Give me $1B and I'll end poverty in a whole country, says Rory Stewart

Rory Stewart is highly ambitious and talks a very big game. Give a billion dollars to his organization, GiveDirectly, to prove cash transfers work at scale as a rapid and transformatory aid tool, and he believes the world can end extreme poverty by 2050. The first goal is to take an entire country out of extreme poverty using cash transfers, Stewart tells Devex via Zoom. The United Kingdom's former international development secretary, albeit for a brief term in 2019, recently began a new job as chief executive of GiveDirectly, an organization that specializes in cash transfers, in a coup for a sector that was once seen as fringe. GiveDirectly’s purpose, in Stewart’s vision, is to show that the world can end extreme poverty — the “fundamental human shame of our age” — with cash transfers playing a critical role and being used for a majority of the world’s aid spend. The agenda to end extreme poverty is “falling off the radar … because the world is in despair, they've lost hope, they don't believe that it's possible,” said Stewart. He called for a renewed movement, claiming it was not an unrealistic goal “just because we missed it in 2000 - 2030. … If we take cash seriously as being more than half the answer to that problem.” While he’s at it, Stewart also thinks cash transfers are “core” to the aid localization and decolonization agendas, challenging international and national power imbalances, changing the structure of the international development sector, and compatible with fighting climate change. In GiveDirectly’s cash programming model, the poorest people in a low-income country are identified, verified, and sent around $1,000 to spend as they see fit. GiveDirectly’s website gives an overview of the evidence for the effectiveness of cash programming, and the organization is also carrying out its own research. “We should by now painfully have learned that the capacity of people from the global north to transform other people's education systems or eliminate corruption or generate rule of law is drastically limited,” said Stewart. “That's because of the reality of power, politics, in those contexts. It may be time to realize that at least with cash, you can make a substantial difference in the lives of the very poor, even if you can't fix all the problems in the country.” On top of its anti-poverty efforts, such as in Liberia and the Democratic Republic of Congo, GiveDirectly has been piloting its model in different contexts, such as drought-affected communities in Kenya, people enduring conflict in Yemen, humanitarian relief in Mozambique, refugees in Rwanda, mudslide disaster relief in Uganda, and supporting government welfare in Togo. They are “looking actively at doing major programs in Afghanistan,” according to Stewart — a country he famously walked across in 2002. Research has shown that “cash is more effective” for nutrition and youth unemployment than programs dedicated to those problems, he said. Cash conversion But before he became an apostle for cash transfers, Stewart himself — including while a U.K. government minister — was skeptical of the concept. He told Devex he had a “damascene moment” while visiting Rwanda in March, when he saw how just a small amount of money “could transform so many dimensions of [an] individual’s life, so completely and so rapidly,” allowing people to improve their homes and toilets, connect to electricity, purchase health insurance, and livestock. An NGO could “spend a fortune on surveying strategies, community consultations, architects, engineers, planners, trying to do the whole thing. Whereas the village just does it for themselves for a fraction of the cost,” said Stewart. He described cash as “dignity, freedom, trusting people. It's the chance to let them improve their lives. It's the chance to let the market work.” A lack of resources — rather than knowledge or capacity — tends to be “what’s holding people back,” said Stewart. “We're starving recipients of resources because our [aid] model is patronizing,” he added. Particularly in Africa, he said, people are “fed up” with attitudes implying people “are ignorant, idle, don't have the right skills, that somebody from the other side of the world has to turn up and tell them how to live in a poor village.” “It’s the most radical, respectful step you can do, to give poor communities cash.” --— Rory Stewart, president, GiveDirectly National trial Malawi, Rwanda, and Liberia make up the shortlist of countries where GiveDirectly hopes to pilot its attempt to lift the entire population out of extreme poverty after raising $1 billion — an amount Stewart admitted he is “not confident at all” his organization could raise. The acknowledgement might come as a surprise to observers from the cash sector, one of whom anonymously welcomed Stewart’s appointment to the job partly because he “knows a lot about getting money in.” To raise the funds from taxpayer funded donors would require the public to “get on the journey I’ve been on myself,” about cash programming, said Stewart. The pilot country would need to have a total population of between 5 and 12 