Implementing scalable safety nets: lessons from Malawi’s COVID-19 urban cash transfer intervention

There is growing recognition that scalable safety nets can help households cope with weather events and other shocks by providing immediate support afterwards. COVID-19 is analogous to a significant weather shock, and the use of safety nets in response (as undertaken by 203 countries: Gentilini et al. 2022) generates valuable lessons for weather-linked scalable safety nets. One of the many innovative efforts undertaken around the world was Malawi’s COVID-19 safety net response in urban areas,theCOVID-19 Urban Cash Intervention (CUCI).Both how the intervention was done and how well those efforts worked offers valuable lessons for the use of safety nets as resilience tools to address shocks in different settings.

The CUCI used geographic and socioeconomic indicators to register 35% of the population in its four key cities of Lilongwe, Blantyre, Mzuzu, and Zomba. Geographic eligibility was determined by poverty hotspots, and household eligibility was based on financial indicators and structural factors (e.g., household size and dependency ratio). Eligibility was validated by local officials, and to date 138,000 households received monthly cash transfers equivalent to the prevailing minimum wage for three months.

A process evaluation of the CUCI was undertaken in 2021 to gather insights on implementation. The final report provides a rich array of lessons for scalable safety nets across other contexts. Seven key findings are as follows:

1. Building broad partnerships, particularly with the humanitarian sector, can crowd-in useful shock-response experience. WFP verified CUCI’s geographic hotspots using satellite images overlayed on household data and informed the transfer value through contributing survey data. The evaluation found the transfer value was adequate and most households perceived the hotspots as accurately identified. Similarly, UNICEF shared its experience in the use of electronic payments by the rural safety net program in shock response.
2. Crises can uncover gaps in knowledge and identify necessary reforms. For Malawi, the prevalence of rural poverty had meant a predominant rural focus for social protection policy and programs. However, while useful for those rural programs, the social registry’s near-universal coverage of rural populations had limited value in identifying urban informal workers affected by COVID-19. To comprehensively address future shocks, such gaps must be identified and addressed appropriately, while carefully balancing the fiscal and policy priorities of tackling chronic, seasonal, and shock-induced poverty and vulnerability.
3. Donor flexibility can underpin both immediate and longer-term efforts to establish scalable safety nets. CUCI was funded by restructuring a World Bank-financed project, following government requests for support to cope with the pandemic. In addition to its short-term benefits, this restructuring also led to the development of a new contingency financing mechanism for scalable safety nets in Malawi, supported by the Global Risk Financing Facility. This mechanism is now operational and will likely be deployed shortly in response to recent poor rainfall.
4. Preparedness in advance of a shock can prevent delays caused by administrative and financial bottlenecks. Because CUCI was the Malawian government’s first foray into urban safety nets, some administrative issues emerged such as establishing roles and responsibilities; communication protocols and content; and coordination mechanisms. Financial management challenges also resulted in delayed disbursement of funds to central and city levels and sluggish implementation of some program components. Establishing and testing the readiness of shock-response procedures and mechanisms in advance – e.g., availability of e-payment access points, refresher trainings, or updating social registry data – can greatly enhance efficiency and timeliness.
5. Piggybacking on existing capacities and information systems can underpin a timely and inclusive response. CUCI leveraged Malawi’s existing rural social registry by developing an abridged version of the registry’s data collection tool to facilitate intake and registration of potential beneficiaries. Safety net officials had prior experience with a rural management information system, and so they were quick to develop an equivalent system for CUCI. Implementation was supported by existing institutional mechanisms at national and sub-national levels, including local committees and block leaders who had not previously been involved in safety nets.
6. Electronic payments can expedite transfers and build trust with communities, but challenges abound in constrained environments. CUCI represented Malawi’s first large-scale use of e-payments for cash transfers. For beneficiaries, the experience was generally successful, but the evaluation pointed to areas for potential enhancements: improved liquidity; better identification processes to ensure data (e.g., phone numbers) is up to date; and more accessible pay points.
7. Developing government capacity ahead of a shock can help officials to successfully navigate a crisis. CUCI’s design and implementation faced many challenges. It was the government’s first urban safety net and was developed amid a contested election campaign – creating risks of politicization and security concerns for frontline staff. Home-based work and travel restrictions further complicated the already fragmented stakeholder landscape, and officials were simultaneously responsible for ensuring the ongoing operation of Malawi’s rural safety net program. CUCI was nonetheless a broadly successful initiative. Previous investment in local capacity development played an important role in its effectiveness.