There are a number of cash transfer (CT) programs in sub-Saharan Africa
intended to aid the most vulnerable households. Because targeting
strategies limit eligibility to resourceconstrained and labor-poor
households, the design of these programs would seem to work against the
creation of positive production spillovers. From a local economy-wide
perspective, though, beneficiary households are a conduit through which
new cash enters the rural economy. As they spend their cash, the
beneficiary households unleash general equilibrium (GE) effects that
transmit program impacts to others in the economy, including
non-beneficiaries. Most households that do not receive cash transfers
are ineligible because they fail to meet the poverty-related criteria
and are not labor constrained; they may be better positioned to expand
production when demand is stimulated by cash transfers.
The local economy-wide impact evaluation (LEWIE) methodology is designed
to understand the full impact of cash transfers on local economies,
including on the production activities of both beneficiary and
non-beneficiary groups; how these effects change when programs are
scaled up to larger regions; and why these effects happen. All of these
aspects are important for designing projects and explaining their likely
impacts to governments and other sponsoring agencies.
The traditional starting point for constructing GE models is the
development of a social accounting matrix (SAM) for a given geographic
area; the LEWIE model requires the construction of household-village
(local) social accounting matrices (SAMs) using household, enterprise,
and community survey data collected as part of the baseline and/or
follow up surveys in each of the countries in which evaluations of cash
transfer programs are carried out. Separate SAMs are constructed for the
households that will receive the randomized transfer, for control-group
households, and when available, for ineligible households in both the
beneficiary and control villages.
Taylor, J.E. A Methodology for Local Economy-Wide Impact Evaluation (LEWIE) of Cash Transfers: Methodological guidelines for the From Protection to Production project. Food and Agriculture Organization of the United Nations, Rome, Italy (2013) iv + 59 pp.