New report on COVID-19
How has COVID-19 impacted the lives of households in Uganda? And to what extent have cash transfers been effective in improving peoples’ lives during the pandemic? These are the questions addressed in a C-19 note published by PEDL, Private Enterprise Development in Developing Countries, and involving FAIR researchers Kjetil Bjorvatn, Arne Nasgowitz and Vincent Somville.
Cash transfers have been introduced, or considered, by many countries to mitigate the impact of the COVID-19 lockdowns. While such policies have generally been found to be effective in promoting household welfare, it is not obvious that these lessons carry over to times of crisis, such as the recent pandemic and economic lockdown.
Our study is situated in Uganda, where we collected evidence from more than 600 households in peri-urban areas across the country. We tracked the households over a period of more than two years, from late 2018 to early 2021. Some of these households were randomly assigned to receive cash transfers as part of a research project, framed as support for business investment, while other households received no such support, thereby constituting the control group. The study forms part of a larger field experiment on cash grants and childcare to promote family welfare, on which we plan to have a working paper ready before the end of the year.
Our data suggest that the lockdown due to COVID-19 in Uganda led to a sharp reduction in the incomes of peri-urban households, but that the impact was rather short-lived. Moreover, we find that cash has been an effective tool in raising the incomes of these households during the summer and fall of 2020, that is, after the initial lockdown period. At the same time, the fact that we do not observe a difference in income at end line, which was conducted four to five months after the last transfer, could imply that the cash treatment does not have an enduring impact on income. However, additional, longer-term data would have to be collected to make firm conclusions on this point.
The psychological effect of the pandemic, as measured by stress, mirrors that of the income development, with the level of stress peeking at the April 2020 survey, that is, with the onset of the pandemic and initial lockdown measures. The cash transfers seem to have been rather effective in reducing stress, for the period seen as a whole, and in particular during the period after the initial lockdown measures.
Kjetil Bjorvatn has been a professor in economics since 2005. He received his PhD degree in economics from NHH, and is leader of the FAIR Insight Team
Arne Nasgowitz is a PhD candidate at the Department of Economics at the Norwegian School of Economics. He joined the Department in 2018.
Vincent is an associate professor at NHH and Associated Senior Researcher at the Chr. Michelsen Institute. He got his PhD from Namur-Louvain in Belgium.
Photo by: Sharon McCutcheon