The local economy impacts of social cash transfers
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This article presents findings on the local economy impacts of seven African country SCT programmes evaluated as part of the UN Food and Agriculture Organization’s (FAO) “From Protection to Production” (PtoP) project. The countries are Ethiopia, Ghana, Kenya, Lesotho, Malawi, Zambia and Zimbabwe. The PtoP project has facilitated expansion of the evaluations of SCT programmes to include productive and local-economy impacts. Local economy-wide impact evaluation (or LEWIE) employs simulation method s to reveal the full impact of cash transfers on local economies, including spillovers they create to non-beneficiaries. It does this by linking agricultural household models together into a general-equilibrium model of the local economy, in most cases a treated village or village cluster. 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. Inte gration 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.