WEEKLY STIPEND

Basic income for slums: One step forward and too many back

Overhead costs of our GMP area approach would be relatively minor.

In Summary
  • Data reveal that, on average, slum dwellers have 1.7 mobile phones between them.
  • Thus targeting 2.8 million poor households would lead to 4.6 million beneficiaries.

We noted on these pages in April that the government had taken its first steps toward guaranteeing a basic income for the poor and vulnerable population. We had based our calculations on the 2019 Kenya Population and Housing Survey and the 2016 UN Habitat Report that gave 8.2 million people in urban slums, or an estimated 2.8 million households, who were – and still are – in urgent need of assistance.

The government had announced to the Senate Ad-hoc Committee on Covid-19 that it had identified 250,000 households, as reported in the Star on May 11, which would be put on a weekly stipend in a bid to support the vulnerable families in the wake of the coronavirus pandemic.

What happened? Although only around 10 per cent of needy households were targeted, reports from the Trends Insight for Africa (TIFA) survey released on 19th June stated that only four per cent of Nairobi slums confirmed receiving a GoK cash grant, and 61 per cent said they didn’t know anyone who had received the grant.

 
 

At the time, each family were to receive Sh1,000 weekly to enable them to meet their basic needs during the period of the Covid-19 pandemic. Following our earlier suggestion, the government announced that their stipends were to be sent via mobile money service platforms, but we have not seen any confirmation of that to date.

UBI, Universal Basic Income, has swept the headlines around the world as rising unemployment and inequality, coupled with low wages, have increased poverty to the extent that many cannot afford even Sh20 for face masks, nor have water to wash them. Another attribute of the growing Covid-19 scenario has seen some profit enormously from the disaster, further contributing to inequality across the world as a few so-called “rentier capitalists” get amazingly rich.

The UNDP has just come out with a Report on TBI (Targeted Basic Income), where they advocate it to be “unconditional in terms of not imposing behavioural conditions such as job-search or use of the cash benefits”. The universality aspect of UBI is frowned upon, both by us and by the UN, simply because of the expense involved and as richer households also benefit.

Payment should be made on an individual basis via GMP to those with mobile phones and, according to the UN, "regardless of household composition, thus avoiding any assumption of economies of scale and unintended within-household discrimination that could be particularly harmful for women’s empowerment and control of economic resources”.

If all targeted vulnerable people receive funds through our proposed GMP (Geographic Mobile Payments), a basic income will be cheaper to administer than if delivered through targeted lists that incur both high administrative cost and the often corrupt survey and delivery methods currently used. The targeted approach currently used by the government may also risk giving a sum of money to one household while the poorer household next door receives nothing.

Payment should be made on an individual basis via GMP to those with mobile phones and, according to the UN, "regardless of household composition, thus avoiding any assumption of economies of scale and unintended within-household discrimination that could be particularly harmful for women’s empowerment and control of economic resources”. Data reveal that, on average, slum dwellers have 1.7 mobile phones between them. Thus targeting 2.8 million poor households would lead to 4.6 million beneficiaries.

The need for TBI is urgent, especially for the urban slums, as theirs is the first priority due to the extremely high density and poverty there. With Covid-19, the poor in the slums simply can’t easily or effectively self-quarantine or self-distance, and many have lost their already informal sector jobs and subsistence incomes. So they now can’t afford food, rent, proper face masks, sanitisers, medicines or treatment.

The Covid-19 crisis and the need for urgent cash transfers to the poor may last for another 5-6 months. There are around 5,000 Safaricom and 2,000 Airtel mobile phone masts throughout Kenya, and the mast radius capacity is based on calls per hour, so more masts are in high density areas (e.g. in the slums and CBD).

 

Telephone numbers of active phones linked to a mast can be detected at any specific time, and a list of mobile numbers generated during curfew hours will reliably identify slum residents. GMP can provide an instantaneous automatic and reliable electronic record of every transaction.

The overhead costs of our GMP area approach would be relatively minor, but will still allow local politicians to use their names so as to verify the sanctity of the cash received. A cash transfer permits households to decide where to allocate their money, but also, compared with more expensively delivered food and other essentials, it is cheaper to allocate. Then, unlike goods, cash has a multiplier effect, as it is used by families to buy goods in the local area and thereby help revive the local slum economy.

A multiplier effect can lead to up to two to three times the initial value, thereby raising the wealth of small businesses and employed persons in families in close proximity to the original receiver. Yes, some people may misuse the cash transfer such as through alcohol consumption. But studies in several countries have clearly shown the multiplier effect enormously outweighs such incidences of misuse.