The Livelihood Empowerment Against Poverty (LEAP) programme provides cash and health insurance to extremely poor households with the goal of alleviating short-term poverty and encouraging long-term human capital development. The LEAP provides a significant infusion of cash into Ghana’s rural economy. When beneficiaries spend the cash transfer they transmit the impact to others inside and outside the local economy, more often to households not eligible for the cash transfer who tend to own most of the local businesses. The impact on the local economy was simulated using a LEWIE (Local Economy Wide Impact Evaluation) model, focusing on the communities in seven districts included in the LEAP impact evaluation. The LEWIE model for the LEAP programme found that the transfers could lead to relatively large income multipliers of GHS 2.50. That is, every cedi transferred to poor households had the potential to raise local income by GHS 2.50. Eligible households receive the direct benefit of the transfer while ineligible households the bulk of the indirect benefit. However, if labour, capital and land markets do not function well, upward pressure on prices could result. This would raise consumption costs for all households and lead to a real income multiplier as low as GHS 1.50. Complementary programmes that increase the supply response (such as access to credit to invest in capital) could increase the real-income and production impacts of the programme.
Thorne, K.; Taylor, J. E.; Kagin, J.; Davis, B.; Darko, R.; Osei-Akoto, I. Local Economy-Wide Impact Evaluation (LEWIE) of Ghana’s Livelihood Empowerment Against Poverty (LEAP) Programme. Food and Agriculture Organization of the United Nations, Rome, Italy (2014) vi + 26 pp.