How cash transfer programmes can improve lives of rural poor
6 months ago, 2 Jan 23:58
I have just returned to the capital city from my Christmas break at a place where my parents live — deep in rural South Nyanza in an area called West Karachuonyo. And I find myself reflecting about the incidence of poverty in the area and debating with myself why the quality of life of rural folks doesn’t seem to improve despite the money the county and national governments keep pouring into these villages. I am convinced that any major assault at improving the quality of life of the poor in the villages will require new ideas, fresh and bold approaches. An American NGO called GiveDirectly has been rolling out in my village an experiment modelled on the idea known as ‘unconditional cash transfers’. First, they conducted a quick baseline poverty survey that mainly targeted women, unemployed school drop-outs and widows. Once in the sample, one was given a free mobile phone and asked to await cash through M-Pesa. RECEIVED SH100,000 In a matter of weeks, everybody in the sample — nearly 4,000 people — had received a total of Sh100,000. These are folks who had never handled such money before. My mind went to what I read some years back about the achievements of one Mr Ignatio Lula da Silva. The former president of Brazil earned international plaudits for having rolled out one of the most extensive and elaborate cash transfer programmes. He was praised for focusing the attention of the world to such programmes as a viable means of tackling poverty in the rural areas. Although I am yet to see a comprehensive impact study of GiveDirectly in West Karachuonyo, I must admit that I am thoroughly intrigued and impressed so far. How did these rural folks spend the money? BUSINESSES A good proportion went into improving their dwellings, mainly refurbishing their houses and building latrines. Some of it was spent on procuring seeds and fertiliser, buying solar lamps, purchasing motorcycle taxis and starting small businesses. Then there are those who spent the money on defraying hospital bills and paying school fees and buying clothes for their families. The impact on the local macro-economy was an unprecedented boom in business activity with fishermen, livestock farmers and cereals traders recording massive sales. Indeed, GiveDirectly turned out to be the biggest economic stimulus programme to be implemented in the region. This was ‘quantitative easing’ at the rural level. As expected, there were folks who just squandered the money on alcohol and conspicuous consumption. The most dramatic account is of the village wag — a chap by the name Ogony from Pala Market — who would ride his newly acquired motorbike around the village with one-thousand-shilling notes pinned all over his shirt to brag and show off his new status. CASH TRANSFER Still, the experiment by GiveDirectly has demonstrated that well-targeted cash transfer programmes can substantially improve the lives of many poor people in rural villages. I plan to write a book about the impact of this intriguing experiment in West Karachuonyo under ...
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