Government needs to double LEAP payments

Published on : Oct. 1, 2017

Remember when your GH¢ 100 worth of prepaid electricity credit would last almost twice as long? Or when GH¢ 50 paid at the petrol pump would take you miles and miles? Not anymore. It should come as no surprise to anyone that the cost of living in Ghana is continuously rising, and rising fast. Everyone feels the pinch, but this is most true for the very poorest people in Ghana who have so little to fall back on.

As the Livelihood Empowerment Against Poverty (LEAP) programme makes its 50th payment to poor families in Ghana this week, we applaud the Government of Ghana for the progress that LEAP has made over the past nine years and look forward to future actions that will ensure the positive impact of LEAP continues.

Currently, one in eight people who qualify for Ghana’s LEAP grants are so far enrolled on the programme. This well-targeted national programme transfers small bi-monthly grants to over 200,000 poor and vulnerable households in all Ghana’s 216 districts across the 10 regions. LEAP is transforming lives. A woman in Karaga recently said, “Since we started receiving the money [from LEAP], my life is now better because you could have faced anything [in the past] and you wouldn’t know how to tackle it.  But now that we receive the money, anything that you face, you may be able to solve it. You will not suffer.”

LEAP is not only growing people, it’s also growing the country. LEAP households use the small cash transfer, averaging just GH¢ 44 per family each month to better the conditions of their everyday lives – buying more and better food, going to a health centre when they are sick and sending their children to school. Because of LEAP, families now also invest and work more – some buying livestock and/or fertiliser or setting up small businesses. The money that LEAP participants receive has substantial ripple effects, benefiting their broader communities. For every GH¢ 1 spent through LEAP, there is an estimated GH¢ 2.50  generated in the local economy, so LEAP is an incredible public investment generating high returns.

However, these substantial gains are being eroded. As prices rose, the government increased the amount of money transferred to LEAP households, tripling the transfer value in 2013 and increasing it again by an average of 20 per cent  in 2015, to keep pace with inflation. However, these grant increases are small and not regular; and because of the rising cost of living in Ghana, the current value of the LEAP grants is actually less than it was in 2013. The transfer currently represents just 13 per cent  of household consumption, or less than six days’ worth of food per month.

Therefore, we all feel the impact of inflation in our lives as prices rise and how it hurts over time. Now imagine you could only ever dream of seeing GH¢ 100, and you look at your transfer of GH¢ 44 seemingly shrinking every day in comparison to what your family needs.

As LEAP is still only reaching one in eight  families that are eligible for it, the government has committed to expand LEAP to 500,000 households by the end of 2018 – a laudable plan which will help achieve inclusive development. However, in order to realise this potential – for poor families and for the nation – the amount of the transfer needs to be raised in order to compensate for inflation and to bring it in line with international standards. Given recent inflation rates and international comparison, the small bi-monthly LEAP grants need to be doubled.

This is an investment worth making, and one that is not beyond reach. The impressive impacts of the LEAP programme have been achieved to date with relatively small amounts of the national budget. In 2014, Ghana spent just 0.04 per cent of gross domestic product (GDP) on the LEAP programme. At the same time, Ghana spent 10 times that much on other less well-targeted social assistance programmes. Similar countries in the region spend an average of four times as much GDP on social assistance as we do, so we are lagging behind as a nation.

Increasing the LEAP grant size that the poorest families receive while it gradually expands to more families that are excluded is both feasible and a good economic and social policy. When it comes to social assistance, Ghana is lagging behind other similar countries in Africa, and as a result it is leaving its poor families behind as well. It’s time to catch up.