The Zambia Child Grant Programme (CGP) provides a bi-monthly cash transfer to households with children under five years of age, with the goal of reducing “extreme poverty and the intergenerational transfer of poverty” in programme households. The CGP provides a significant infusion of cash into Zambia’s rural economy. When beneficiaries spend the cash transfer they transmit the impact to others inside and outside the local economy, more often to households not eligible for the cash transfer who tend to own most of the local businesses. The impact of the CGP on the local economy was simulated using a LEWIE (Local Economy Wide Impact Evaluation) model, focusing on the three districts where the programme is located and included in the CGP impact evaluation. The LEWIE model for the CGP found that the transfers could lead to relatively large income multipliers of ZMK 1.79. That is, every Kwacha transferred to poor households had the potential to raise local income by ZMK 1.79. Eligible households receive the direct benefit of the transfer, while ineligible households receive the bulk of the indirect benefit. However, if labour, capital and land markets do not function well upward pressure on prices could result. This would raise consumption costs for all households and lead to a real income multiplier that is lower than the nominal multiplier. This real income multiplier could be as low as ZMK 1.34. Complementary programmes that increase the supply response (such as access to credit to invest in capital) could increase the real-income and production impacts of the programme.