ZAMBIA: Household Spending exceeds Unconditional Cash Transfers with 59% within three years: a Randomized Controlled Trial
In a recent review, the World Bank estimates that around 150 countries in the ‘developing world’ have implemented cash assistance programmes, which together reach approximately 800 million people.
The impact of such programmes in sub-Saharan Africa was thoroughly evaluated, using experimental data from two Unconditional Cash Transfer (UCT) programmes implemented by the Government of Zambia, where each programme is accompanied by a randomized controlled trial (RCT).
A UCT is similar to an Unconditional Basic Income (UBI) in that beneficiaries are paid directly in cash with no requirements on their actions. The main difference between the types of programmes concerns the inclusion criteria for participation. A UBI is targeted at every citizen, regardless of (for instance) socioeconomic status, whereas the UCT’s are often available for the poor population only, often with specific inclusion criteria, such as the presence of children of a specific age in a household or geographical criteria.
In 2010, the Zambian government began testing two different UCT-programmes. The programmes are still on-going. One of them is targeted at households with a child under age 3, while the other is targeted at households with various types of vulnerabilities (female or elderly headed households taking care of orphans or disabled children). Neither of the programmes is explicitly poverty targeted at the household level, but the (geographical) inclusion criteria resulted in 90% of beneficiaries below the Zambian poverty line. The outcome-parameters are identical in the two programmes. In each case, the annual amount transferred to a household is $144 ($24 every two months).
The effects after 2 and 3 years were compared to baseline. Far-reaching effects were reported in both groups, not only on the primary objective, food security and consumption, but also on a range of productive and economic outcomes.
A relatively simple flat cash transfer, unconditional and paid every two months, is shown to have wide-ranging effects on ultra-poor households in rural Zambia, significantly raising consumption and increasing food security, children’s schooling and material well-being, while at the same time strengthening economic capacity and assets.
After three years, household spending was -on average- 59% larger than the value of the transfer received.
These results are presented in a paper published by UNICEF: “Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from two government-led programmes in Zambia.”
A Basic Income News article by Tyler Prochazka about a recent meta-analysis (of 165 studies) on the effects of Cash Transfers can be found here.
cover photo (published with permission) and full citation of the paper:
Handa, Sudhanshu; Natali, Luisa; Seidenfeld, David; Tembo, Gelson; Davis, Benjamin. Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from two government-led programmes in Zambia, Innocenti Working Papers no. IWP_2016_21, UNICEF Office of Research – Innocenti, Florence
Special thanks to Josh Martin and Kate McFarland for reviewing this article.