In Uganda, a government suspension results in a $10M loss for GiveDirectly

NAIROBI — In the midst of an investigation and indefinite suspension by a Ugandan government regulator, the U.S. Agency for International Development was forced to terminate a nearly $10 million direct cash assistance program run through GiveDirectly, the largest nonprofit providing cash transfers globally.

The program, launched in August in partnership with the Ugandan government, was part of the national COVID-19 response, intended to support those who lost income as a result of the pandemic and who are at risk of food insecurity. It is estimated that about 23% of the urban poor in Uganda lost their income during and after the lockdown and that the number of food-insecure people in the country increased by 44%.

The cash transfer program targeted 120,000 people in six cities, with each getting about $27 per month for three months. By September, over 47,000 Ugandans were enrolled.

“From an impact perspective, it's heartbreaking,” Joe Huston, managing director of GiveDirectly, said of the terminated program.

While the organization hopes that it can resolve the issue and continue with its programming, it no longer has access to the funds, and its in-country team is stuck in limbo, as no timeframe for the investigation’s outcome was given.

Indefinite suspension

While the cash transfer program was vetted by the national cabinet of ministers, in September the National Bureau for NGOs, under the Ministry of Internal Affairs, announced an investigation.

In September, GiveDirectly received a list of concerns from the NGOs bureau, including questions around the organization’s registration and the approvals it was granted, the sources of the $10 million in funding, and questions around cash transfers, with concerns raised about whether it could lead to laziness among recipients, according to Huston.

Randomized controlled studies of GiveDirectly’s cash transfer programs have shown they are effective in increasing the assets and food security of recipients, and can increase productive hours.

During a press conference in mid-September, Patrick Onen Ezaga, communications officer for the bureau, said it was indefinitely suspending GiveDirectly’s operations until the NGO board finalized its investigations, threatening “sanctions” if the organization continued to operate.

He added that the program “appears to raise a lot of concern” among stakeholders and criticized the organization for continuing to operate amid the ongoing investigation.  

Last Friday, the U.S. Embassy issued a press release that said GiveDirectly addressed the NGO bureau’s questions and that “no irregularities in the cash transfer program or GiveDirectly’s operations were identified.” The embassy said that failure to meet contractual obligations because of the suspension of the program forced the U.S. to permanently terminate it and withdraw the funding. The U.S. is Uganda’s single largest donor of development and humanitarian assistance.

$10 million lost

GiveDirectly began operations in Uganda in 2013 with a project in Eastern Uganda. It has since branched out to providing mobile money cash transfers across the country, including providing support to refugees, coffee farmers, and girls in Kampala to help them pay school fees.

As part of its COVID-19 response, the organization still provides cash transfers in four other African nations: Kenya, Liberia, Malawi, and Rwanda, as well as in the U.S.

Beyond the COVID-19 program, there are 18,000 recipients of other active GiveDirectly cash transfer programs in the country that the organization also stopped because of the suspension, Huston said.

These are not the only cash transfer programs in the country. For example, the World Food Programme and the Ugandan government launched a program last month targeting 56,000 people, including refugees, with funds from Sweden. Governments across the world have used cash transfers as part of their social assistance response to the pandemic.  

However, there have been other recent issues with the Ugandan government’s handling of NGOs. Elections scheduled to be held early next year could make the issue particularly sensitive.

According to the NGO bureau, it has been undergoing a “validation” process since last year of the over 15,000 NGOs that have accumulated in the national registry over the past three decades.

In September, over 200 organizations working with refugees were suspended for noncompliance with government requirements.

In October, the NGO bureau also halted the operations of National Election Watch Uganda, a newly-formed coalition of election observation groups, alleging improper registration.

Magelah Peter Gwayaka, a lawyer and program manager at Chapter Four Uganda, a nonprofit focused on protecting civil liberties and human rights in the country, questioned the legality of GiveDirectly’s suspension. He said Ugandan law mandates that an organization receive a fair hearing before the nation’s high court before an operational permit is canceled.

“They are not following the due process of the law to investigate and to make a decision,” Gwayaka said.

“That precedent may affect several other institutions who could potentially be closed in the same way,” he added.

Left in limbo

Huston said GiveDirectly is hoping to resolve the issues with the bureau.

“We've productively partnered with the government in the past and we've worked closely with our lawyers to make sure we were crossing the right T's and dotting the I's. I mostly think this is some type of misunderstanding that we'll be able to clear up,” he said. “The Ugandan government is certainly well within its rights to investigate or review nonprofits they are regulating in their country.”

But even if the situation is resolved and programming is able to resume, the organization no longer has access to the nearly $10 million in funding from USAID, Huston said.

“Even the few months delay, and obviously the cessation of the funding for the COVID projects, is really disheartening,” he said.

The organization is working to find alternative funding sources to fill the gap in payments already promised to people — which can only be distributed if the NGO bureau lifts its suspension.

The GiveDirectly team in Uganda of about 80 people is also in uncertain terrain. The organization plans to keep its workers on the payroll for the duration of their contracts, which largely last through the end of January, even though they are currently at home, said Lucy Abulo, senior manager of talent and external relations for GiveDirectly in Uganda. The organization had hired additional staff specifically for the COVID-19 program.

“We're a bit in limbo, we're trying to figure out how to have the team members that we have help out on our other country programs, but there's obviously a limit, for example, in terms of language ability, and things like that,” Huston said.

The NGO bureau had not provided comment at the time of publication.