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How cash transfer programmes can improve lives of rural poor

Wednesday January 3 2018

A man counts bank notes.

A man counts bank notes. The GiveDirectly cash transfer programme has gained prominence in development circles as a tool for cushioning the poor against adverse economic conditions. PHOTO | FILE | NATION MEDIA GROUP 

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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.


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?


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.


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 the title, Hand-outs that caused development.

I want to challenge county governments and Constituency Development Fund (CDF) boards to give serious thought to well- targeted, evidence-based cash transfer programmes where beneficiaries are vetted transparently.

After all, where do the billions allocated to CDFs every year end up? What can county governments claim to have achieved in terms of improving the quality of life of the rural poor?


As you visit villages throughout the country, what you see are incomplete rural dispensaries, half-finished sports stadiums, haphazardly designed foot bridges and stalled cattle dips.

As a people, we suffer from an attitude that equates rural development with concrete and buildings. We will raise millions of shillings to build cattle dips without bothering about the money for chemicals and maintenance.

We are always more than willing to raise money to fund capital expenditure — build churches , dining halls and classrooms — without bothering about where funds for recurrent expenditure will come from.

Many rural health centres provide shoddy services to the poor simply because not enough nurses have been posted there. Neither are medicines supplied adequately to these beautifully designed structures.

History will record that the gravest mistake successive Kenyan governments made was to invest far less in human beings — cash transfers, nutrition and public health — than in brick and mortar.