Cash transfer (CT) programmes are increasingly important tools for poverty reduction in sub-Saharan Africa. These programmes tend to target ultra-poor and labour constrained households, with particular emphasis on those with vulnerable children.
Investments in health and education induced by such programmes have economic benefits through improvements in human capital, which lead to better job prospects and employability. But there is also good reason to believe that CTs can influence other productive dimensions. When CTs are provided in a regular and predicable fashion, they may help households in overcoming credit constraints and managing risk. This, in turn, can increase productive investments, increase access to markets and stimulate local economies.
Overview of the project
FAO’s From Protection to Production Project (PtoP) is collaborating with rigorous impact evaluations of CT programmes in Ethiopia, Ghana, Kenya, Lesotho, Malawi, Zambia and Zimbabwe. The project uses a mixed methods approach that combines econometric analysis, local economy SAM/CGE models, and qualitative methods. The project especially looks at household level agricultural production and labour outcomes, impacts on social networks (informal transfers) and multiplier effects in the local economy.
Cash transfers are particularly relevant to both tracks of FAO’s twin track approach as they reduce hunger and vulnerability immediately, while at the same time potentially facilitating household investments in productive activities. Generating the evidence on the underlying household behaviour and local dynamics behind the productive impacts of CTs in Africa will help sharpen program design and implementation and address concerns about increasing political support, strengthening programmes’ graduation strategies and attaining medium-term fiscal sustainability. The evidence will also highlight potential synergies and constraints between social protection and complementary interventions that can ensure that these impacts are long lasting and sustainable.