A Critical Poverty Eradication Experiment in Kenya
Written by: Eduardo Matarazzo Suplicy and Mônica Dallari
This January, we discovered an extraordinary pioneer effort towards poverty eradication in poor rural villages in Kenya: the transfer of Universal Basic Income (UBI). Through the initiative of GiveDirectly, an institution created by four graduates of Harvard University and MIT, Silicon Valley institutions and other organizations contributed to the formation of a US$30 million fund to benefit about 20,000 Kenyans in the most important and thorough study about UBI in history. In the visits to rural villages in the Kisumu and Siaya areas, reports were unanimous in stating that with UBI contributed to a significant improvement in the quality of life of all the beneficiaries.
Upon learning that GiveDirectly was carrying out this experiment in Kenya, we decided to write a letter to them, in which I (Eduardo) introduced myself as the author of the Brazilian Law 10.835 / 2004, which establishes the implementation, in stages, the UBI for all people in Brazil, including foreigners residing here for five years or more. As honorary co-chair of BIEN (Basic Income Earth Network), I said I would like to know about the experiment. This request was accepted by Caroline Teti, GiveDirectly’s external relations director in Nairobi.
How the UBI program works
As soon as we arrived in Nairobi, we met with her and started a dialogue with the coordinator of a team of 34 people who work in the call center. The call center is responsible for the quarterly contacts with each one of the 21,000 adult beneficiaries of the UBI experiment. In 2016, GiveDirectly started the pilot to provide a UBI payment in Kisumu, Siaya and Bomet counties. More than 630,000 people in these counties live below the poverty line, defined by the Kenyan government as less than US$15 a month per household member, in rural areas, and $28 a month per household member in urban areas.
For the execution of the experiment, 295 villages (14,474 residences) were randomly selected, divided into four groups:
- Control Group: 100 villages that do not receive payments;
- Long-Term UBI: 44 villages in which adults (over 18 years old) receive sufficient income for basic needs, about US$0.75 per day, or $22 per month for 12 years;
- Short Term UBI: 80 villages where adults receive sufficient income for basic needs, about $0.75 per day or $22 per month for 2 years;
- Lump Sum UBI (or UBI Cash Payment): In 71 villages, families receive UBI in the fixed amount of US$1,000 divided into two payments of $500.
The transfers are made through M-Pesa, a mobile money service created in 2007 by Safaricom, a Vodafone telephone company in Kenya. The platform enables financial transactions that are safe, fast and cheap through a cell phone, such as deposits, transfers, and savings. The platform does not need a bank account.
Small retailers in rural villages across the country were trained and became agents of M-Pesa services. Beneficiaries can withdraw money or shop at accredited establishments in all villages in Kenya. Those who did not have cell phones were able to purchase a low-cost GiveDirectly device. Today, 80 percent of the country’s adult population has a cell phone.
From the visits to the beneficiaries of the Kenyan experiment of UBI, we can say that the improvement in the well-being of the people is very significant. This was what we were able to witness in all the residences we visited and in the dialogue with beneficiaries of UBI. Mothers and fathers spoke of the concern to prioritize the education of children and adolescents, ensuring attendance and completion of school. This became possible due to UBI, which even helped in the hiring of auxiliary teachers. In general, our respondents stated that they were better fed and had access to a greater variety of foods.
The benefit of the UBI resulted in people being able to work more intensely and productively, especially because they were able to acquire better working equipment, such as tools, motorcycles to transport people or make deliveries, livestock (goat and cattle) to supply meat and milk, fishing equipment to get more fish in the lake to sell them, land purchasing for vegetable and fruit trees planting. These activities directly increased their income. Some families have invested in systems to better capture rainwater or solar energy collectors in order to have electricity. Households purchased better furniture, such as mattresses, sofas, tables, chairs and small electrical appliances, such as a stereo or radio. Straw roofs have been replaced with steel that contains gutters.
It is important to note that we do not perceive any use of alcohol or other drugs. A study by Innovation Poverty Action1, IPA, corroborates our observation since there was no increase in spending on tobacco, alcohol or gambling. The impression we have goes in the opposite direction; behaviors based on solidarity and cooperation between individuals have been reinforced.
Perhaps most remarkable was the redefinition of gender roles. Because women also receive the benefit, we hear from them how they feel freer in deciding where to spend their money, and we record reports of how couples have come to the table on UBI payday to talk about the household budget. Households frequently organize groups to pool money for a larger purchase or to assume a higher value expenditure. In Kenya, polygamy is allowed. We sometimes see that the UBI contributed to greater solidarity between the wives of one husband, and even between his widows and children.
The agility and speed provided by the digital income transfer system were also fundamental. Each beneficiary is notified by SMS when the transfer is made, being able to make purchases in the M-Pesa accredited establishments, or if she prefers, to exchange the credit for money.
Another important development was numerous reports demonstrating a noticeable decrease in violence against women and other criminal acts, such as theft in the villages. The direct income transfer done in this way has avoided incorrect procedures and corruption.
For those who want to know more about this Universal Basic Income (UBI) experiment in Kenya and other countries, please access the website. The website provides testimonials from beneficiaries of the UBI collected by the people who work in the call center, available to everyone. You will have confirmed the positive impression of this remarkable pioneering experiment on Universal Basic Income. In addition, you will have the opportunity for this remarkable and important experiment. If you would like more information, write to firstname.lastname@example.org.
