From Protection to Production: The Role of Social Cash Transfers

in Fostering Broad-based Economic Development

Benjamin Davis and Marco Knowles

Food and Agriculture Organization,

the From Protection to Production Project, and

the Transfer Project

DFID

London

April 22, 2015

Why PtoP

• Political resistance to giving out cash – Ministries of Finance, more broadly – Perceived as expensive (given levels of poverty) – Concerns about dependency

• Bad spending, unable and/or unwilling to graduate

• Most beneficiaries in Sub Saharan Africa are female, rural, engaged in subsistence agriculture and work for themselves – Most production consumed on farm – Most have low levels of productive assets – Often labour-constrained

• Elderly, single headed household

– Large share of children work on the family farm

Social cash transfers targeted to poorest of the poor can have productive impacts—how?

• Long term effects of improved human capital – Nutritional and health status; educational attainment – Labor productivity and employability

• Transfers can relax some of constraints brought on by market failure (lack of access to credit, insurance) – Helping households manage risk

– Providing households with liquidity

• Transfers can reduce burden on social networks and informal insurance mechanisms

• Infusion of cash can lead to multiplier effects in local village economy

PtoP at the outset (2011)

• Provide insight into how cash transfers can contribute to sustainable poverty reduction and economic growth at household and community levels.

• Strategic partnership with UNICEF and regional and country level

• Added value to impact evaluations of government-run social cash transfer programs in seven countries – Malawi, Ghana, Ethiopia, Lesotho, Zambia, Zimbabwe and Kenya – Directly linked to programme implementation and feeding policy

debate via UNICEF

• Key component of the Transfer Project – Focused on broader health, education, nutrition and well being

results – Regional learning agenda

• Initial funding from DFID (2011-2014), EU and FAO

Main topics of study in analytical work

• Impact of social cash transfer programs on – Household and individual level livelihood decisions

• Investment/change in production activities • agricultural and non agricultural

• Labor supply on and off farm and domestic activities

– Risk coping strategies

– Social networks

– Community dynamics

– Local economy income multiplier

• Analysis by gender wherever possible

• Role of implementation in mediating these impacts

• Our partners look at social outcomes

Mixed method approach (more detail later if you wish)

• Household and individual level impacts via econometric methods based on impact evaluation design

– FAO and AU, UNC, AIR, OPM

• Local economy effects via CGE (LEWIE) modeling

– UC Davis

• Perceptions and experiences on household economy and decision making, social networks, local community dynamics and operations via qualitative methods (all except Zambia)

– OPM and FAO

Finalizing the analytical work

household level

analysis

local economy

analysis

qualitative

analysis

Ghana LEAP Final Final Final

Kenya CT-OVC Final Final Final

Lesotho CGP Final Final Final

Ethiopia SCTP Draft Final Final

Zimbabwe HSCT 5/2015 Final Final

Malawi SCT 5/2015 Final Final

Zambia CGP Final Final NA

Cross country 6/2015 Draft Final

• Each report accompanied by brief; some turned into journal articles

• Bring it all together in report, journal article and Transfer Project book

What has PtoP become (2015)

• Expanding analytical work – Impact of combining cash transfers with complementary

interventions • Lesotho CGP plus kitchen gardens (DFID emergency)

– Deeper analysis of women’s economic empowerment and decent work • Additional field work in Rwanda (VUP), Zambia (MCP) and Malawi

• Expanding analysis of existing data in Lesotho and Zambia

– Applying methodology to livelihoods interventions • Zimbabwe Livelihoods and Food Security Programme (DFID)

– Deeper analysis of existing data and LEWIE • Role of agriculture in nutrition and consumption, heterogeneous

impact, technical efficiency in production, simulation of alternative programmes, cross country thematic comparisons, continuous treatment

• Evidence-based policy support focusing on strengthening coherence between agricultural and social protection policy and programming – Regional and country level dialogue between Ministries of

Agriculture, Social Welfare and Finance, civil society organizations, regional organizations and development agencies

– Malawi: Inter Agency Resilience Programme at district level – Guidance material on strengthening coherence between

agriculture and social protection policies and programmes – Literature review of evidence on linkages between social

protection and agriculture. – Country case studies (ODI—4 in SSA, 2 in LAC and 1 in Asia) – In collaboration with UNICEF, WFP, African Union, NEPAD, ILO,

World Bank, civil society organizations and others

• Extensive communications – Briefs, videos, interviews, workshops, social media…….

