FAO: Impact of Cash Transfers on Local Economy

comprehensive analysis by the Food and Agriculture Ogranization (FAO) deals with the impacts of Social Cash Tranfsers on the local economy in sub-Sahara Africa. The FAO research is part of the project “from Protection to Production” and is set in seven different countries, including Zambia, Zimbabwe, Malawi and Lesotho.

Our LEWIE analysis finds evidence of significant spillovers, resulting in SCT income multipliers that are considerably greater than one in most cases. Most spillovers accrue to non-beneficiary households. Integration with outside markets shifts impacts out of local economies, reducing local income multipliers. Local supply constraints may result in price inflation which creates a divergence of real from nominal income multipliers for beneficiaries as well as non-beneficiaries. The existence of income spillovers reveals that SCT programmes have local economy impacts beyond the treated households, which could yield large benefits for rural developments.

Download the whole report here (pdf, 1.2 Mb).

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