Social C ash T ransfer P rograms in Africa: Rational and Evidences

1. Social Cash Transfer Programs in Africa: Rational and Evidences Solomon Asfaw Food and Agricultural Organization (FAO) Agricultural Development Economics Division (ESA) Rome, Italy

2. Outlineof the presentation • Background of CT programs in Africa • Why do we expect growth linkages? • What does the evidence say?

3. Expansion of government-runcash transfers in Sub Saharan Africa Approximately half of the countries of SSA have some kind of government-run CT program And others have multilateral/NGO-run CT programs Some programs are national Others scaling up Some pilots beginning this year Beneficiaries predominately rural, most engaged in agriculture

4. Cash transfers national scale up (as of end 2010) % of population covered by cash transfer program

5. Number of households covered

6. Transfer values(share of recipient consumption)

7. What’s particular about cash transfers in SSA--context Higher risk and vulnerability • HIV/AIDS • Economic and social vulnerability • Widespread poverty • Continued reliance on subsistence agriculture and informal economy • Exit path from poverty is not necessarily through the labor market • Less developed markets and risk, risk, risk Weaker institutions • With exception of Southern Africa, less fiscal space---donors play a strong role • Still missing consensus among national policy makers • Weak institutional capacity to implement programs • Weak supply of services (health and education)

8. Wide range of designs • Universal programs • Old age pensions, child grants • Targeted programs • Focus on ultra poor, labor constrained; OVC and other specific vulnerabilities • Cash for work for able bodied • A few cash transfer programs are explicitly linked to productive activities • Prominent role of community in targeting • Unconditional (for the most part) • “Soft” conditions and strong messages

9. Labor-constrained and OVC criteria select unique households: Malawi Malawi SCT Households Rural Ultra-Poor IHS3

10. Labor-constrained and OVC criteria select unique households: Zambia Rural Ultra-Poor LCMS 2010 Zambia (Monze) SCT Households

11. 5 (+1) ways in which cash transfer programs have productive/economic impacts and lead to improved resilience • Why do we expect economic impacts (growth linkages) from SCT programs?

12. 1. Improve human capital Nutritional status Health status Educational attainment Typically core objectives of CT programs Underlying rationale for CCTs in LAC enhance productivity improve employability

13. 2. Facilitate change in productive activities By relaxing credit, savingsand/or liquidity constraints—and/or constructing community assets Investment in productive activities Allocation of labor, inputs Accumulation of productive assets Farm implements, land, livestock, vehicle, inventory Change in productive strategies New crops, techniques New line of products or services New activities (off farm wage labor, migration?)

14. 3. Better ability to deal with risk and shocks By providing insurance via regular and predictable CTs Avoid detrimental risk coping strategies Distress sales of productive assets, children school drop-out, risky income-generation activities Avoid risk averse production strategies “Safety first” or “eat first” Increase risk taking into more profitable crops and/or activities Specialization or diversification Higher value crops or ….. migration

15. 4. Relieve pressure on informal insurance mechanisms By regular and predictable CTs to the poorest and most vulnerable Reduce burden on social networks Local networks of reciprocal relationships In SSA, often weakened and over burdened in context of HIV/AIDS Rejuvenate social networks Allow beneficiaries to participate in social networks Allow non beneficiaries to redirect their resources

16. 5. Strengthen the local economy How do local economy effects work? • Immediate impact of transfer will raise purchasing power of beneficiary households. • As beneficiary households spend cash, impacts immediately spread outside beneficiary households to others inside and outside treated villages. • Trade and purchases within village may set in motion income multipliers inside treated villages. • Periodic markets and purchases outside village will shift income effects to non-treated villages, potentially unleashing income multipliers there. • In longer run, as program is scaled up, transfers will have direct and indirect (or general equilibrium) effects throughout the region of implementation.

17. Transfer Treatment Control

18. Transfer Treatment Control

19. Transfer Treatment Control Rest of Lesotho Rest of World

20. Transfer Transfer Treatment Control Rest of Lesotho Rest of World

21. Transfer Treatment Control? Rest of Lesotho Rest of World

22. What does the evidence say? Lots of evidence on human capital Poverty, food security and food consumption Nutrition, health and education Relatively few studies on risks and shocks Very few studies on Productive activities Multiplier effects Social networks Climate change adaptation

23. 1stand 2ndgeneration cash transfer program impact evaluations in SSA (19 in 13) • Ethiopia • PSNP, 2006-2010 • Tigray SPP, 2012-2014 • Ghana LEAP • Pilot, 2010-2012 • Lesotho, CGP • Pilot, 2011-2013 • Uganda, SAGE • Pilot, 2012-2014 • Zimbabwe, SCT • Pilot, 2013-2015 • Tanzania,TASAF • Pilot, 2009-2012 • Expansion, 2012-2014 • Niger • Begins in 2012 • Malawi SCT • Mchinji pilot, 2008-2009 • Expansion, 2012-2014 • Kenya • CT-OVC, Pilot 2007-2011 • CT-OVC, Expansion, 2012-2014 • HSNP, Pilot 2010-2012 • Mozambique PSA • Expansion, 2008-2009 • Zambia • Monze pilot, 2007-2010 • Child Grant, 2010-2013 • South Africa CSG • Retrospective, 2010 • Burkina Faso • Experiment, 2008-2010

24. Summary of results on social outcomes Not collected x=significant empty=pending NS=not significant

25. Summary of results on economic outcomes Not collected x=significant empty=pending NS=not significant

26. Comparison of secondary school impacts of CCTs and SCTs

27. Our websites From Protection to Production Project http://www.fao.org/economic/PtoP/en/ The Transfer Project http://www.cpc.unc.edu/projects/transfer