Uganda and Kenya are the sites of an innovative aid project that has the potential to revolutionise the ways charities and donor governments seek to alleviate extreme poverty in Africa.
GiveDirectly (GD), a New York-based NGO, has been providing about $1,000 a year in direct cash transfers to each of 30,000 households in Kenya and 20,000 in Uganda. The group has raised more than $100 million since its launch five years ago.
The direct-giving initiative is based on the premise that extremely poor people benefit most when they are able to decide for themselves how to spend or invest aid allotments.
“The needy know their needs better than outsiders do,” the NGO states.
GD uses electronic money-transfer systems to make periodic payments to selected households.
“People don’t spend it on alcohol or tobacco, and they don’t stop working as a result of getting cash transfers,” says GD spokesman Ian Bassin. “Alcohol and tobacco use actually decreases in some cases because the level of stress goes down.”
Agnes, a 29-year-old subsistence farmer in western Kenya, is quoted on GD’s website as saying that the cash “will enable me boost my business, and I will also be able to further my son’s education who dropped out of school because of lack of money.”
Tapenensi, 36, says on the same site that she will use her initial GD payment of $112 to buy a goat “so that I can rear it and keep getting school fees for my children as I am a widow.” The Ugandan recipient added: “I also bought household utensils since I was lacking some.”
GD’s work in Kenya from 2011 to 2013 was favourably reviewed in a study published last year by two researchers, one affiliated with Princeton University in the US and the other with the Nairobi-based Busara Centre for Behavioural Economics.
“We observe increases in food expenditures and food security, but not spending on temptation goods,” the researchers wrote.
“We also observe no evidence of conflict resulting from the transfers,” added Johannes Haushofer of Princeton and Jeremy Shapiro of the Busara Centre.
“On the contrary, we report large increases in psychological well-being, and an increase in female empowerment with a large spillover effect on non-recipient households.”