ing food for their family. These arguments elucidate the substantial increase in consumption of ex-FNLs as they “fell into a lot of money” (Uvin, 2007). However, FNLs also used demobilization money to invest in land (69%) and construction (8%), to invest in an income generating activity (31%), and to pay off debts (15%). These investments can be regarded as rational forms of nonfinancial saving in the absence of financial savings institutions.

Our second finding is the negative evolution of spending indicators for demobilized CNDD+ between 2006 and 2010 (hypothesis 2). We have reason to believe that CNDD+ households also experienced a consumption boom after “falling into money” in 2004. For the same reasons than their FNL counterparts, they are likely to have spent most of their allowances in consumption goods or in investments that were not productive enough to sustain their consumption in the long run. This tendency would explain why we observe a decrease in their consumption between 2006 and 2010. An alternative explanation for our results is that we are actually measuring the continuation of a decreasing trend. In this scenario, this trend would not be due to the grants, but would rather be explained by unobservable characteristics correlated with having received the grants.

There is evidence supporting the first interpretation and discrediting the second. First, Verwimp and Bundervoet (2009) have shown that consumption by CNDD+ ex-combatants’ households increased by 34% between 1998 and 2007. Their second wave of data was collected after the start of the program and after ex-CNDD+ received their cash transfers. These data suggest that CNDD+ ex-rebels were not on a decreasing trend before 2007, which dismisses the second interpretation. Second, qualitative evidence suggests that ex-combatants spent a large share of their allowance in nonproductive ways: food, drinks or clothes. They are therefore likely to have experienced a consumption boom similar to ex-FNLs as of 2005. From our survey, we find that 50% of CNDD+ ex-combatants spent part of their allowance in consumption goods and 33.3% in clothing; only 5.6% reported having saved part of the allowances. Ndayiziga et al (2008) underlines the tendency of ex-combatants to “overspend the demobilization indemnities in an unorganized way, quickly putting them back into hardship”, while Willems et al (2010) conclude that “although the total sum of the benefits given to ex-combatants was rather large, many of them found it difficult to effectively use it for their reintegration because they did not have the capacity to handle money.” Third, our results are also consistent with the fact that the indicators related to the stocks of productive assets exhibit a constant trend, while consumption indicators exhibit a downward trend. According to our data, a substantial fraction of ex-combatants invested in a plot of land (39%), in a small shop (28%), in working material (22%) or in livestock (11%). These investments are more durable and hence still observable in 2010 (table 4, columns [4] and [8]). On the contrary, the spike in food and nonfood spending was short-lived and vanished when ex-combatants ran out of demobilization money (table 4, columns (2) and (6)). Fourth, our interpretation is consistent with the evolution of total consumption percentile 22