Can Unconditional Cash Transfers Lead to Sustainable Poverty Reduction? Evidence from Two Government-Led Programmes in Zambia

Sudhanshu Handa and Luisa Natali, UNICEF Office of Research – Innocenti
Gelson Tembo, Palm Associates
Benjamin Davis, Food and Agriculture Organization of the United Nations

In sub-Saharan Africa, the poorest region in the world, the number of cash transfer programs has doubled in the last five years and reaches close to 50 million people. What is the impact of these programs, and do they offer a sustained pathway out of ultra-poverty?

In this paper, the authors examine these questions using experimental data from two unconditional cash transfer programs implemented by the Government of Zambia. They found far-reaching effects of these two programs, not just on their primary objective—food security and consumption—but also on a range of productive and economic outcomes. After three years, household spending is 59 per cent larger than the value of the transfer received, implying a sizeable multiplier effect. These multipliers work through increased non-farm business activity and agricultural production.