DFID contribution as share of total funding over time (4/11 to 4/15)

DFID contribution: £992,000

(about $1.6 million)

DFID support was key to leveraging

other funding

Results so far

Households invest in livelihood activities— though impact varies by country

Zambia Malawi Kenya Lesotho Ghana Tanz

Agricultural inputs +++ - ++ +++ (1)

Agricultural tools +++ +++ NS NS NS

Agricultural production +++(2) NS ++(3) NS

Sales +++ NS NS NS - -

Home consumption of agricultural production

NS +++ +++ (4) NS NS

Livestock ownership All types All types Small PIgs NS Small

Non farm enterprise +++ NS +FHH -MHH

- NS

1) Reduction hired labor 2) Overal value of production;

reduction in cassava 3) Maize, sorghum and garden

plot vegetables 4) Animal products

Stronger impact Mixed impact Less impact

Many stories told in the qualitative fieldwork

Shift from casual wage labor to on farm and family productive activities

adults Zambia Kenya Malawi Lesotho Ghana Tanz

Agricultural/casual wage labor

- - - - - - (1,2)

- - - - - (2) NS

Family farm + (2) ++ (2) +++ ++ (2) +++

Non farm business +++ NS + NS

Non agricultural wage labor

+++ NS NS NS NS

children

Wage labor NS NS - - - NS NS (5)

Family farm NS - - - (3) +++ (4) - - NS (5)

1) Positive farther away 2) Varies by age, gender 3) Particularly older boys 4) Increase chores, reduction leisure 5) No impact on time use; labor not

reported

Shift from casual wage labour to family business—consistently reported in qualitative fieldwork

No clear picture on child labor (but positive impacts on schooling)

Zambia—continuous treatment: how impact changes with level of cash transfer

Labo

r su

pply

Non labor income

Any Wage Labor;

Labo

r su

pply

Non labor income

Own farm labor

Derived by numerical integration

Labor supply

As transfer level increases, greater reduction in wage labor and greater increase in own farm labor

As transfer level increases, greater increase in hired labor

Improved ability to manage risk Zambia Kenya Malawi Ghana Lesotho Tanz

Negative risk coping - - - - - -

Pay off debt +++ +++ NS

Borrowing - - - NS - - - NS NS

Purchase on credit NS NS NS

Savings +++ +++ +++ NS ++ poorest

Give informal transfers NS +++ +++

Receive informal transfers NS +++

Remittances - - - NS - - - NS (1)

Trust (towards leaders) ++

Strengthened social networks • In all countries, re-engagement with

social networks of reciprocity—informal safety net

• Allow households to participate, to “mingle” again

• Reduction in negative risk coping strategies

• Increase in savings, paying off debt and credit worthiness—risk aversion

• Some instances of crowding out

1) Mixes remittances and informal transfers

Productive impacts related to gender

• In most cases women main target of programmes – Majority of cash recipients: Ghana LEAP (81%); Zambia CT (98%); Zimbabwe HSCT

(64%); and Lesotho CT (67%) – Female-headed households majority of household beneficiaries: 73% in Ethiopia

CT, 65% in Kenya OVC-CT, and 83% in Malawi SCT. • Quantitative instruments not geared to analyse gender in detail

– Need to disaggregate household production activities and control over assets (we were not able to get this into most surveys)

• Some conclusions: – Some differences in labour supply—but no clear story – Some differences by gender of head of hh—but no clear story – Zambia story—almost all recipients were female

• Qualitative field work – Access to cash did not translate into changing traditional gender roles in

household decision-making – Where women already controlled income and profits - and made independent

decisions over the use of such income - potential for increasing empowerment in the long run.

