Cash transfers, in the context of social protection programs are emerging in many developing countries as a leading initiative in tackling poverty and vulnerability. During the last decade, middle income countries such as Brazil, Mexico and the Republic of South Africa have rapidly expanded their cash transfer schemes. The rapid and successful introduction of these programs indicates that cash transfers can contribute to increased resilience and pro-poor growth by serving as an effective risk management tool, empowering poor households to lift themselves out of poverty. There is currently a huge demand for the introduction and provision of basic social protection schemes in the Least Developed Countries-LDCs.
Several studies indicate that social protection schemes have multiplier impacts by creating demand for locally produced food, goods and services. Beneficiaries have been shown to use transfers to buy food and other goods and services that to a large extent are provided by local producers. Some are able to save money and invest in seed and livestock. Studies from South Africa suggest that poor families receiving cash transfers in rural areas are significantly more likely to continue farming activities. Cash transfers can be an important development mechanism to improve household resilience in terms of maintaining agricultural production in the face of an overall downward economic trend. More knowledge is still required to understand the direct links between social cash transfers, economic growth and rural production – particularly in the context of low-income countries