Special Paper No. 08 of 2024 on Effect of Cash Transfers on Food Expenditure, Dietary Diversity and Nutrition Status of Beneficiary Households

Abstract

Cash transfers are among the most popular social protection instruments that can improve nutrition status by alleviating poverty and cushioning poor and vulnerable households from shocks and risks that affect their livelihoods. However, in Kenya, these programmes are predominantly not designed within a nutrition-sensitive approach, despite proposals to integrate nutrition interventions. This study examines the impact of cash transfers on key nutrition-related outcomes: household food expenditure, dietary diversity, and stunting among children under five years old. The study used data from the 2015/16 Kenya Integrated Household Budget Survey (KIHBS) and applied linear regression models in the analysis of effect of cash transfers on food expenditure and dietary diversity and Probit models in analyzing the effect of cash transfers on child stunting status. The findings reveal that beneficiary households receiving cash transfers exhibit a 10.6 per cent lower expenditure on food and consume 0.5 fewer food groups compared to non-beneficiary households. This could be attributed to the unconditional nature of the transfers and their failure to keep pace with inflation, with the Ksh 2000 value of cash transfers per month adjusted for inflation standing at Ksh 874 in 2022. Interestingly, when cash transfers are adequate to meet the food poverty line, food expenditure and household dietary diversity scores increase significantly by 27.8 per cent and 0.22 units, respectively. In addition, receipt of cash transfers reduces the likelihood of stunting among children under five years by 2.6 per cent in beneficiary households, pointing to the need to leverage cash transfer programmes as effective tools not only for poverty reduction but also for improving nutrition outcomes.