TOPICS > World

Group gives cash aid to rural Kenyans, then studies its effects

April 8, 2017 at 4:47 PM EDT
Since it was founded in 2011, U.S.-based nonprofit GiveDirectly has given cash unconditionally to villagers in eastern Africa, particularly Kenya and Uganda. The nonprofit’s most recent project involves providing a basic income consisting of cash payments to every adult in a rural Kenyan village. NewsHour Weekend Special Correspondent Christopher Livesay reports from Kenya.
LISTENSEE PODCASTS

By Melanie Saltzman and Sam Weber

When it comes to humanitarian aid for Africa, traditionally it has meant taxpayer-funded programs like PEPFAR or privately-funded shipments of medical supplies, food and other goods. A non-profit organization called GiveDirectly is pioneering another approach in eastern Africa: giving cash unconditionally to the needy.

The latest project involves providing what’s called a “universal basic income,” whereby every adult in a designated area receives a regular cash payment. In tonight’s signature segment, NewsHour Weekend Special Correspondent Christopher Livesay reports from Kenya.

CHRISTOPHER LIVESAY: Magline Awino Ndiwa lives in a rural village in western Kenya called Kaluande South.

As a subsistence farmer, she and her husband struggle to support their five children.

MAGLINE AWINO NDIWA: Most of the money that we get is always spent on school fees, because if we don’t pay the fees, they are sent home.

CHRISTOPHER LIVESAY: For years, she’s made tough decisions on whether to pay those fees, buy food, or improve her tiny, mud-thatched home, with its leaky tin roof. Then, last year, a U.S. based nonprofit organization called “GiveDirectly” came to her village and offered her $1000 in cash — ten times her annual earnings — and said she could spend it on whatever she wanted.

70 percent of the 281 families in this village received cash from GiveDirectly, which targets people living on less than $1 a day. Ndiwa used her cash to build this bigger house.

How has life changed now that you’ve gotten this cash?

MAGLINE AWINO NDIWA: It’s not easy to live with five children in a small house. But now I have a good home that’s not leaking and has enough space to accommodate all the children. I am happy.

MICHAEL FAYE: The big idea was giving people money to make them less poor. It almost seems so obvious.

CHRISTOPHER LIVESAY: Economist Michael Faye was one of four graduate students studying development economics who co-founded GiveDirectly in 2009. Unlike other aid groups that provide goods or services, nearly 90 percent of its donations go straight to recipients as cash.

MICHAEL FAYE: We were frustrated with many of the same things that a lot of donors are frustrated with: Nonprofits are opaque, the money has to pass through multiple hands, and only a fraction of it winds up in the hands of the poor.

CHRISTOPHER LIVESAY: Funded by private donors and foundations, including several based in Silicon Valley, GiveDirectly has distributed nearly 56 million dollars across western Kenya and Uganda since 2011, providing up to $1000 to 65,000 families with no strings attached.

People use GiveDirectly’s cash in a wide variety of ways:

Sylvanus Olweny Oluoch used the money to buy food, clothes and livestock. And build this modest new house.

Daniel Omondi Odipo used part of his GiveDirectly grant to pay his wife’s dowry.

And many recipients use the money to start a business.

CHRISTOPHER LIVESAY: Chicken broth, some candy. I see toothpaste.

Jane Aketch Orege opened this small general store and a barber shop next door.

So there’s nothing keeping a recipient of this money from doing something with it that the donor doesn’t like?

MICHAEL FAYE: That’s right. There’s obviously things that a lot of us would agree are bad — smoking, alcohol, and so on. But there are other things that we as donors think about. Maybe we think someone should spend it on education. Maybe we think they should spend it on a cow. And I think there’s a degree of self-reflection that we should have on why we have those preferences, and why we think those preferences are more important than the poor’s preferences.

CHRISTOPHER LIVESAY: GiveDirectly’s cash is distributed through M-PESA, a widely used mobile money system that allows Kenyans to receive and send money for a small fee. If a potential cash recipient doesn’t own a cell phone, GiveDirectly provides one.

The money is given in three lump sum payments. And as part of enrolling in the program, every recipient is vetted in person.

Diana Achieng Mwaga is a GiveDirectly field officer. While leaving decisions up to the recipients, mgawa documents how they plan to spend the cash, and collects data on their lives before they receive the money.

GiveDirectly relies on outside researchers to assess the impact of their cash-transfer program.

One study published last year on GiveDirectly’s work found recipients:

Increased livestock ownership by 50 percent
Reported a significant decrease in depression
Didn’t spend more on alcohol and tobacco.

BERK OZLER: Cash transfers are not only the future, they’re the present.

CHRISTOPHER LIVESAY: World bank economist Berk Ozler says research across the globe shows the advantages of cash as a form of aid, especially in the short term.

BERK OZLER: I think we have more and more evidence that suggests that unless you have a very good reason to give people something else, you should give them cash instead.

CHRISTOPHER LIVESAY: While certain benefits of cash have been widely studied, GiveDirectly still has to convince the people it’s trying to help, many of whom are skeptical.

MAN IN CROWD: What is the religion behind this thing?

CHRISTOPHER LIVESAY: Field officer Diana Achieng Mwaga has had to knock down rumors of ties to sinister religious forces.

Magline Ndiwa says, unlike her, some people in her village refused the money.

MAGLINE AWINO NDIWA: They were saying so many things: that we will be forced to give up our children, that we will die.

CHRISTOPHER LIVESAY: Mary Akoth is co-wives with Ndiwa, married to the same man. A common practice in this part of Kenya.

When you first heard about GiveDirectly what did you think?

