Impact of Cash Transfer on Poverty Reduction in Lindi District, Tanzania

Abstract

Cash Transfers (CT) as a strategy for poverty reduction acquired prominence in Latin America but spread later to the rest of the developing world including Tanzania. Government through its umbrella institution, Tanzania Social Action Fund (TASAF) introduced what has become the largest CT for poor households in the country since 2010 to date. Although there is growing evidence on the impact of CT on poverty reduction, results are contextual. Thus, the paper examined the causal effect of CT on poverty reduction in Lindi District, Tanzania. Specifically, the study assessed the impact of CT on households’ overall wealth, housing conditions, use of basic services, productive and non-productive assets. The study employed Propensity Score Matching (PSM) to estimate the effects of CT on households by matching recipients and non-recipients’ households using Nearest Neighbor, Radius caliper and Mahalanobis matching techniques. Sample size constituted 398 respondents, split into equal number of recipients and non-recipients’ households. Five Focus Group Discussions (FGDs) and 13 Key Informants Interviews (KIIs) were conducted. Qualitative data was analysed using content analysis. Findings indicated that CT to poor households by itself is not enough to significantly reduce extreme poverty. However, the results indicated significant effect of CT on five poverty indicators which are type of floor, sanitation facilities, livestock, mobile phone and chair. The study recommends to government adoption of multi-intervention programs directed on key living standard indicators such as productive assets to transform the quality of low-income households.