CASH TRANSFER

Basic income for Kenya slums – government rises to the challenge

We urge government to use GMP to reach out to all 4.9 million slum dwellers.

In Summary
  • Interior CS Matiang’i said each family will be receiving Sh1,000 weekly, Sh4,000 a month, to enable them to meet their basic needs.
  • A cash transfer allows households to decide where to allocate their money but also, compared with more expensively delivered food and other essentials, is cheaper to allocate.

After months of trying, our group of four is delighted that the government has taken its first steps toward guaranteeing a basic income for the poor and vulnerable population. The government has announced to the Senate Ad-hoc committee on Covid-19 that it has identified 250,000 households which will be put on a weekly stipend in a bid to support the vulnerable families in the wake of the coronavirus pandemic.

We are pleased Interior Cabinet Secretary Fred Matiang’i said each family will be receiving Sh1,000 weekly, Sh4,000 a month, to enable them to meet their basic needs during the period of the Covid-19 pandemic. 

It is not quite clear how the 250,000 households were identified as he said that the government had obtained mobile numbers of the targeted households and will have their stipends sent via mobile money service platforms. Happily, he targeted households spread across all low-income informal settlement areas in Kenya’s urban centres.

 

We had suggested the use of mobile phone masts located in the slums, through a process known as Geofenced Mobile Payments Option (GMP) to target the poorest through an area-based approach. A targeted approach to existing lists, as suggested by the government, may risk giving a sum of money to one household while the poorer household next door receives nothing.

Our approach took note of the 5,000 Safaricom and 2,000 Airtel mobile phone masts throughout Kenya and that mast capacity is based on calls per hour so more are in high-density areas (eg slums, CBD). 

Indeed GMP may be needed weekly for a crisis and recovery period of at least 2-3 months and to the adult population of 4.9 million mobile phones in slums.  Then GMP at Sh1,000 weekly will total Sh4.9 billion per week while the government proposes a total of Sh1 billion per week.

The overhead costs of our GMP area approach would be minor but still allow local politicians to use their names so as to verify the sanctity of the cash received. The targeted approach of the government to an existing list of individuals or households could be more expensive than what we propose and not reach the population groups most in need.

We note too that basic needs, as defined by one of the authors for the World Employment Conference by the ILO as far back as the mid-1970s, included food, housing, health and education services. 

A cash transfer allows households to decide where to allocate their money but also, compared with more expensively delivered food and other essentials, is cheaper to allocate. Cash also has a multiplier effect that goods don’t have, as cash is used by families to buy goods in the local area and thereby stimulate what economists call effective demand. 

A multiplier effect can lead to up to two or three times the initial value thereby raising the wealth of small business and employed persons in families in close proximity to the original receiver. Yes, some people may abuse the cash transfer but studies in several countries have shown the multiplier effect enormously outweighs a small proportion of abusers.

 

We urge the government to widen and improve its highly welcome and praiseworthy first step to go the extra mile and use GMP to reach out to all 4.9 million slum dwellers. The result would not only alleviate hunger and health as the poor decide on how to spend their newfound income, but also improve security that the recent dreadful Kariobangi incident and others have mistakenly harmed.