Social Networks and Risk Management in Ghana’s Livelihood Empowerment Against Poverty Programme

We use data from a quasi-experimental impact evaluation of the Livelihood Empowerment Against Poverty (LEAP) programme, one of Ghana’s largest social protection initiatives, providing unconditional cash transfers and free enrolment in the National Health Insurance Scheme to extremely poor households in rural areas. Implementation of the programme was inconsistent during the study period, as LEAP households did not receive a steady flow of predictable cash with which to smooth consumption. Impact results from the evaluation are consistent with behaviour suggesting that the programme did not lead to a perceived increase in permanent income. While LEAP did not lead to an increase in consumption, there are significant impacts in the reduction of the amount of debt held and the increase in loan repayments. We also find what appears to be an important risk reduction strategy among households – the re-engagement with informal social networks. This pattern of impacts is probably due to the uncertain and lumpy payments from LEAP which enabled households to have enough capital on hand to make such ‘investments’, suggesting that rather than crowding out informal safety nets, LEAP actually led to ‘crowding in’, allowing beneficiary households to re-establish and re-engage in local systems of risk reduction and protection.