– Cash itself does not seem to be enough

Broad range of impacts (though variation across countries)

• Beneficiaries are happier and more confidant – People with hope more likely to invest in future

• Increased food security (access and quality)

• Improvement in different aspects of child welfare – Increased school enrolment

– Reduction in morbidity (diarrhea/illness)

– Increased access to shoes, clothing, birth registration, vaccination

• Safe-transition of adolescents into adulthood – Reduction in transactional sex, sexual debut, pregnancy

Why? What explains differences in household-level

impact across countries?

Crop Livestock NFE Productive labor

Social Network

Zambia yes yes yes yes

Malawi yes yes no yes small

Kenya no small yes yes

Lesotho yes small no no yes

Ghana no no no small yes

Predictability of payment

Regular and predictable transfers facilitate planning, consumption smoothing and investment

0

1

# o

f p

aym

en

ts

Zambia CGP

0

1

2

3

4

5

6

# o

f p

aym

en

ts

Ghana LEAP

Regular and predictable Lumpy and irregular

Bigger transfer means more impact

0

5

10

15

20

25

30

35

40

GhanaLEAP(old)

KenyaCT-OVC

(big)

Burkina KenyaCT-OVC

RSACSG

LesothoCGP

(base)

GhanaLEAP

(current)

KenyaCT-OVC(small)

Zim(HSCT)

ZambiaCGP

ZambiaMCP

MalawiSCT

Widespread impact

Selective impact

% o

r p

er c

apit

a in

com

e o

f p

oo

r

Demographic profile of beneficiaries

Under 5

5 to 9

10 to 14

15 to 19

20 to 24

25 to 29

30 to 34

35 to 39

40 to 44

45 to 49

50 to 54

55 to 59

60 to 64

65 to 69

70 to 74

75 to 79

80 to 84

85 to 89

Over 90

1000 500 500 1000 population

Males Females

Ghana LEAP

Under 5

5 to 9

10 to 14

15 to 19

20 to 24

25 to 29

30 to 34

35 to 39

40 to 44

45 to 49

50 to 54

55 to 59

60 to 64

65 to 69

70 to 74

75 to 79

80 to 84

85 to 89

Over 90

2000 500 500 2000 population

Males Females

Zambia CGP

More able-bodied More labour-constrained

• Differential access to assets – Besides labour, those with a bit more land, access to other

agricultural assets, and/or receiving complementary intervention • Story often repeated in qualitative field work

• Economic context matters – Vibrant and dynamic local economy?

– Opportunities awaiting if only a bit more liquidity?

• Effectiveness of local committees – Important role in suggesting options for beneficiaries,

facilitating programme operations

• Programme messaging matters – Messaging in unconditional programmes, as with conditions in

CCTs, affects how households spend the transfer

Impacts beyond the beneficiary household: local economy income multipliers

• Transfer raises purchasing power of beneficiary households • As cash spent, impacts spread to others inside the

community, setting in motion income multipliers • Purchases outside village shift income effects outside the

community, potentially unleashing income multipliers there • As program scaled up, transfers have direct and indirect

(general equilibrium) effects throughout region. • Three possible extremes:

– Local supply expands to meet all this demand • Big local multiplier

– Everything comes from outside the local economy • No local multiplier at all: 1:1

– Local supply unable to expand to meet demand, and no imports • Inflation

• Have to follow the money – Surveys and LEWIE model designed to do this

Simulated income multiplier of the Ghana LEAP programme

Every 1 Cedi transferred can generate 2.50 Cedi of income

Production constraints can limit local supply response, which may lead to higher prices and a lower multiplier

When constraints are binding, every 1 Cedi transferred can generate 1.50 Cedi of income

MAX

MIN

Base model

Income multiplier

Nominal 2.50 (CI) (2.38 – 2.65)

Real 1.50 (CI) (1.40 – 1.59)

Ghana LEAP

Nearly all the spillover goes to non beneficiary households

Income multiplier is greater than 1 in every country

0

0.5

1

1.5

2

2.5

3

Malawi Kenya(Nyanza)

Ethiopia (Abi-Adi)

Zimbabwe Zambia Kenya(Garissa)

Lesotho Ghana Ethiopia(Hintalo)

Nominal multiplier Real multiplier

Size of income multiplier varies by country and context—Why?

