A charity dropped a massive stimulus package on rural Kenya — and transformed the economy

Vox

For about a decade now, the charity GiveDirectly has been distributing cash straight to poor residents in sub-Saharan Africa, starting in Kenya and expanding later to Uganda, Malawi, Rwanda, Liberia, the Democratic Republic of the Congo, and Morocco.

The organization was founded by economists, and has been studying the impact of its programs from the get-go. But the research has focused narrowly on recipients: Were they better off, the same, or worse off than people not getting cash?

Now, a research team has released a study of a large-scale GiveDirectly program that distributed over $10 million in cash to rural residents of Siaya County, Kenya, near Lake Victoria. But this time, the focus was not on the individuals who received aid. Instead, the researchers wanted to find out what effect the cash had on the region of Kenya where the aid was being distributed — the first major study to test “general equilibrium” effects of the policy.

GiveDirectly gave about $1,000 (or $1,871 in purchasing power terms) each to more than 10,500 households, through three transfers over the course of about eight months. The program amounted to about 15 percent of the GDP of the local area. For comparison, that’s about three times as much economic stimulus, relative to the size of the economy, as the 2008-09 stimulus packages in the US.

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