million people, with up to 3 million people in extreme poverty — and a government open to the idea, because it would be a “nationwide program that would transform the economy of the country,” said Stewart. “We have to weigh up a country that's sufficiently difficult and challenging to prove the point … there’d be no point trying to end extreme poverty in Botswana, because Botswana is so successful, that really nobody would be that impressed. Equally, it might be too big a job to end extreme poverty in Nigeria or Niger,” he continued. Stewart expected that it would be found that cash would not be “the answer to everything,” but would be a “much larger answer to things than we realize.” While he said current international development spending on cash is around 2%, he wants that increased to 60-70%, which would mean funding to the tune of around $100 billion. Even in Stewart’s cash revolution, he believed aid should still be spent on programming that deals with public goods such as health. Stewart said he does not want to turn GiveDirectly into a $200 billion nonprofit, but instead “encourage the rest of the industry to go into cash.” “In the end, this is only going to get done when other people, the big NGOs, the [World] Bank, the U.N. agencies, host governments, the big donors, start shifting 50 or 60% of their funds into cash,” he said. Where this would leave international climate spending remains to be seen, but Stewart claimed cash programming fitted “incredibly well” with the environmental agenda, with communities receiving cash becoming more resilient and others carrying out less deforestation — though much natural destruction is carried out by groups that are not usually recipients of cash support. Potential pitfalls Unforeseen consequences are a risk in such a project, admitted Stewart, adding “we’re aware you don’t always think of everything.” When the time comes to trial an entire country, he believed not enough money would be injected into the economy to cause inflation. By adding just 2% or 3% of a country’s gross domestic product over three years to its very poorest citizens, Stewart hoped GiveDirectly could avoid inadvertently causing inflation, which he said would be caused by around 20% of GDP being injected into the economy. Extreme poverty is often prevalent in areas suffering conflict and fragility. So how would Stewart go about convincing a donor the money wouldn’t fall into the wrong hands? “There are extreme cases where cash may struggle but they are far fewer than we think,” replied Stewart. “There are specific areas where you would want to be worried about that, like where terrorist groups like al-Qaida, al-Shabab, and Boko Haram are in control,” said Stewart. “But much of what we call fragile conflict affected states are not territories actually actively controlled by a terrorist group,” he added. “What are you going to be able to do in Boko Haram controlled territory anyway?” continued Stewart. “You're not doing health and education in terrorist controlled areas, you're not running nutrition programs, in the middle of al-Shabab held territory. And if you are doing development programs there, then I think you probably could be doing cash there.” And Stewart’s “instinct” is that cash can work for communities enduring conflict. “One of the issues generally is really around market access,” he said. “But it's remarkable how even in conflict affected zones, markets emerge. Northern Nigeria, there are a lot of functioning markets. Afghanistan, there are a lot of functioning markets. Generally, if you can give people cash, they can access those markets.” Another factor affecting extreme poverty is the state of the global economy. With the World Bank predicting global recession, how might financial ruptures affect GiveDirectly’s work? In this case, cash is more resilient than traditional development programs, according to Stewart. Recipients gain “flexibility to adapt to markets [and] in extreme situations … it's very difficult to see what else you can actually do other than give people cash,” he said. “If the entire global supply chain is breaking down … I don't know what the solution is other than to trust people to try to fix their own problems.” Localizing cash So where would the dominance of cash that Stewart envisions leave the aid sector? It is “changing and will continue to change fast,” according to Stewart, and in future will employ “less people from the global north” though there will still be “huge roles” in areas such as global health. Cash programming will become more efficient, employing ever fewer people. The shift in resources would also help address the power imbalances the development sector is grappling with, said Stewart. He said cash was at the “core” of the localization and aid decolonization agendas and addressed the “imbalance between elites and capitals, and poor rural communities. The patronizing attitude towards poor rural communities is not a monopoly of the West. … I've sat in meetings with African ministers in which they've told me communities can't be trusted with money.” “It’s the most radical, respectful step you can do, to give poor communities cash,” said Stewart.