33366 World Bank Social Safety Nets Primer Notes 2004 No. 16 Costs of Projects for Orphans and Other Vulnerable Children: Case Studies in Eritrea and Benin Many developing countries are witnessing the ical care, and these would not be captured in a emergence of a large and growing number of financial analysis. The economic costs measured orphans, street children and children in the by the study incorporate the value of these worst forms of labor. In particular, conflict and goods and services. In a financial cost analysis, HIV-AIDS have produced a large and growing the cost of capital is divided over its expected cohort of orphans in Africa. Interventions to lifetime to determine an annual depreciation fig- address their plight take a variety of forms such ure. The economic analysis of costs used in the as group homes, orphanages, subsidized adop- study includes depreciation but also values the tion, and reunification and reintegration. Low opportunity cost of the money tied up in the cost solutions are critical if large numbers of capital good. The costs of initiating a project are orphans and other vulnerable children (OVC) also considered in this study. Start-up costs are to be reached, yet there is very little infor- include, for example, capital costs such as the mation available on the actual costs of delivering cost of construction, vehicles and office equip- services that assist them. ment. They may also contain non-capital costs Over the past four years, World Bank staff such as the cost of studies identifying benefici- have prepared several small and medium-sized aries, and recruiting and training staff. interventions for orphans and OVC in a number of African countries. This study estimates the Cost-Effectiveness costs of interventions in Benin and Eritrea, in While the study accounts for all the costs of order to determine which sorts of projects are these interventions, it does not measure cost most suitable for scaling up, given limited finan- effectiveness. Comparison of the cost-effective- cial resources. ness of alternative investments in OVC is com- plicated by differences in the characteristics of Economic Costs versus Financial Costs the children entering the project, the quantity This study measures the average annual economic and quality of the services they receive and the costs of the project. Many assessments of cost benefits realized by them. focus narrowly on financial costs such as salaries, purchases of equipment, consumables, Findings etc. However, financial costs can be misleading A key finding is that institutional solutions are for several reasons. Most organizations serving costly compared to family based solutions. The OVC benefit from donations such as food and average annual economic cost per child of the clothing and voluntary labor such as free med- Adi Keith Group Home for orphans in Eritrea Menahem Prywes prepared this note based on Prywes, Menahem; Coury, Diane; Fesseha, Gebremeskel; Hounsounou, Gilberte; and Kielland, Anne. 2004. "Costs of Projects for Orphans and other Vulnerable Children: Case studies in Eritrea and Benin." Social Protection Discussion Paper No. 0414. World Bank. Washington, D.C. Benin & Eritrea--Size & Structure of Average Annual Economic Cost per Child in Six Projects (12% discount rate) Benin: Child Protection Fund Eritrea Orphans Red Cross Adi Keith GRADH Street Ouidah Reinte- Group Project Child Labor Children Orphanage gration Homes Adoption Years 2001-03 2001-03 2001-03 2001-03 2003 2001-03 Personnel Share (%) 45% 20% 41% 6% 9% 52% Other recurrent (%) 44% 31% 56% 90% 27% 48% Capital Share (%) 11% 50% 3% 4% 64% 0% Total cost (%) 100% 100% 100% 100% 100% 100% Avg annual cost per child in US $ $566 $646 $1,315 $96 $1,943 $29 was about $1,900; and that for the Ouidah The costs per child of the projects in Benin Community Orphanage in Benin was about are too high to scale-up to serve the volume of $1,300. The corresponding cost of orphans' OVC in the region. The group homes in Eritrea integration in Eritrea was less than $100. The are also too expensive to scale up. However, the cost per child of a Red Cross project for street Eritrea reunification and reintegration project is children in Benin was almost $650. In that proj- relatively inexpensive. This is a limited interven- ect children are encouraged to move to a shelter tion, consisting mainly of the transfer of rev- before insertion with their families, foster fami- enue-generating micro-projects to foster families lies or educational placement. A project to assist (often livestock). While it delivers less services children in abusive child labor in Benin invests to the children than the group homes, its low in apprenticeship arrangements for older chil- cost allowed this support to be delivered already dren and reinserts younger children into school to the foster families of 24,000 orphans. at a cost per child of almost $570. 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