Cabinet to approve cash subsidy for poor families

The Cabinet is this morning expected to pass a resolution that will see thousands of vulnerable households get monthly allowances in what is Kenya’s first ever cash-based social safety net programme.

Some Sh600 million will be used to guarantee the very poor households a constant supply of food in Nairobi, Kisumu and Mombasa.

Initially, 200,000 vulnerable families will get Sh1,500 monthly handouts in a programme modelled on similar schemes in Brazil, Chile, Ethiopia, Ghana and South Africa, where the poor draw monthly subsistence allowances.

It comes a few months after the government rolled out a maize subsidy scheme late last year as an acute supply shortage pushed the price of staple maize flour beyond the reach of many low-income households.

Execute plan

The monthly cash handout plan is expected to pile pressure on the government for upward adjustment of this year’s Sh860 billion budget in the coming years as the programme is expanded to more households.

Initially, the social welfare payments will cover 100,000 households at a cost of Sh1.2 billion until June next year.

That means Treasury will in March ask Parliament for supplementary funds to execute the plan.

If expanded to cover 200,000 families in the next financial year, the social safety net programme would require Sh3.6 billion a year to execute.

Treasury has this year allocated Sh2 billion for drought relief and planned to spend Sh1 billion on a food subsidy scheme targeting vulnerable people.

Prime Minister Raila Odinga said the government will use the existing cash transfer systems such as mobile phone based platforms to reach 100,000 poor families in Nairobi’s low income settlements of Mathare, Korogocho, Mukuru and Kibera slums starting this month.

An additional 100,000 poor families in Kisumu and Mombasa will be enrolled in the programme in March next year.

“The beneficiaries will be identified through community participation,” Mr Odinga said, adding that the Gender ministry would handle the disbursements in the pilot phase.

Analysts reckoned that the plan though positive is fraught with the danger of pushing public expenditure beyond the point that the economy can support, and could be overly wasteful if not guarded against corruption.

“The intention is good but concerns over the ballooning public expenditure must be taken into account. Such social protection plans have succeeded elsewhere including in India, but only when deliberate steps are taken to keep corruption out of it,” said Kwame Owino, an analyst with the Institute of Economic Affairs.