Visiting Barack Obama’s Grandmother Sarah Obama
On our last day in Kenya, we visited Mama Sarah Obama, Barack Obama’s grandmother, at her farm in Kogelo, another rural village. At first, we would have only three minutes to be with her because of her age, 98 years, but we talked with Mama Sarah and Obama’s aunt, Marsat Oniango, for almost 30 minutes. Enthusiastic about the conversation, they assured me they would send President Obama a letter that I had with me, the same one I had handed to him on October 5, 2017, during a lecture in Sao Paulo.
I spoke of my enthusiasm when I watched on TV the homage Obama paid to South African President Nelson Mandela on his 100th birthday in the packed stadium of Johannesburg. In that speech, the former US president made an important statement, expressing concern about “artificial intelligence that is accelerating. Now we will have automobiles without drivers, more and more automated services, which will mean the need to provide work for all. We will have to be more imaginative because the impact of change will require us to rethink our political and social arrangements to protect the economic security and dignity that comes with work. It’s not just money that a job provides. It provides dignity, structure, a sense of place and purpose. And we will have to consider new ways of thinking about these problems, such as universal income, review of working hours, how to train our young people in this new scenario, how to make each person an entrepreneur of some level.”
I concluded by expressing my certainty that this positive experiment in the Universal Basic Income in the country of Obama’s father and grandfather, whose graves we visited on the grounds of Mama Sarah’s house, will resonate very favorably throughout the world.
Steps after the trip
Eduardo Matarazzo Suplicy
The fact of having experienced a real immersion in the subject of Basic Income in such a short space of time and in two very different dimensions, that is, the theoretical academic approach of the conference in Cambridge and the opportunity to make field observations during our visits to Kenya, provoked a series of reflections, which made me desire to act.
The trip was made throughout the month of January 2019, coinciding with the inauguration and first month of the government of Jair Bolsonaro. The campaign of the victorious candidate in the 2018 election, his statements after confirmation of his election and the movements of the transition process between the Temer government and the new occupants of the Planalto indicate that the new government has an economic agenda that is based on intentions to resume growth and development of the country, generate jobs and guarantee some stability in public accounts. Despite the fact that I belong to the party that opposed the Bolsonaro candidacy, I believe that certain principles of equity, income distribution, and assistance to the most excluded are values of democracy that are not exclusive to this or that political aspect. So I decided that it was time to warn President Jair Bolsonaro, Minister of Economy Paulo Guedes and the Special Secretary of the Federal Revenue of Brazil Marcos Cintra Cavalcante de Albuquerque about the pertinence to take the steps towards the Citizenship Basic Income.
Soon after coming back to Brazil, I wrote a letter to these three government officials who had just taken their first steps and offered two copies of works that I believe are fundamental to understanding the concept of basic income: My book “Citizen’s Income: The Exit is Through the Door,” and “Basic Income – A Radical Proposal for a Free Society and a Sane Economy” by Philippe Van Parijs and Yannick Vanderborght, which contains a foreword by myself.
In my argument, I stress the fact that Law 10.835 / 2004, which establishes the Citizen Basic Income, Universal and Unconditional, was approved by all the parties in both houses of the National Congress, including by the then deputy Jair Bolsonaro. I reminded the President “in case the President of the Republic wishes to comply with Article 3 of the Constitution on the fundamental objectives of the Republic of Brazil, in a manner compatible with what is expressed in its program of government, to guarantee a minimum income for all Brazilian families, as liberal thinkers like Milton Friedman argue, the most effective way to do so will be through the implementation of the Citizenship Basic Income, a concept that Friedman considered another way to apply the Negative Income Tax.”
In the letter, I also summarized some up-to-date information on the subject, such as the fact that today “more than 40 countries are debating, conducting experiments and considering the implementation of Unconditional Basic Income.” I briefly reported on the visit I had just made: “The results so far are highly promising, as I found out in person. Brazil would have all the conditions to carry out local experiments, as indeed has been the desire of several municipalities like Santo Antônio do Pinhal, Apiaí and Maricá. In the City Council of São Paulo, a Law Project of Mayor Fernando Haddad is in process, already approved in the Commissions of Constitution and Justice and Public Administration, to establish, in stages, UBI in cooperation with the state and federal governments.” Finally, I suggested that a Working Group, possibly coordinated by IPEA, to study the steps towards the Citizenship Basic Income. I stated that I had already spoken with both the Perseu Abramo Foundation of the Workers Party and the Fernando Henrique Cardoso Foundation, linked to the PSDB, who have already been willing to discuss basic income with the newly elected government.
The letter, as well as the volumes, were delivered to Marcos Cintra Cavalcante de Albuquerque, current Special Secretary of the Federal Revenue of Brazil, with whom I had a hearing on February 1, 2019. At the same time, I delivered a letter to the then president and future president of IPEA, Ernesto Lozardo, and Carlos Von Doellinger, detailing how this Working Group could be constituted and reporting my dialogue with former President Fernando Henrique Cardoso during the electoral process. “Given that a number of Presidential candidates were in agreement with this objective, we could very possibly meet the various economic teams of the various candidates to work on this subject.” Sérgio Fausto, the working coordinator of the FHC Foundation, suggested that this meeting should be held after the elections in the first half of 2019.
On the other hand, Márcio Pochmann, President of the Perseu Abramo Foundation, accepted the proposal to create a Working Group for this purpose, and two meetings of this group have already been held. I believe it will be common sense for IPEA to coordinate the efforts of these various institutions linked to the parties whose candidates have made proposals to do this.
It is up to the Government to take the suggested steps.