For decades, the world has tried to end extreme poverty in Africa. Tragically almost nothing seems to have worked.
More than a trillion aid dollars have been pumped into the continent since the 1960s. Famines have been averted. Hundreds of millions have been vaccinated. Yet the total number of Africans surviving on less than $1.90 a day has hovered around 400 million for about 40 years.
But could the solution have been staring us in the face the whole time? Could we get rid of the white United Nations 4x4s, arcane development plans dreamt up in Western capitals and concentrate on one thing: giving poor people money?
Rory Stewart, former UK cabinet minister and one-time Conservative leadership contender, thinks so. He has just been appointed President of GiveDirectly, an American NGO trying to shake the foundations of the aid world.
“Instead of giving a tent to people in poverty, which they sell for cash to buy what they want, or moving wheat halfway around the world from a farmer in Idaho, we’re actually letting people determine what their needs are,” Mr Stewart tells The Telegraph in Kilifi, a drought-stricken county in southern Kenya.
GiveDirectly’s pitch is as radical as it is simple. They argue that if you give every family in an impoverished community a no-strings-attached one-time payment of $1,000 (£865) – roughly four days’ salary for a typical UN staffer – you can transform their lives for the better in almost every way.
“Cash has this magic multiplier effect. It gets the general economy going,” says Stewart. “It allows people to buy a roof for their homes. “A cash donation lets people get a cow which produces milk and gives calcium to their kids. It lets them set up a small business or get their children through school. It improves their diets, so they’ll have fewer sick days,” he says.
There is a quiet revolution couched in his words. For half a century, the aid industry has revolved around legions of Western expatriates, with fancy master’s degrees, parachuting into far-off places to tell locals what they need to get out of poverty.
‘Now I have some dignity’
UN agencies and NGOs will sometimes play dazzling accounting tricks that give the illusion that most of their donations go directly to those in need. But ineffective projects, huge overheads for contractors and dodgy officials often suck up resources, leading to widespread disillusionment among rank and file humanitarians.
Stewart, who was Secretary of State for International Development in 2019, is damning in his criticism of patronising attitudes in the aid sector. “We dress it up in fancy words like best practice and capacity building. But basically, ‘best practice’ means we know what’s best. And ‘capacity building’ means we need to teach you what to do. And then if you fail, we say there’s a lack of ‘political will’. In other words, you’re lazy,” he says. “At some level, these are fancy jargon words for suggesting that communities in Asia or Africa are ignorant, unskilled and idle.”
By effectively cutting out the highly paid middlemen, GiveDirectly claims that its work has a better bang for its buck than almost any other intervention. But many national governments are cautious of the idea. The international community has already been sold many dud silver bullets and giving out cash to poor people is not a popular political decision. Could this really work on a grand scale?
Five years ago, almost everyone in the Mgandamwani village lived in fragile, leaky huts. There was no electricity and women used to walk three hours a day to the nearest reservoir to get water. Most men earn a pittance – £3.50 to £7 – working the occasional hard labour job in town.
Villagers say their lives transformed overnight when they received $1,000 on their mobile money accounts. They got local builders to get tin roofs, concrete floors, solar panels and lights so their children could read in the evening. Some young men went on training courses to become electricians or welders. Three middle-aged women – Kanze, Dama and Kadzo – pooled their cash together to lay water piping in the village for the first time.
“It’s the genius of the market. It’s very pure market economics,” says Stewart excitedly after coming back from seeing a new herd of goats. “Most people in extreme poverty have spent their entire lives thinking about what they would do if they got a bit of money and they can get it much cheaper than we can.”
Broader research backs up the improvements at Mgandamwani. A major study by academics at the Universities of California San Diego and Georgetown found that a simple $500 transfer reduced the child mortality rate by 70 per cent and improved child growth. A review of seven studies in Africa found that cash transfers reduced risky sexual behaviour, increased the use of antenatal care and increased the likelihood of having a nurse on site when a woman gave birth.
The villagers in Mgandamwani are all still brutally poor on a level almost unimaginable to anyone in Britain. But that’s not how recipients see it. “I spent all the money on my house,” says Zawadi Kitsao, an illiterate woman who is probably much older than the 36 years written on her ID card. “Before, I didn’t even have a door on my house for privacy. Now I have some dignity,” she says as she walks around her newly constructed breeze block home.
One fear many critics of cash payments have is that men will end up spending the money on drugs, alcohol and cigarettes. While this happens in some isolated cases, researchers say this is a tired cliche and that most people seize the opportunity to change their lives for the better. But several broader problems remain. Most countries where GiveDirectly have been working are stable and relatively law-abiding.
It is hard to see how the lean NGO can guarantee security for cash recipients in war-ravaged nations like South Sudan, where whole villages are sometimes taken hostage for the money stored on their digital mobile wallets. The next problem is one of scale.
Since the organisation was founded by a pair of PhD students at Harvard University and the Massachusetts Institute of Technology in 2008, they have reached more than 300,000 households with large payments across Liberia, Kenya, Malawi, Rwanda and Uganda. Could the massive investment of liquid cash cause rampant inflation?
The answer is not entirely clear, although Stewart cites economic modelling showing that you would need to dump about 20 per cent of GDP to have a serious impact on inflation. Many aid workers still need to be convinced. But in some ways, it is easy to see why the simple idea of giving people cash has faced so much resistance.
“It’s difficult. It’s not just that people are selfish; it’s psychological. People have dedicated their whole life to the idea that they have a unique set of knowledge and skills and that they are necessary to save people,” says Stewart. “If you have to confront the fact that actually the villagers have a better idea about what they need than you do, your whole life is called into question.”
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