The Social Safety Nets Team of the Social Protection Unit of the Human Development Network is pleased to sponsor a presentation by

Ian Walker, Lead Social Protection Specialist, LAC

Joao Veiga Malta, Senior Procurement Specialist, LAC

Chair: Margaret Grosh, Lead Economist, HDNSP

Abstract

The 2008 global food price crisis posed a critical challenge to the fiscal viability of the Peruvian Vaso de Leche program, as rising input costs stretched the ability of municipalities to reach the intended target population with the planned level of nutritional support. Increasing the cost-effectiveness for the procurement of food is a key strategy in the face of rising costs. The study will be of interest to many staff whose projects provide for procurement of goods in a decentralized manner, not just food.
 
The study identifies priority problems in the process chain of administration of VdL; provides examples of good practice and bad practice and presents concrete recommendations for feasible reforms, suggesting benchmarks for good practice. This report identifies two key factors making the program’s costs higher than necessary, uncompetitive procurement; and suboptimal specification of the nutritional content of the VdL rations. There is clear a-priori evidence of uncompetitive outcomes  in the VdL market, including the prevalence of large divergences of price in neighboring municipalities.

Procurement could be made more transparent and prices more reasonable if VdL simplified procurement bundles and MEF established a regionalized price reference system. There should be no artificial limitations on the procurement process: municipalities should be encouraged to seek to procure the cheapest variant of the product which complies with VdL’s nutritional requirements.The program should also place more data into the public domain. Cost-effectiveness  could be greatly increased by concentrating on products with high nutrition benefit-cost ratios, especially fresh milk. Cost-effectiveness could be also increased by reducing the number of procurements and increasing their size. The estimated savings from the reforms suggested add up over 40% of the program’s budget. The recent decision to use available systems such as SISFOH to improve the targeting of VdL on the poorest households can also improve the program’s overall cost-effectiveness. The recommended reforms to improve VdL cost-effectiveness could be phased in gradually, starting with municipalities with relatively large savings potential, where the gains will be relatively easy to achieve.

About the Speakers

Ian Walker is Lead Social Protection Specialist in LAC HD. He is the manager of the Peru REACT DPL series and of the parallel RECURSO AAA program and is a co-author of the forthcoming LAC regional study, Building and Effective and Inclusive Social Protection System in Latin America: Diagnosis and Policy Directions. Mr Walker has been at the Bank for four years. He was previously Director of ESA Consultores in Honduras, where he undertook a wide range of studies on development issues in Central America and beyond, including many social fund evaluations, and studies of water and sanitation and urban upgrading projects.
 
Joao N. Veiga Malta is an e-Procurement and e-Government expert who has advised international organizations and governments in Latin America, Africa, Asia, Europe and Australia. Prior to joining the Bank as Senior Procurement Specialist, he was the Program Coordinator, Electronic Government Procurement (e-GP) in the  Inter-American Development Bank (IDB), and served on the United Nations Commission on International Trade Law - UNCITRAL - and the European Union working groups on e-Procurement. His previous experience includes working with the Government of Western Australia as International Projects Director, e-Projects. He has co-authored several publications on e-procurement, procurement management and reform. He holds a Masters in Strategic Procurement.