Kenya: Innovative Cash Transfers Restore Hope, Dignity
There is no “one size fits all” strategy for helping families and communities rebuild after a devastating crisis. Action Against Hunger’s food security & livelihoods programs uphold this principle when working to restore self-sufficiency by respecting a community’s economic and cultural character. Each community has its own unique assets, and it’s our job to work with local leaders to identify these assets and integrate them into a project’s overall design. While this painstaking commitment to community participation is essential, contexts are different, requiring new models and novel approaches.
The political instability that unfolded in Kenya in January of 2008 presented Action Against Hunger with one such set of unique challenges. Nakuru, the regional capital of Kenya’s Rift Valley Province, had been particularly affected by the post-election violence that tore through Kenya last year. With populations displaced along ethnic lines, livelihoods disrupted, and homes destroyed, communities were left adrift to fend for themselves in makeshift camps.
While most humanitarian assistance centered on the needs in the camps, a significant number of the displaced had gone undetected, having sought shelter with friends and relatives in Nakuru instead of the camps. After establishing a presence in the camps, Action Against Hunger discovered that there were unmet needs in town, where residents struggled to rebuild their homes and support their families without any access to income. Action Against Hunger saw a clear opportunity to introduce a cash-based program to meet these overlooked needs.
A Need for Innovation
Some type of cash-based intervention often makes sense in such situations, but the usual mechanisms didn’t seem to fit Nakuru’s diverse, urban environment. A standard cash-for-work program didn’t seem appropriate: most of the destroyed properties had been privately owned, leaving little opportunity for such community-wide projects. Cash voucher programs were another possibility, but vouchers are restricted to specific food and non-food items, which wouldn’t have helped the displaced in Nakuru. Cash grants were another option that might have worked in Nakuru’s urban setting, but distributing large sums of money might encourage theft, not to mention make it difficult to monitor how the grants were used or measure their effectiveness.
What was needed was some sort of livelihood revitalization program to foster a range of income-generating activities for those displaced individuals who lost what little capital they had possessed. “Cash-based interventions make sense for jumpstarting income opportunities,” explains ACF’s Food Security & Livelihoods Adviser, Silke Pietzsch. “These people are adults and can decide for themselves what they need to start a micro-enterprise or get a business off the ground.”
Given Nakuru’s urban setting, with financial institutions and an active economy, Action Against Hunger developed a novel solution: Why not enlist a local bank to secure beneficiaries’ grants in formal accounts? Equity Bank, a local institution with two Nakuru branches and multiple ATM machines, agreed to open accounts for Action Against Hunger’s program beneficiaries. As customary bank fees would have depleted some of the grant money, ACF assumed responsibility for any ATM card purchases, transfer costs, and withdrawal fees. And another innovative cash transfer program was born.
Reaching Those Most In Need
Over 80% of the participants represented households headed by women.
According to the program’s comprehensive eligibility criteria, the project targeted heads of households who were single parents, elderly, disabled, chronically ill, or who had at least one member in an emergency nutrition program. Eligibility also depended on economic factors such as asset losses, work opportunities, external support (family or otherwise), and number of dependents. Eventually, 1,000 households received cash grants of $130 dollars each (roughly 10,000 Kenyan shillings), distributed over 2 to 4 week intervals depending on investment needs. Over 80% of the participants represented households headed by women, and all beneficiaries were required to attend financial management training sessions.
Project designers expected that beneficiaries would use the first disbursement for immediate needs—such as food, clothing, health care, and construction materials to rebuild their homes—and the second disbursement for longer-term livelihood support. But surprisingly, only a quarter of the beneficiaries followed this strategy. Another quarter reserved the first disbursement for longer-term needs, such as small business investments or the purchase of farming implements, and the remainder divided the first disbursement for both short- and long-term needs.
There were some adjustments along the way—replacements were found for 114 households disqualified after the first round of disbursements—but the overwhelming majority successfully combined the grants with their own creativity and regained their economic independence.
One elderly woman, disabled by polio, used the entire grant to buy a corn popping machine and sell bags of popcorn at the roadside. On her first day, she reported that she sold 200 bags of popcorn at 10 shillings each, earning 2,000 shillings for a morning’s work. She now hopes to expand her business by convincing other disabled friends to join her.
Another group of women used the grants to rebuild their social and economic lives. Pooling their money, they bought motorized spinning wheels and raw wool (which was cheaper in bulk) and formed a spinners’ cooperative. As they had all lost their husbands in the recent violence and were afraid to stay alone, they used a portion of the grant money to rent a house where they could live and work together.
With a very modest outlay, some 1,000 families were back on the road to self-sufficiency.
The success of the program and the value of the cash grants cannot be overstated: With a very modest outlay, some 1,000 families were back on the road to self-sufficiency. In an interesting twist, however, Equity Bank’s involvement added an entirely new dimension to the project, providing participants with a level of financial security they had never experienced before. Having a formal bank account empowered more than half the participants to save an average $32 from the original grant for future emergencies; they were no longer fearful of losing whatever they didn't immediately spend.
It is quite possible that this new distribution mechanism (i.e., bank ATMs)—beyond the cash grants themselves—has helped some of Nakuru’s most vulnerable residents achieve self-sufficiency.
Humanitarian Exchange: Making Cash Work, A Case Study from Kenya
Food Security & Livelihoods Advisor for Action Against Hunger provides more detail about the organization's innovative cash transfer program in Nakuru, Kenya in the June 2009 issue of Humanitarian Exchange. The article serves as a resource for other humanitarian actors working in the field.