Sub-Counties in the HSNP area will hit severe drought threshold each year.

Catherine Fitzgibbon is an independent consultant providing technical support to the Government of Kenya’s National Drought Management Authority (NDMA) on the targeting and scalability of cash assistance in northern Kenya. She has worked in the Horn of Africa for over 15 years both as an implementer and has undertaken a range of policy and research work in social protection, poverty graduation and resilience.