MARY AKOTH: I was not happy because money that you have not worked for, you cannot be comfortable taking it.

CHRISTOPHER LIVESAY: The Kenyan government also runs cash grant programs for more than 700,000 households with vulnerable children, the elderly, and the disabled, providing monthly stipends of about $20.

Gladys Wanga is a member of Kenya’s parliament.

CHRISTOPHER LIVESAY: Are you learning anything from GiveDirectly?

GLADYS WANGA: Yes, I think one of the lessons that the government programs can learn from GiveDirectly is transparency and just a level playing field for everyone. And just a tool that vets, and when you, if you meet the criteria, you’re good to go.

CHRISTOPHER LIVESAY: Wanga represents Homa Bay, an area in western Kenya where GiveDirectly has given out cash since 2015.

Have they followed through on what they claimed they were able to achieve?

GLADYS WANGA: Yes, they’ve certainly followed through. Lives have changed. They promise what they do. They don’t promise what they can’t do.

CHRISTOPHER LIVESAY: GiveDirectly has been making lump-sum payments to the poorest individuals in Kenya for years. But what would happen if entire villages were recipients? That’s what GiveDirectly wants to find out with an experiment stretching 12 years.

The idea is to provide what’s known as a “Universal Basic Income:” Universally providing every adult in a village enough cash to cover the basic cost of living.

The concept of a Universal Basic Income has been debated in both poor and rich countries around the world. In wealthier economies, it’s been proposed as a replacement for safety net programs, a way to combat growing income inequality, and even to address job losses expected from automation.

Other countries are already experimenting with the idea. In Finland, the government has begun a universal basic income trial for some of its citizens. Governments in Canada, Scotland, and the Netherlands have also proposed trials. And in the United States, a private organization has proposed a trial in Oakland, California.

GiveDirectly’s $30 million program in Kenya will be the largest and longest experiment of its kind. Recipients will receive about $22 a month, which is close to $0.75 a day. Last October, it started providing a basic income in this village to test the model. Kennedy Aswan Abagi is the village’s elected “elder.”

KENNEDY ASWAN ABAGI: Twelve years is a long time. Hopefully by that time everybody shall have invested in something that can support their families, like rearing livestock or farming crops, so that their lives can continue smoothly.

CHRISTOPHER LIVESAY: His village is one of 300 that will be part of the Universal Basic Income experiment. The villages will be randomly divided into four groups. Some will get lump-sum transfers, some will get money for twelve years, some for two years, and other villages will get nothing… acting as ‘controls’ to see the impact of the basic income.

ALAN KRUEGER: How much income does she usually make in a month?

CHRISTOPHER LIVESAY: Princeton University economist Alan Krueger is one of the independent researchers that will analyze data from the basic-income experiment. He was visiting the pilot village along with GiveDirectly co-founder Michael Faye.
So this is the questionnaire that recipients go through?

ALAN KRUEGER: That’s right.

CHRISTOPHER LIVESAY: It’s pretty weighty; how long does it take to actually get through all these questions?

ALAN KRUEGER: At the moment it’s taking just under three hours, and we’re trying to cut it down.

CHRISTOPHER LIVESAY: Participants will be asked about everything from their hopes for the future to their incomes.

ALAN KRUEGER: You don’t just focus on a single outcome, you have to look at a range of outcomes.

MICHAEL FAYE: How did you react the first time you heard about it?

CHRISTOPHER LIVESAY: Although worlds apart, Faye believes lessons from the universal basic-income experiment in Kenya will be relevant to Europe and the U.S..
That might seem like apples and oranges to a lot of people, Kenya compared to the U.S.

MICHAEL FAYE: It is absolutely apples and oranges, and you could also say Detroit and Oakland are also apples and oranges. And as an economist, this is why you do the experiment many times, to learn what is universal and what is locally specific. But you certainly need to pick somewhere to start.

ALAN KRUEGER: I think there are aspects to economic behavior that cut across cultures, but we’ll see how much we can extrapolate from the fields here in Kenya, to other contexts.

CHRISTOPHER LIVESAY: World Bank economist Berk Ozler has doubts about how much researchers will learn from the Basic Income experiment in both rich and poor countries.

BERK OZLER: If we’re talking about the U.S. or Finland or Switzerland or something like that, the context and the amounts will be so different. And then on the developing country side, I think that I’m worried that the amount is too large.

CHRISTOPHER LIVESAY: Ozler fears that a country like Kenya could never afford to implement a program like GiveDirectly’s for all of its citizens. He would also like to see the experiment go further, and test GiveDirectly’s cash payments against other types of charitable aid in rural Africa, such as vaccines, mosquito nets to prevent malaria or free livestock.

BERK OZLER: I’m not going to convince you that cash transfers are better. You’re not going to convince me that giving people chickens is better. So let’s just put it to the test.

CHRISTOPHER LIVESAY: How do you measure success in a program like this?

MICHAEL FAYE: It’s almost hard at some basic level for it not to be successful, simply because you’re giving people that are living on 50, 60 cents a day money that will take them above the poverty line. The broader success is shifting the sector to a place that is based around evidence, that is transparent and honest, and puts the recipient at the center of aid programs, and not just the donor.

CHRISTOPHER LIVESAY: Aid recipient Kennedy Aswan Abagi says he plans to use his cash gifts to expand his carpentry business and invest in more livestock, and he’s thinking long term.

KENNEDY ASWAN ABAGI: Our only hope is that GiveDirectly will fulfill its promise of continuing to send us the money for twelve years, without interruption, so that we can continue investing in projects that will sustain us afterwards.

SHARE VIA TEXT