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Case Study

Direct and Indirect Benefits of Food and Cash Assistance in Uganda

May 2023 — By World Food Programme

The United Nations World Food Programme (WFP) has the vision to escalate Cash Based Transfers (CBT) initiatives in coordination with the Government of Uganda. This study aims to gain a better understanding of the direct and indirect benefits of food and cash transfers to refugees and asylum seekers within WFP’s General Food Assistance (GFA) operations in the country.

Based on the modality of assistance provided, four settlements were selected, namely Bidibidi (100 percent food transfers) and Kiryandongo (61 percent cash transfers and 39 percent food transfers), Kyangwali (100 percent cash transfers), and Nakivale (100 percent cash transfers).

In these settlements, WFP interviewed 1,406 beneficiary households along with 635 households from host communities and 140 business owners. A general equilibrium (GE) modelling approach was applied to the collected data to simulate how spending in goods and services generates spill-over impacts to non-assisted households, productive activities, and the labour market. Specifically, the GE model used is the Local Economy-Wide Impact Evaluation (LEWIE) model within WFP’s Shock and Assistance Platform for Economic Simulations (SHAPES).

The results of the study are representative at the settlement level and will inform ongoing interventions, providing supporting evidence for promotion of self-reliance, livelihood, and asset creation activities. The key findings are as follows:

  • The overall contribution of WFP assistance is significant in all four settlements. When simulating the impact of cash versus food transfers, the LEWIE model shows that cash transfers create larger total impacts, which imply larger spill-over effects and thereby higher benefits for Ugandans living nearby the settlements.
  • GFA (both food and cash transfers) has a significative return on investments. For every US dollar transferred to the beneficiaries, it is possible to estimate an income multiplier of 1.89 in Bidibidi, 1.37 in Kiryandongo, 1.50 in Kyangwali, and 1.53 in Nakivale. Production multipliers are larger for retail and service activities (between 5 and 17 percent), while they are smaller for crop and livestock activities (between 0 and 6 percent).
  • Market integration, the level of agricultural productivity and date of establishment of the settlements are key conditions to be considered to explain these results. For settlements that are well established and integrated with regional markets, cash tends to create larger benefits. The date of establishment of the settlement seems to be relevant to the levels of additional benefits generated. This is likely to be partially driven by increased productive activities for refugees who have been living in Uganda for a longer period.
  • The market dynamics in host communities are influenced by refugees’ income-generating activities. The study shows that, refugees do not survive on assistance alone in the surveyed settlements; often they have income-generating activities that allow them to interact with the host-country economy. Local businesses potentially benefit from refugees’ demand for their products and the availability of refugee labour.
  • We find some relevant households’ characteristics that are associated to the use of assistance and the generation of income and productive multipliers:

• Households receiving cash transfers spend more money than those receiving food transfers and have a higher probability of engaging in farming activities.

• The more aggregate productive capacity refugee and host communities have, the larger the multipliers. Households with more productive capacity tend to have fewer coping needs.

• Multiplier effects on assistance grow as households become more productive in the local economy. Increasing their capacity to engage in income generating activities is therefore important, and training programs could support this effort, also by improving financial literacy in the settlements.

• Refugee households with female heads of household perform significantly worse than their male-headed counterparts. However, when female members have secondary or above level of education, they tend to have higher food security outcomes even if with lower income and expenditure levels.

• Households with a larger number of working age members less likely adopt negative livelihood coping strategies, while those with more vulnerable individuals (children, pregnant and lactating women, disabled individuals, and the elderly) have worse food security outcomes.