GiveDirectly provides a wealth transfer service to the extreme poor in Kenya. We operate an end-to-end model and do not outsource or subcontract work to other organizations.
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We do this in five steps. (1) We use census data to select regions of Kenya with high poverty rates. (2) We select villages in these regions with low-quality housing and access to an M-Pesa agent. (3) We identify the poorest households in these villages using simple, transparent criteria: households must live in homes made out of mud, wood, and grass. (4) We record these households' phone numbers or, for those who do not have cell phones, provide them with a SIM card to register. (5) We use a rigorous process of audits to prevent mistakes or fraud. Field staff independently audit 100% of recipients and senior staff conduct additional audits. To date this process has located exceptionally poor households: our average recipient lives on $0.65 per day, and only 18% of eligible households report having enough food for tomorrow. More on targeting performance
- We currently work in Rarieda District in Western Kenya
- We have located 732 eligible recipients in 50 villages to date
- Our average recipient lives on $0.65 per day, and 18% of eligible households report having enough food for tomorrow.
- Eligible households earn 45% less on average than their ineligible neighbors.
- Our audits to date have uncovered ineligible households in 1% of cases and bribe requests by field staff in 0% of cases.
We move the money from our US bank to our account with Safaricom's M-Pesa mobile payment system using a foreign exchange broker. We then transfer money from our M-Pesa account to the recipient's M-Pesa account. As a security measure we only transfer funds to a recipient if the name in our records matches the name on the national ID document he or she used to register for M-Pesa. The recipient gets an SMS text message reminding him or her of the transfer and then collects the transfer from a local M-Pesa agent, who is typically a shopkeeper in the recipient's village or in the nearest town. The recipient transfers his or her electronic balance to the agent's phone in return for cash. More on transfer performance
- Mean self-reported round-trip travel time for recipients is 42 minutes and mean monetary cost is $0.64
- 7% of recipients report any issue collecting their payments; in most cases the M-Pesa agent was out of cash.
- 1% of recipients report being asked by the M-Pesa agent for an "extra" payment.
Recipients use transfers for whatever is most important to them; we never tell them what to do. To date recipients report using transfers for a wide variety of purposes including buying food, investing in their homes, paying school fees, buying livestock, buying land, and buying clothing. More on impact
- The most frequent self-reported use of funds is purchasing a metal roof. We estimate the annual rate of return on on metal as opposed to thatch roofing to be 15%-20%, suggesting this is an attractive investment.
- 1% of recipients report regrets about the way they used their transfer. For example, one woman chose not to pursue a business opportunity but later wished that she had.
- 1% of recipients report having had some of their transfer stolen.
- On net, 100% report being better-off as a result of the transfer.