Social Cash Transfer Programs in Africa: Rational and Evidences Solomon Asfaw Food and Agricultural Organization (FAO) Agricultural Development Economics Division (ESA) Rome, Italy
Outline of the presentation 1. Background of CT programs in Africa 2. Why do we expect growth linkages? 3. What does the evidence say?
Expansion of government-run cash 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
Cash transfers national scale up (as of end 2010) % of population covered by cash transfer program 25 20 15 10 5 0
Number of households covered 250000 200000 150000 100000 50000 0 5
Transfer values (share of recipient consumption) 50 45 40 Transfer share of consumption 35 30 25 20 15 10 5 0 Burkina Kenya CT-OVC Lesotho RSA CSG Ghana Zim Zambia CGP Zambia MCP Malawi 6
Weaker institutions Higher risk and vulnerability What s particular about cash transfers in SSA--context 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 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)
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
0 0 Density.01.02.03.04 Density.02.04.06 Labor-constrained and OVC criteria select unique households: Malawi 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 age 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 How old is [NAME] (years)? Malawi SCT Households Rural Ultra-Poor IHS3 9
0 0.01.02.03.04.05.06 Density.01.02.03.04.05.06 Labor-constrained and OVC criteria select unique households: Zambia Age Distribution of Monze, Zambia SCT Beneficiaries Age Distribution of Rural Severly Poor: Zambia LCMS 2010 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100105 agey 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 agey Zambia (Monze) SCT Households Rural Ultra-Poor LCMS 2010 10
Why do we expect economic impacts (growth linkages) from SCT programs? 5 (+1) ways in which cash transfer programs have productive/economic impacts and lead to improved resilience
1. Improve human capital Nutritional status Health status Educational attainment enhance productivity improve employability Typically core objectives of CT programs Underlying rationale for CCTs in LAC
2. Facilitate change in productive activities By relaxing credit, savings and/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?)
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
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
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.
Transfer Treatment Control
Transfer Treatment Control
Transfer Treatment Control Rest of Lesotho Rest of World
Transfer Treatment Control Rest of Lesotho Rest of World
Transfer Treatment Control? Rest of Lesotho Rest of World
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
1 st and 2 nd generation cash transfer program impact evaluations in SSA (19 in 13) 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 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 Niger Pilot, 2009-2012 Expansion, 2012-2014 Begins in 2012
Summary of results on social outcomes Schooling Morbidity Health care Anthro. Burkina x Ghana LEAP x NS X Kenya CT-OVC x x* X* NS Lesotho Mlw Mchinji X X X? RSA CSG X NS Zam CGP Zam Monze x NS NS Zam MCP Not collected x=significant empty=pending 24 NS=not significant
Summary of results on economic outcomes Consumption Food security Assets Production Burkina Eth PSNP x x x x Ghana LEAP NS X NS NS Kenya CT-OVC X X x NS Lesotho Mlw Mchinji X X x x RSA CSG X Zam CGP X X x x Zam Monze NS NS x x Zam MCP x x x x 25 Not collected x=significant empty=pending NS=not significant
Comparison of secondary school impacts of CCTs and SCTs Impact of Cash Transfers on Secondary School Enrollment (percentage points) Mexico Progresa CCT 6 Colombia Familias CCT 6 Turkey CCT 5 Bangladesh (females only) CCT 12 Ecuador CT, announced as CCT Kenya SCT 8 Zambia (Monze) SCT 9 Ghana LEAP SCT 6 10
Our websites From Protection to Production Project http://www.fao.org/economic/ptop/en/ The Transfer Project http://www.cpc.unc.edu/projects/transfer