Cash Payments to Poor Not Only Help Families, but Boost Local Economy, Study Finds (video)
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- Published on Friday, 12 February 2010 14:49
Malawi's cash transfer program, which provides direct payments of cash to the poorest households, not only improves the quality of life for those families, but also stimulates the local economy, a team of researchers led by Candace Miller, a BUSPH assistant professor of international health at the Center for Global Health & Development, has found.
In a follow-up to an earlier study, Miller's team examined data from village groups in the Mchinji district of Malawi that participated in the Social Cash Transfer (SCT) program, to gauge the program's impact on the economy. The researchers found that the cash payments to poor families ? on average, $13 a month ? were stimulating business at local groceries and trading centers and contributing to increased agricultural production.
"The monthly payments transferred to SCT recipients were consistently fed back into the local economy," the new study says. "Business owners confirmed that the SCT has strengthened the local market by providing a steady source of customers and cash into villages where they had once been scarce. During the three years since the SCT has been operational, sales were generally reliable even in the rainy/hungry season, when they are typically at their lowest point."
In addition, the research team found that the majority of households receiving the cash payments allocated some portion of that cash to other destitute households in the area, through the hiring of labor or giving of loans, food and gifts.
"Once the SCT is fully scaled throughout Malawi," the report says, "it appears as though there will be important impacts not only for SCT households, but for some non-SCT households and local businesses as well."
As principal investigator for the evaluation of the Mchinji Social Cash Transfer project, Miller has worked with collaborators to assess the impacts of the government initiative, designed to alleviate poverty and malnutrition among the poorest 10 percent of households in Mchinji and other districts. In an earlier report, the team found that recipient families were using the cash payments to buy food and medicine, to send children to school, to buy livestock and farming supplies, and to travel to hospitals to obtain anti-retroviral drugs (ARVs) for HIV and AIDS.
The transfer program, launched in 2006, is still in its pilot phase and is currently operational in 7 of the 28 districts of Malawi. Bolstered by the positive findings of the program's impact, the government has tentative plans to expand to all of Malawi's 28 districts by 2012.
The new study includes comments from some business owners about the impact of the SCT program.
"Truly speaking," one vegetable seller reported, "this [SCT] has really assisted because in villages, months like December, February, January, it is very hard to get money. But due to this program, money is available throughout the year, and they come to buy in these critical months."
Malawi is not the only country using cash grants as a form of social assistance; similar programs have been implemented in Mexico, Brazil, India and other countries. But large-scale cash-transfer schemes are rare in Africa, as are scientific evaluations of such programs.
The CGHD team has been working in collaboration with the University of Malawi's Centre for Social Research to evaluate the program's impact on families and its overall operations. The evaluations have attracted broad interest from policymakers in other countries. In recent years, 13 African governments joined in a pledge to draft national cash transfer plans that will offer assistance to vulnerable citizens. The World Bank is making millions of dollars available for targeted cash assistance programs across Africa.
The research team has received funding from USAID and UNICEF for a series of reports evaluating the cash transfer program.
More information on the Malawi SCT program.
Submitted by Lisa Chedekel
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