Impact of PtoP on impact evaluation methodology

• LEWIE – First time to formally include general equilibrium modelling in mixed

method approach to impact evaluation – Now included in a number of new evaluations

• HSNP in Kenya (2015); FAO in Northern Ghana (2014) and Zimbabwe (2016); WFP gauging impact of refugee camps on host countries (2015)

• Household level analysis – Inclusion of economic impacts in cash transfer impact evaluations

(beyond PtoP) – Systematic approach across countries, cross country comparisons – Continuous treatment approach

• Qualitative analysis – Systematic approach across countries – Modified for additional field work in Ghana, Zambia, Malawi and

Rwanda

Impact of PtoP on policy and programmes (1)

• Concrete and immediate implications for programme implementation – Dialogue on targeting; types/size of transfers, messaging – Importance of timing, sequencing, layering of interventions – Focus on productive inclusion (CT CoP)

• With Transfer Project, changed national policy narrative on cash transfers – Zambia, Ghana, Lesotho and Kenya—as documented in forthcoming

Transfer Project book – Opened to broader audience—particularly ministries of finance,

presidency (language and issues they are interested in) – Countered dependency criticism

• Beneficiaries responsible for generating their own income and food security; money not wasted

• Social protection as development instead of simply assistance – Credibility of cash transfers and larger social protection agenda

• Serious at being effective; creating confidence

Impact of PtoP on policy and programmes (2)

• Influenced national debates on role of social protection in rural and agricultural development – Role that cash can play in supporting most marginalized

family/small holder farmers

– Debate on cash transfers and input subsidies (eg ILO and IMF in Zambia)

• Increased use of results and messages among regional organizations and in regional fora – African Union, NEPAD, Malabo Declaration

• Key role in defining FAO’s role in social protection and associated results within its new Strategic Framework; SOFA 2015; bringing in Forestry and Fisheries

Agriculture, livelihood interventions play important part in social protection systems

• Almost three quarters of economically active rural population are smallholders, most producing own food

• Small holder agriculture as key for rural poverty reduction and food security in Sub Saharan Africa – Relies on increased productivity, profitability and sustainability of small

holder farming

• Addressing chronic food insecurity and rural poverty requires long-term, predictable package of social protection and complementary measures—including food production – Neither can do it alone

• Social protection and agriculture need to be articulated as part of strategy of rural development

• Countries moving towards systems approach (WB and UNICEF) • Potential FAO role in supporting articulation with agricultural

development

What’s next—planning ahead

• Strategic focus – Strengthen coherence between agricultural and social protection

policies and programmes • Strong focus on women’s economic empowerment • Agriculture and nutrition?

• Geographic focus – Continue focusing on sub-Saharan Africa, while drawing on lessons

in Latin America and Asia

• Approach – Combine knowledge generation and policy support – Develop national capacities – Forge partnerships – Strong country presence – Embedded in national processes

Components of scaled up new programme

• Increase evidence on value added of combined interventions – Initial PtoP approach difficult to replicate – Support design/finance social protection, agriculture and/or nutrition

related interventions to complement existing government run programmes

– Build research agenda and assess impacts – Inform policy dialogue

• Coherent agricultural and social protection policy frameworks – Support national policy analysis and dialog – Simulate distributional impacts, cost-benefit of alternative policy

choices

• Increase national capacities to design and evaluate coherent policies and programmes

• Strengthen coordination mechanisms • Mobilize political support for better coherence

Our websites

From Protection to Production Project

http://www.fao.org/economic/PtoP/en/

The Transfer Project

http://www.cpc.unc.edu/projects/transfer