Why slum dwellers need basic income in times of crisis

A slum in Nairobi. FILE PHOTO | NMG 

By MICHAEL HOPKINS

Summary

• Many have vouched for the need to provide a basic income for all if we are to solve issues of poverty and poor income distribution around the world.
• In Kenya right now, the country is under lockdown from 7pm to 5am and even more restricted movement between Nairobi and the coast have been introduced.
• Hopefully such drastic measures will help to stop the spread Covid-19. But they fall hard on the warm and sociable people of Kenya.

Covid-19 has led to many hardships and not only the unfortunate are affected. Jobs and incomes are severely affected, especially for the poor and even more for those who live in the slums in Kenya. As the Mathare Youth Sports Association (MYSA) Chairman Bob Munro wrote to me, “How can the poor majority of families in the slums with at least four or more adults and children sharing a nine-square-metre tin shack without a toilet, water, electricity, food, medicine, sanitisers or money survive the coronavirus crisis by self-isolating and self-distancing?”

Many have vouched for the need to provide a basic income for all if we are to solve issues of poverty and poor income distribution around the world. In Kenya right now, the country is under lockdown from 7pm to 5am and even more restricted movement between Nairobi and the coast have been introduced. Hopefully such drastic measures will help to stop the spread Covid-19. But they fall hard on the warm and sociable people of Kenya.

The poor suffer the most. The measures announced by the government so far have badly hit markets, transport, tourism and basic services. These measures are crucial to stop the virus spreading but also lead to fewer means for the poor to exercise small and micro business activities, and hence a loss of their meagre incomes. Poor people are poor not because they are lazy. They generally work long hours for tiny rewards.

The world is in turmoil but this is an opportunity to introduce radical changes both in public policy and in companies becoming more socially responsible as they increasingly accept responsible stakeholder capitalism. The public sector may never be the same, as the virus has led to increased debt and potential default.

“They (businesses) will not be saved by tax breaks and more credit; they need people to be able and willing to buy their goods,” says my former ILO colleague Guy Standing in https://www.idler.co.uk/article/why-coronavirus-must-lead-to-a-basic-income-for-all/]. Standing further argues strongly in favour of a basic income for everyone. I have analysed elsewhere the pros and cons of basic income [see https://www.linkedin.com/pulse/basic-income-bi-corporate-social-responsibility-csris-hopkins/ ], but there is no doubt that giving poor people extra financial resources will bounce back immediately into increased consumption, of which most will go to the private sector. Much better than merely eliminating corporate tax breaks as happened in America. The result was a boom in the stock market as companies bought their own shares, further enriching the already rich. More recently, the US has decided to inject a further $2 billion and this time with opposition support.

Ten million Kenyans live in slums, which translates to 21.2 per cent of the 47 million population.

Nairobi leads with 36 per cent of its population living in slums, which means over 1.5 million people.

My main objection to a basic income for everyone has been its cost. Supposing even a modest monthly sum of Sh1,000 is given to each of the 10 million slum dwellers in Kenya for three months – the expected duration of the Covid-19 pandemic. That would result in a total cost (excluding delivery costs) of Sh30 billion. These figures must be put in context. Kenya’s accumulated domestic debt as of March 27, 2020 was Sh3.07 trillion, while the World Bank and the IMF have kindly announced that they will give Kenya Sh130 billion for virus and locust amelioration. Many will ask for more, but better to get started with something relatively modest.

Also, I am not suggesting that all that virus and locust money should be used for a slum basic income but it gives an idea of orders of magnitude and shows my proposal is feasible in terms of money. To be worked out is a delivery mechanism. It might be implemented straightforwardly by sending M-PESA to everyone in a slum area who has registered their phone. But not everyone has a mobile phone, and a supplementary mechanism may be necessary – or just give people without phones a cheap one.

Companies can do more too. Simple things such as mobile phone companies not only sending advertising messages to their customers but safety warnings too. I noticed while running in one of Kenya’s open beautiful parks, the Arboretum, that only 30 percent of visitors were wearing masks, and perhaps only five percent keeping a social distance. Young people, especially, get their information and warnings from social media. Hence a chance for an alert mobile phone or social media company to add to their advertising a short phrase of warning.

Some have suggested, as occurs in refugee camps, that we distribute food and medical supplies to the poor. This could be done through government and a combination of international and local institutions, where ones like Rotary and the private sector are already active. All well and good, and this should be further encouraged. But regular cash brings immediate benefits, with the additional benefit of stimulating the local economy for those poor souls who are really stuck right now. In Kakuma refugee camp 66 percent of the refuges have smart phones, and Equity Bank already has a system for distributing credit for food funded by the UNHCR.

Basic income benefits would be immediate. Poor people would immediately spend on local services and food, thereby creating a decentralised and large effective demand for the slum economies.

Yes, some may be used for criminal or socially abusive activities. That cannot be avoided unfortunately, although cash transfers would help prevent criminality, providing a signal that the government really cares.

Cash is king, and most of the money will go through useful outlets and help the poor in the slums significantly.