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Strategies & Market Trends : Africa and its Issues- Why Have We Ignored Africa?

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From: TimF9/21/2016 3:52:55 PM
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A revolutionary experiment in giving 6,000 people free money may face a surprising challenge
Chris Weller
Sep 8, 2016, 2:33 PM ET

Thomson Reuters

The idea of giving people free money is so radical, even some recipients think it's too good to be true.

Later this year, roughly 6,000 people in Kenya will receive regular monthly payments of about a dollar a day, no strings attached, as part of a policy experiment commonly known as basic income.

People will get to use the money for whatever they want: food, clothing, shelter, gambling, alcohol - anything - all in an effort to reduce poverty.

The experiment will be run by GiveDirectly, one of the highest-rated charities in the world because of its radical approach of direct cash transfers. All around East Africa, GiveDirectly wires people money and keeps tabs on how they fare later in life.

But instead of accepting the cash transfers with open arms, many Kenyans have recently been saying "No, thank you." It's a legitimate concern: As GiveDirectly moves into its larger basic income experiment, the last thing it wants is for people to turn down the money.

In a recent GiveDirectly blog post, the charity's Kenya-based official, Will Le, explains that refusal rates in East Africa have typically held steady between 4% and 6% in past cash transfer trials. They've been especially low in countries like Uganda and Rwanda. In one Kenyan region known as Homa Bay, however, the rates have risen as high as 40%.

"We've done a lot to try to understand what has led to this increase in refusals," Le wrote in the post.

Since July 2015, GiveDirectly's investigations have shown that people who refuse the cash are skeptical. They find it "hard to believe that a new organization like GiveDirectly would give roughly a year's salary in cash, unconditionally," Le writes. "As a result, many people have created their own narratives to explain the cash, including rumors that the money is associated with cults or devil worship."

Le says the organization considered cutting its losses and leaving Homa Bay in search of more welcoming regions. But due to another large experiment already in the works (separate from the decade-long basic income experiment) and the risk of rumors spreading to other villages, GiveDirectly will stay and try to bring the rates down. In just two months, he says, targeted efforts have led the initial refusal rates of 80% in one subcounty to fall to just 20%.

Gaining people's confidence hasn't been easy.

GiveDirectly has created a team specifically for making people feel comfortable with its cash transfer program. It has gone on the radio to discuss the project, gotten help from local leaders, and used testimonials from past experiments as proof they're not a scam.

GiveDirectly co-founder, Paul Niehaus, says he isn't too concerned. The two counties GiveDirectly selected for its large-scale basic income experiment have historically have higher acceptance rates than these smaller cash transfer trials in Homa Bay.

"We will still do the experiment, and I think we'll still learn a lot about impacts on individual recipients," he tells Business Insider.

But as a result of the acceptance issues, it may be difficult for GiveDirectly to interpret the experiment's impact on things like community cohesion. For example, one of the benefits of basic income being universal (not just individual) is that more money for everyone theoretically uplifts community welfare. If some people refuse the money, GiveDirectly may miss out on this.

Niehaus says the remedy might be comparing results across villages where acceptance rates have differed and teasing out the insights. It helps that the charity has already been issuing cash transfers for five years in the region and has huge amounts of data to use for comparison.

It may also have international data to cross-reference. Basic income experiments have also been planned, albeit on a smaller scale, in Finland, the Netherlands, and Oakland, California, though none is as comprehensive and ambitious as GiveDirectly's.

amp.businessinsider.com
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