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Local economy impacts and cost-benefit analysis of social protection and agricultural interventions in Malawi











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    Local Economy-wide Impact Evaluation (LEWIE) of Malawi’s Social Cash Transfer (SCT) Programme 2015
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    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.
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    The local economy impacts of social cash transfers
    A comparative analysis of seven sub-Saharan countries
    2016
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    This article presents findings on the local economy impacts of seven African country SCT programmes evaluated as part of the UN Food and Agriculture Organization’s (FAO) “From Protection to Production” (PtoP) project. The countries are Ethiopia, Ghana, Kenya, Lesotho, Malawi, Zambia and Zimbabwe. The PtoP project has facilitated expansion of the evaluations of SCT programmes to include productive and local-economy impacts. Local economy-wide impact evaluation (or LEWIE) employs simulation method s to reveal the full impact of cash transfers on local economies, including spillovers they create to non-beneficiaries. It does this by linking agricultural household models together into a general-equilibrium model of the local economy, in most cases a treated village or village cluster. Our LEWIE analysis finds evidence of significant spillovers, resulting in SCT income multipliers that are considerably greater than one in most cases. Most spillovers accrue to non-beneficiary households. Inte gration with outside markets shifts impacts out of local economies, reducing local income multipliers. Local supply constraints may result in price inflation which creates a divergence of real from nominal income multipliers for beneficiaries as well as non-beneficiaries. The existence of income spillovers reveals that SCT programmes have local economy impacts beyond the treated households, which could yield large benefits for rural developments.
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    Evaluating local general equilibrium impacts of Zimbabwe’s Harmonized Social Cash Transfer Programme (HSCT) 2014
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    The Harmonized Social Cash Transfer (HSCT) is an unconditional cash transfer introduced in 2011 by the Ministry of Public Service, Labour and Social Welfare (MPSLSW) in order to strengthen the purchasing power of ultra-poor households who are labour constrained through cash transfers. The objectives of the programme include enabling recipient households to increase consumption above the poverty line, reduce the number of ultra-poor households and help beneficiaries avoid risky coping strategies such as child labour and early marriage. Moreover, the programme is expected to lead to improved nutritional status, health and education outcomes, as well as a reduction in violence. As of March 2014, 55 509 households in 20 districts had been enrolled, covering 247 645 individuals. Local economy-wide impact evaluation (LEWIE) simulation methods are used to assess the likely impacts of cash transfers on the local economy. When the Harmonized Social Cash Transfer programme gives money to benefic iary households, they spend it, buying goods and services. As this cash swirls around within wards and districts, it creates benefits for non-recipient households as well who may provide the goods and services purchased by beneficiary households. This study finds that the Zimbabwe HSCT generates a total income multiplier of 1.73 in nominal terms with a confidence interval of 1.42 to 2.00. Each dollar of transfer has the potential to generate 1.73 dollars of total income within the project area.

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