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Local Economy-wide Impact Evaluation (LEWIE) of Malawi’s Social Cash Transfer (SCT) Programme

Year of publication 2015

Pages 26 p.

Author Agricultural Development Economics Division

Product type Document

Edition 1

Synopsis (short abstract) The Government of Malawi’s (GoM’s) Social Cash Transfer (SCT) Program is an unconditional cash transfer program targeted to ultra-poor, labor constrained households. The objectives of the programme include reducing poverty and hunger in vulnerable households and increasing school enrolment. The program began as a pilot in Mchinji district in 2006. Since 2009, the program has expanded to reach an additional eight districts (Chitipa, Likoma, Machinga, Mangochi, Phalombe, Salima, Thyolo and Balaka) out of 28 total districts in Malawi. The program has gone to full scale in Mchinji, Chitipa and Likoma and by 2012, had reached nearly 30,000 households and approximately 103 000 individuals. The SCT provides a significant infusion of cash into Malawi’s rural economy. When beneficiaries spend the cash transfer, they transmit the impact to others inside and outside the local economy, creating benefits for non-recipient households as well, who often provide the goods and services purchased by be neficiary households. The impact on the local economy was simulated using a LEWIE (Local Economy Wide Impact Evaluation) model. This study finds that the Malawi SCT generates a total income multiplier of 1.25 in nominal terms. Each Mk of transfer generates an additional Mk 0.25 of total income gain within the programme area. That is, each Mk of transfer generates an additional Mk 0.25 of total income gain within the project area. In addition, it creates a gain of Mk 0.68 for trading centres d irectly, because households spend a large share of their incomes there, and indirectly, because retail, service and other production activities taking place in the Village Cluster buy a large share of their inputs there. The SCT programme has significant production impacts. The transfers stimulate the production of crops by Mk 0.31 and livestock by Mk 0.14 per Mk transferred. The largest effect is on the retail sector, where sales increase by Mk 0.60 per Mk transferred to eligible households. M ost of this extra income accrues to non-beneficiary households, who are better off and tend to own more of the local businesses.

Language English

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