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The Cost of Selective Feeding (Special Supplement 2)

by Rose Caldwell & Alistair Hallam (Valid International)

The aim of this paper is to present the cost per beneficiary of CTC and discuss aspects of these costs, underlying assumptions and other factors and issues affecting cost.

The costs discussed are all based on CTC programmes operated by Concern Worldwide and supported by Valid International. All cost information has been supplied by the Concern field accountants for each country, and is based on the total cost of operating the programme in country. The costs have been recorded and categorised using Concern Worldwide field accounting policies and procedures, an overview of which is outlined below.

Field accounting

Direct Costs

These costs relate to the day-to-day recurring running costs of the programme such as:

Capital Costs

These costs relate to the once-off capital purchases required for the programme and include the purchase of motor vehicles, communications and computer equipment, clinical equipment and any construction /renovation costs. The programmes under consideration in this cost analysis had only just begun operating. Since Concern Worldwide operate a policy of expensing costs on purchase, the full costs of capital items are fully allocated to the CTC costs. This effectively inflates costs, since the majority of the capital equipment would expect to have a useful economic life of 3-5 years. Arguably, using a method of capital depreciation (thus spreading these costs over a longer period) would provide a sounder analysis.

Local Office Overheads & Country Office Overheads

Concern Worldwide allocates overheads to programmes on two levels, local office overheads and country office overheads. For example, Concern Worldwide in Ethiopia will have a Country Office in Addis Adaba and a local office in Wollo. The local office in Wollo is likely to run several different programmes such as agriculture, health and community development programmes as well as the CTC programme. Similarly, the country office is likely to support more than one local office. The costs of local and country offices are categorised as transport, expatriate and administrative costs. The costs of both these offices will be allocated to the CTC programme and reflect, as closely as possible, the use of the resources. For example, local office transport allocation may be based on the number of vehicles used in each programme, whilst country office transport allocation will be based on the mileage of country office vehicles to each local office.

Cost Exclusions

The costs presented here do not include significant costs relating to the Head Office of Concern Worldwide, which provides support to Country Offices.

Rate of Exchange

The rate of exchange used by the field office, to translate the costs from local currency into USD, sterling or euro, is the average rate obtained in the period under consideration. The rate of exchange used to convert USD/ sterling costs into euro was provided by Concern Worldwide and is the average for the period Jan 2003 to Aug 2003 (1 euro = 1.1 USD/0.693 sterling)

Number of Beneficiaries

At the time of the cost analysis, all these programmes were still operational. As a result, it was decided to use number of beneficiaries admitted to the programme as opposed to number recovered, as many were still in the programme

Programme costs

International standards for selective feeding, recommend that therapeutic feeding programmes should not be run in isolation of supplementary feeding programmes. In CTC, this interdependence is even more marked as the OTP element of the CTC is implemented by the same teams and through the same structures as the supplementary feeding element. However, to aid comparison with the costs of running TFC programmes, the total costs have been split into therapeutic (OTP) and supplementary (SFP) (see table 19). This is a very tentative split and a number of assumptions were made in order to do this, namely:

Based on the analysis, the cost per beneficiary for the CTC programme as a whole (including SFP, OTP and SC elements) varied from 114 euro in South Sudan to 62 euro in Ethiopia, as detailed in Table 20.

Table 19: Tentative division of costs by CTC programme elements
History of field programme established new established
Programme duration 3 months 10 months 5 months
Prevalence of severe malnutrition 4% 1% 0.4%
OTP numbers 339 1571 519
SFP numbers 3144 8164 7855
OTP cost/beneficiary (?) 255 257 301
SFP cost/beneficiary (?) 96 115 43
Combined cost/ beneficiary (?) 114 148 60

 

Table 20: Overall costs of CTC programmes in Ethiopia, South Sudan and Malawi
Country CTC programme Period of programme/costs Number of beneficiaries admitted Cost per beneficiary (euros)
South Sudan Aweil West 4 months (1/05/03- 31/8/03) 3144 114
Malawi Dowa 12 months (1/8/02 - 31/7/03) 8164 148

 

The variations in costs between country programmes, reflected in table 20, relate to the following factors:

South Sudan

South Sudan is recognised as a difficult and expensive country in which to operate. High costs are inccurred for the transportation of food, medicines and staff, much of which has to be flown in from Kenya. In addition, this programme was only operational for four months at the time of the analysis and therefore the full cost of set up/capital expenditure has been borne by relatively few beneficiaries. One would expect the cost per beneficiary at the end of the programme to be substantially less.

Malawi

Two major factors affected Malawi's cost. First, the high overhead costs allocated to the CTC programme and second, the high cost of vehicles. High overhead costs were incurred by the programme as Concern Worldwide had begun working in Malawi only six months prior to the period under review. During this period, Concern had few programmes operational in Malawi and hence the CTC programme was carrying a far higher than normal burden of overheads, including the costs of setting up the standard Concern infrastructure - vehicles, communication and IT equipment, etc. The vehicle costs were high because for most of the time of this review, Concern was not a registered NGO in Malawi and there were no duty free arrangements in place for importation of vehicles (duty over 100%). Consequently, the CTC programme rented several 4x4 vehicles at high cost for most of the first year of the programme, before buying new vehicles.

Ethiopia

Ethiopia is a well-established Concern Worldwide field operation, with many programmes which are relatively inexpensive to run. Hence the cost per beneficiary in this case is lower than in the two other examples.

Influences on cost-effectiveness of CTC programmes

One of the most important factors affecting the cost per beneficiary is the number and the density of beneficiaries. Unlike traditional TFC programmes, CTC does not have a capacity limitation in relation to its fixed costs. In other words, once the initial capital and set-up costs have been expended, the number of beneficiaries that can be treated within a particular geographical area is not limited. Hence, the cost per beneficiary continues to decrease as the number of beneficiaries increases. Table 21 presents a sensitivity analysis that considers the impact on the cost per beneficiary of changing beneficiary numbers by 1000 and 2000.

Experience to date has helped identify a number of other factors that influence the cost-effectiveness of the CTC approach:

Table 21: Sensitivity analysis estimating the variation in cost/beneficiary as beneficiary numbers change
  Cost per Beneficiary (euro)
Country Actual no. of beneficiaries +1000 beneficiaries +2000 beneficiaries -1000 beneficiaries -2000 beneficiaries
S Sudan 114 87 60 141 168
Malawi 148 132 116 164 180
Ethiopia 60 53 45 67 75

 

Difficulties comparing TFC and CTC Costs

Comparing costs of TFCs and CTC programmes is difficult for several reasons:

In order to satisfactorily provide a cost comparison, a comprehensive piece of work needs to be undertaken, taking into consideration both quantitative and non quantitative factors that influence direct and indirect costs to programmes and their beneficiaries.

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Reference this page

Rose Caldwell and Alistair Hallam (2004). The Cost of Selective Feeding (Special Supplement 2). Supplement 2: Community-based Therapeutic Care (CTC), November 2004. p39. www.ennonline.net/fex/102/4-5