Zambia has experienced a strong economic recovery and robust growth in the past 10 years, but this has had little impact on the high rates of poverty. There is extreme inequality – both between urban and rural areas and between the living standards of the small emerging middle class and those of the rest of the population.

Because the economic path that has been pursued so far has not worked for many Zambians, the time is right to ask whether alternative approaches should be tried, including increased use of productive transfer programs, to accelerate the pace of poverty reduction. Experience worldwide in the past 20 years has shown such programs not only increase the immediate consumption of the poorest, but also reduce their poverty more permanently, by raising their productivity, enabling them to invest in human capital, and escape from intergenerational poverty traps. From the point of view of the government, safety nets can be an effective way to target support to particularly poor groups and areas; and also a transitional way to support the extreme poor while other longer-term interventions take effect.

The new Government of Zambia is keen to re-examine the country’s strategy for helping the poorest, and is currently considering how best to do this. This report examines the choices available to the government and lays out the costs, benefits, and likely poverty impact of each of the options. The primary objective is to inform the debate within Zambia and to help policymakers and planners to reach well-informed decisions about the most effective way forward.