Do Unconditional Social Cash Transfer Schemes Have Productive Impacts in Malawi?

Abstract

In 2006, the Government of Malawi initiated the Social Cash Transfer (SCT) programme as part of a poverty reduction strategy that targeted ultra-poor, labour-constrained households. The SCT programme is an unconditional cash transfer designed to reduce poverty, hunger and starvation, and improve school enrolment and attendance and the health and nutrition of children among the poorest 10 per cent of households in Malawi. The programme currently reaches over 28,000 households and is expected to serve 300,000 households with 910,000 children by 2015. The value of the transfer ranges from US$4 per month for a household with one eligible member to US$13 per month for households with four or more eligible members. In addition, the programme offers a schooling attendance bonus ranging from US$1.30 per month for primary-school-age children to US$2.60 per month for secondary-school-age children. On average, the transfer represents just under 30 per cent of beneficiary households’ per capita income. A one-year pilot of the SCT programme was designed and implemented in the Mchinji District in central Malawi to allow for the implementation of an impact evaluation. Four control and four treatment Village Development Groups, corresponding to 23 villages and forming part of the original programme roll-out, were randomly selected to be part of the evaluation. Baseline data collection began prior to treatment in March 2007. Follow-up data on a total of 365 treatment and 386 control households were collected in September 2007 and again in April 2008, at which point the control households also began receiving transfers. These 751 households contain 1,876 children below 18 years of age, among which 1,090 belonged to treatment households and 786 to control households. Using data from the Mchinji District pilot, Covarrubias et al. (2012) look at possible impacts of the SCT programme in three productive dimensions: (i) investment in assets, particularly agricultural assets and livestock; (ii) changes in labour allocation, primarily as seen through changes in income-generating activities; and (iii) alterations in risk-coping strategies, including the use of child labour