Social pensions and their contribution to economic growth

A Ugandan Ministry of Gender, Labour & Social Development and the Expanding Social Protection programme report reviews evidence on how social pensions help expand local economies. It says that a number of studies “have shown that social protection transfers generate multipliers of between 1.3 and 2.4 for the cash entering communities”. This means the size of the benefit can be more than double the cost.

A study in Kiboga and Kyenjojo, the report, downloadable below adds, found “almost every store owner reporting that business had improved after the introduction of the SCG”. While another study “found similar impacts, with small businesses consistently increasing their turnovers and profits”. This lead to both outside traders and shopkeepers from the community gathering at pay points on payday and recipients making immediate purchases of soap, beans, oil, sugar, salt, and clothing as well as ‘luxury’ items such as meat.

Evidence of traders travelling to SCG communities to sell goods, for example, from Mubende to the neighbouring district of Kisojo in Kyenjojo, led to competition which “may be the reason why there is no evidence of the SCG leading to a rise in inflation”.