One of World’s Poorest Countries Found Better Way to Do Stimulus

The eldest of eight children, Bamaze says his parents expected him to stay in the village and care for them in their old age, but he yearned to break away. Although this windfall wasn’t enough to make that possible, he would use it to pay rent as well as the fees for his wife’s secretarial course, saving the rest to buy maize for the coming year’s planting. “If you don’t have anything and then somebody gives you a little,” he says, “you have to be grateful for the little that you receive.”

The pandemic has been a catastrophe in just about every sense, claiming over 5 million lives and plunging more than 100 million people into extreme poverty. It also traced a new high-water mark in terms of government spending on social assistance—a large share of which arrived in the form of cash payments. According to a running tally from the World Bank, 186 countries have sent a combined $1.25 trillion directly to their citizens. About 1 in 6 human beings worldwide has been a recipient.

Wealthy countries were able to rely on tax data and unemployment rolls to identify and pay people in need and were able to offer more generous benefits. The first round of stimulus payments the U.S. made as part of the Cares Act was the largest such distribution in absolute terms and kept almost 12 million people from falling into poverty, according to the Census Bureau. But, empowered with a growing array of digital technologies, poorer countries were able to set up payment systems that overcame daunting obstacles and surpassed, in some ways, those of their wealthier counterparts.

In Togo, a nation of about 8 million people where the average income is below $2 a day, it took the government less than two weeks to design and launch an all-digital system for delivering monthly payments to about a quarter of the adult population. People such as Bamaze, with no tax or payroll records, were identified as in need, enrolled in the program, and paid without any in-person contact. According to Anit Mukherjee, a policy fellow at the Center for Global Development, “the U.S. program looks like a dinosaur” in comparison.
Novissi, which means “solidarity” in the local Ewe language, is the brainchild of Cina Lawson, who heads the Ministry of Digital Economy and Digital Transformation. Lawson was born in Togo but didn’t grow up there. Her father, the scion of a wealthy family, was forced into exile in 1979 by Gnassingbé Eyadéma, the country’s independence leader and longtime president, who regarded him as a political rival. Lawson, just a child at the time, has trouble distinguishing her own memories of the family’s midnight flight from those recounted by relatives. “For a long time, I said that my life started at 6 or 7,” she says.

Lawson grew up in Paris and went on to earn degrees at the Institut d’Études Politiques and Harvard. After her studies, she worked in telecommunications in New York. Her feelings toward Togo were mixed, but she had a growing desire to be of service to the greater African continent. An opportunity presented itself unexpectedly when Eyadéma died in 2005 and his son Faure claimed the presidency. Togo’s new leader set out to make peace with his father’s opponents and, after meeting Lawson on the sidelines of the United Nations General Assembly in 2009, invited her to take charge of the country’s postal and telecommunications systems, a domain that would eventually encompass all things digital. At 37, she would be among his cabinet’s youngest members.

Fresh to her post, Lawson struggled to learn local codes of conduct while applying a perspective shaped largely abroad. “Not growing up in Togo, you’re an insider and an outsider,” she says. Many of the young Togolese staff she hired were part of the same global diaspora, having been born or lived outside the country. Over the coming years, the nation—one of the poorest on the planet—made strides on some important metrics. From 2018 to 2020, the ease of doing business in Togo, as measured by the World Bank, rose faster than in any other country. The poverty rate, 62% in 2006, fell to 46% by 2019.

The coronavirus threatened to reverse that progress. In the days after the country’s first case, the government closed land borders to travelers, canceled most mass gatherings, and imposed a curfew on greater Lomé, home to about a quarter of the population. This may have been the appropriate policy response from a public-health perspective, but it spelled disaster for many of Togo’s citizens.

What could be done to lessen their suffering wasn’t immediately obvious. The government waived fees for electricity and water, and several cabinet members advocated distributing free food, Lawson recalls. But she and Shegun Bakari, a close adviser to the president, wanted to send cash instead, and they envisioned doing it digitally, removing the need for in-person contact.

Togo had run some cash transfer programs in the past, but they were small-scale and typically involved registering households one at a time and distributing physical money by hand. According to Bakari, other cabinet members objected to the idea of using mobile technology, arguing that many in rural areas didn’t have access to phones or identification, and even those who did might lack the wherewithal to navigate a digital system. Yet in fact, Togolese— like people across Africa—had for years been using “mobile money,” stored on and transferred from their mobile phones. The president quickly embraced the proposal.

The idea of alleviating a crisis by giving people cash was far more radical 10 years ago than it is today. In 2009, when Michael Faye co-founded the New York-based nonprofit GiveDirectly, whose mission is to alleviate poverty by providing unconditional cash transfers, skeptical development experts and philanthropists told him the sums would be misspent. But in the following decade, evidence has accumulated that in many circumstances, cash improves the life of poor people more than equivalent spending on aid programs or goods.

