The relevance of local structures for economic multiplier effects of social pensions in Uganda

Maria Klara Kuss, Franziska Gassmann & Firminus Mugumya

#2018-004

This paper provides insights into the differences in economic multiplier effects of Social Cash Transfers in unequal structural settings. Using a qualitative approach and the case of Uganda's Senior Citizens Grant (SCG), the paper confirms that there are considerable differences in the scope of economic multipliers between structurally integrated and remote areas. Integrated communities are in a better position to access the secondary benefits of the SCG since they are better able to respond to the increased demand by recipients with higher value and more lucrative investments. Moreover, community members in integrated areas are also more likely to benefit from improvements of already existing infrastructures and services than community members in remote areas where at times growth-enhancing structures and services remain entirely absent. The paper concludes that the expansion of SCTs in low-income countries should be accompanied by measures that reduce pre-existing structural inequalities across areas.

Keywords: Social pension, cash transfer, economic multiplier, Sub-Sahara Africa, Uganda

JEL Classification: H53, H55, I38