How cash aid has spurred small business in Kenya

When the government of Kenya began giving cash instead of food aid to poor people in Kenya’s drought-stricken northern region, the aim was to help them buy food more efficiently and conveniently.

But the cash-transfer programme has had an unexpected effect: Most of the recipients of the cash have used it to start small businesses, which they see as the best way of adapting to increasingly tough climatic conditions.

“We expected them to buy food, given the emergency situation. But investing the money into businesses shows how very little resources can be used to build resilience among very poor communities,” said Evelyn Nadio, manager of the Hunger Safety Net Programme (HSNP), which provides the cash aid under Kenya’s National Drought Management Authority.

The parched, acacia scrub regions receiving the help – including Kenya’s Mandera, Turkana, Marsabit and Wajir counties – had seen huge losses of livestock as a result of drought. Many herders had lost nearly all their animals, which had been their main source of income.

Today, however, eight years after the programme began, other businesses have sprung up.

At Katiko Market in Turkana Central, Akuom Idieya Katurong’ot, a widowed mother of seven, runs a retail shop and a goat slaughterhouse. She also rents a set of small kiosks built from iron sheeting. Money from the cash-transfer programme helped pay for all the new infrastructure.

Nearly 90 percent of the recipients of cash from the safety net programme have similarly opened retail businesses or used the money to restock their herds with drought-hardy goats, said Nadio.

The aim of the cash transfer programmme, she said was to reduce extreme hunger and vulnerability by providing unconditional cash transfers of 4,900 Kenyan shillings ($55) every two months to targeted households.

The programme, supported by the U.K. Department for International Development and Australia Aid, is aimed at keeping families from sinking into deeper poverty and having to sell their remaining assets when drought strikes, said James Oduor, the chief executive officer for the National Drought Management Authority.

Katurong’ot’s name was included in the list of 39,918 households identified as the most vulnerable in Turkana County after she lost 80 out of 100 goats she owned as a result of drought.

But the funds have reached more than just the recipients on the list. At Katiko Market, Namadak Kalimapus runs a food kiosk and a shop where she sells a range of goods including vegetables, petrol for motorcycle operators, clothing and drinks, including beer and some drinking spirits.

“I sell all these items because there is no petrol station anywhere near here, there are no bars, and therefore this is a one-stop-shop where you buy fuel, clothes, food and drinks,” she said with a broad smile.

Kalimapus started her business with 1,000 shillings ($11) borrowed from her late grandmother, who was a beneficiary of the cash-transfer aid in 2013. Kalimapus invested that first bit of money in wheat flour and some cooking oil, and began cooking and selling buns and donuts.

“I was the only one making mandazi (buns) at this market. And with some little money (from the cash-transfer programme) in peoples’ pockets, I used to sell everything, thereby making enough money to travel to Lodwar to buy more flour, and keep some profit to use with my household,” said the 40-year-old mother of six.

Almost three years on, Kalimapus’ business is worth thousands of shillings. It’s a lot, she says, in a place that has no telephone network, no radio and television signal, no electricity, no public transport and few social amenities.

The benefits of cash

In the four drought-hit Kenyan counties, the government routinely transfers cash to 100,000 of the most vulnerable residents every two months, with a supplement of 2,450 shillings ($28) going to those requiring emergency help during particularly bad periods.

Both programme organisers and recipients of the aid have found that providing cash is more effective at creating lasting resilience than providing food, Nadio said.

“Cash is less bulky compared to foodstuff, it is more convenient to the recipient and, as a result, residents have appreciated it more than food-aid,” she said.

Some households have had difficulty accessing cash, which is paid through a bank, because they do not have identification cards, a requirement for banking in Kenya.

Others have run into problems with the names on their programme registration not matching up with the names on their identification documents, said James Lopuiya, an Equity Bankagent who serves recipients in Central Turkana.

But he said that some of the errors – usually reversals of given names and surnames – have been corrected, and recipients have received the cash due them since the start of the programme.

According to Oduor, of the National Drought Management Authority, the government is expected to gradually increase the budget allocation for the cash transfer programme for the next three years.

Recipients say it has been a success.

“If I was given foodstuff worth the same amount, I would be having nothing, and instead, I would be waiting for more food-aid to come,” said Mary Aking’ol Lokiridi from Eliye village, who now owns a retail shop which provides enough income to buy school uniform for her nine children at Kalokol Primary School.

This article is published in collaboration with The Thomson Reuters Foundation trust.org. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Isaiah Esipisu is a freelance contributor for the Thomson Reuters Foundation, with an interest in climate change issues.

Image: A  trader sells fruit and vegetables at a rural marketplace. REUTERS/Mike Hutchings.