Experiment will show if basic pay for all is answer to digital economy challenges

Sunday February 26 2017

Erick Odhiambo Madoho (second left) and members of the GiveDirectly team. PHOTO | ANDREW RENNEISEN

Erick Odhiambo Madoho (second left) and members of the GiveDirectly team. PHOTO | ANDREW RENNEISEN  

By MURITHI MUTIGA
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What if every adult citizen was guaranteed payment of a minimum amount of money every month whether they were employed or not?

Is it feasible to pay people for not working? A large-scale experiment which is being rolled out in Kenya will seek to find the answers to these questions.

It seems a strange concept but the idea of a Universal Basic Income, a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money, has gained popularity among economists in recent years.

It is underpinned primarily by two issues: The first is that automation in many industries and workplaces means that more and more people will be put out of work by robots.

A car assembly line that previously employed thousands of people will now employ far fewer engineers whose primary job will be to operate the robots that have replaced factory workers.

The theory is that it is only fair to tax the industries that are displacing the human workforce and offer citizens, including those out of work, a basic income.

A second driver of this trend is a desire to reform welfare systems in the West which are seen as costly and inefficient. So might it be a good idea to offer everyone a fixed basic income? Some economists think so.

The Kenyan experiment will involve 26,000 people being given funds regularly for 10-15 years. They will be tracked by researchers from the charity organisation GiveDirectly to see how the essentially free money will affect their lives.

Will they be inspired to invest the extra funds in business or other ventures that will improve their lives? Or will they be more likely to turn to alcohol and drugs and to abandon productive activities?

PREVAILING DROUGHT

Disbursements of cash in place of traditional aid giving has grown in popularity around the world. Recently, the government adopted this as part of the effort to tackle the prevailing drought. Refugees in Kakuma also frequently get cash which they can use to purchase their own supplies instead of the dehumanising queues for food rations of old.

However, whether the experiment in Kenya will work or not is expected to inform policymakers around the world.

I have my doubts. If media reports are accurate that the people in low income areas identified to take part in the project will receive only $0.75 (Sh75 a day or Sh2,250 a month), that seems such a small figure that it could hardly be seen as having a meaningful effect on people’s lives. Sh75 is not enough to buy a two kilo packet of flour and can hardly be viewed as a “basic income”.

Also, a lot of these grand schemes – notably the Millennium Villages Project which was championed by the economist Jeffrey Sachs but which ended up in failure – flop because of insufficient consultation with the people that take part in the project.

Still, it will be interesting to see what happens with the free funds experiment. In an age where automation will continue to eliminate jobs, innovative tax schemes will need to be embraced.

The Universal Basic Income is one such experiment – and it may yet be an answer to the challenges posed by the new digital economy.

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The latest data from the Independent Electoral and Boundaries Commission on registered voters makes for interesting reading.

VOTE ALONG ETHNIC LINES

Considering that, for as long as a Kenyatta and an Odinga is likely to be on the ballot, most Kenyans will vote strictly along ethnic lines, the numbers offer interesting clues as to how the election will go.

From a superficial reading, Mr Odinga’s strongholds have boosted their numbers in comparison to 2013.

But if they had gone anywhere near the targeted percentage of voters that the IEBC aimed to register, the National Super Alliance would virtually have smoothed its way to victory (assuming that the coalition will survive the naming of its presidential candidate).

Jubilee, on the other hand, just as in 2013, displayed remarkable discipline and organisation in marshalling a large number of voters to enrol this time round, despite the fact that the International Criminal Court cases, which were the prime drivers of turnout last time, are not in the frame.

Still, the boost in numbers in Nasa strongholds is significant. If the opposition stays united, the stage will be set for a much closer election than the one witnessed in 2013.

I will be crunching the numbers in the weeks ahead. However, the feverish spinning by the various political party social media warriors (who all find that the numbers favour them) recalls the old quote that: If you torture the data long enough, it will confess to anything.

[email protected] @mutigam