Productive Spillovers of Social Cash Transfers in Africa: A Local Economy-wide Impact Evaluation (LEWIE) Approach

Abstract

Many countries around the globe, including in sub-Saharan Africa, have implemented social cash transfers (SCTs) as a new line of attackagainst extreme poverty. Most African SCT programmes involve theunconditional transfer of cash to households that are both asset-and labour-poor. The stated goals of these programmes are social: to improve the welfare of the treated households by providingcash and encouraging changes in behaviour related to nutrition, education and health. But by providing poor households withcash, SCT programmes also treat the local economies of whichthese households are part, by stimulating demand for local goodsand services. In light of the eligibility criteria for SCTs, ineligiblehouseholds may be more likely than eligible households to expandtheir production to meet new local demand. If the local supply response is sufficiently elastic, the impacts in local economiesmay be expansionary rather than inflationary.