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. Outline of the presentation 1.Background of CT programs in Africa 2.Why do we expect growth linkages? 3.What does the evidence say?

3. 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

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

5. Number of households covered 5

6. Transfer values (share of recipient consumption) 6

7. 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 Higher risk and vulnerability 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 9

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

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, 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?)

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  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. How do local economy effects work?

17. Transfer Control Treatment

18. Transfer Control Treatment

19. Transfer Rest of Lesotho Rest of World Control Treatment

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

21. Rest of Lesotho Rest of World Treatment Control?

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. 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 – Pilot, 2009-2012 – Expansion, 2012-2014 Niger – Begins in 2012

24. Summary of results on social outcomes SchoolingMorbidityHealth careAnthro. Burkinax Ghana LEAPx NSX Kenya CT-OVCx x*X* NS Lesotho Mlw MchinjiXXX? RSA CSGX NS Zam CGP Zam Monzex NS Zam MCP Not collected x=significant empty=pending NS=not significant 24

25. Summary of results on economic outcomes Not collected x=significant empty=pending NS=not significant ConsumptionFood securityAssetsProduction Burkina Eth PSNPxxx x Ghana LEAP NSX Kenya CT-OVC X X x NS Lesotho Mlw MchinjiXX xx RSA CSG X Zam CGPX Xxx Zam Monze NS x x Zam MCPxxx x 25

26. Comparison of secondary school impacts of CCTs and SCTs Impact of Cash Transfers on Secondary School Enrollment (percentage points) Mexico ProgresaCCT6 Colombia FamiliasCCT6 TurkeyCCT5 Bangladesh (females only)CCT12 EcuadorCT, announced as CCT 10 KenyaSCT8 Zambia (Monze)SCT9 Ghana LEAPSCT6

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