Ugo Gentilini, the global lead for social assistance at the World Bank, has been tracking the blossoming of research and real-life applications of cash transfers on a personal website and through a weekly newsletter for several years. The effectiveness of cash is reason enough to take an interest, he says, but he’s also fascinated by the subtle but important shift in authority that it conveys, away from development professionals and toward beneficiaries. “Cash transfers empower people to make their own decisions,” he says.

Lawson says that is what resonated with her about the idea, too. “It’s a strong belief of mine that just because someone is poor doesn’t mean he’s irresponsible—he’s just poor,” she says. “So if you give him money, there’s no way he’s going to waste it. For me, it’s linked with dignity.”

Covid pushed countries to move quickly beyond age-old debates over who is deserving of government aid and whether transfers should be unconditional. The sheer breadth of suffering undercut the paternalistic attitude that the poor brought their suffering upon themselves. Sophie Tholstrup, a policy coordinator at the Cash Learning Partnership, a consortium of humanitarian organizations that promotes the use of cash, says, “This year we’ve all become victims of circumstance.”

Even with the president’s support, Lawson’s team faced big challenges. For starters they didn’t know which Togolese were most in need: Tax rolls were no help in a country where four out of five working-age people toil in the informal economy. The last national census, conducted almost a decade earlier, hadn’t gathered information about households’ wealth or income.

To ensure payments were made only to verified individuals, the team sought to build the platform off an existing database. Few Togolese possessed a driver’s license or national ID card, but 3.6 million adults are registered to vote, according to the country’s electoral commission, which requires potential voters to indicate their occupation and address. This electoral database was thought to represent somewhere between 83% and 98% of the adult population.

Lawson and other members of the cabinet decided to focus the first round of support on anyone with an address in greater Lomé who had listed an informal occupation, including shopkeepers, seamstresses, maids, hairdressers, and drivers. With the funding allocated by the government, they could provide each beneficiary one-third of the minimum wage, about $20 per month.

Lawson insisted that the platform be able to offer an instantaneous payoff; otherwise, she warned, Togolese would doubt the promise of “free money” and fail to enroll. “You register, the platform determines you’re eligible—because once you enter your voter ID, the platform knows your profession and your geographic position—and bam! You receive an SMS with the money,” she says.

The task of building the platform fell to 38-year-old programmer Morlé Koudeka. Most of his colleagues were already staying at home and working remotely, but because the electoral database was confidential, he and a couple of subordinates had to report to the ministry’s empty building. The team held Zoom conferences as late as midnight and brainstormed via WhatsApp. “We all became beta testers,” Lawson says. A project that would typically have taken months was largely complete in 10 days.

On the day Novissi began, April 8, there were millions of registration attempts, and tens of thousands of calls poured in to telephone operators contracted by the ministry to help troubleshoot. According to the call center’s managing director, Sylvie Kokuvi, some of the reports helped improve the program.

When a swell of callers said they couldn’t enroll because their voter ID numbers had already been registered, the ministry realized that some fraudsters had harvested the numbers from lists posted at polling places and were working their way through them. In response the ministry added another verification step that could be completed only by a person in possession of the physical voter ID card.

Although the platform strained and briefly buckled under the crush, it largely worked. In that first round of disbursements, more than 567,000 people received payments—and now the government had a way of dispensing relief that could be adjusted to the shifting pandemic. In August, when cases spiked in a rural canton, the country’s smallest administrative unit, the ministry made all the residents there eligible, pushing money out to more than 5,000 people. The government also authorized funds specifically for intercity bus drivers and out-of-work teachers. Han Sheng Chia, GiveDirectly’s vice president for innovation, says he was impressed by how deftly benefits could be targeted in response to changing conditions, noting “this could be a model for the future of crisis response.”

In part because Novissi proved so successful, the ministry teamed up with GiveDirectly and researchers at the University of California at Berkeley to fund a round of payments for the 200 poorest cantons. To find them, the researchers trained an algorithm to identify impoverished communities based on their urban layout and housing materials, using satellite images. The researchers couldn’t pick individual beneficiaries by occupation because many rural residents didn’t have differentiated professions; instead, they created a second algorithm that used data from mobile phones—including the frequency and timing of calls, texts, and data use—to identify the poorest users. Over the next few months, this round pushed funds out to 138,000 more beneficiaries. “I don’t need to know your name to know that you need support,” Lawson says. “That’s revolutionary.”

Besides providing economic help, the program fostered sentiments of solidarity. Operators at the call center, young professionals accustomed to telemarketing on behalf of European clients, found themselves in conversation with fellow Togolese living in far different circumstances. Kokuvi recalls how one caller from the far north of the country thanked her personally for the disbursement, as if she had sent the money herself. “He offered to bring me some yams,” she says. Some callers who didn’t meet the eligibility criteria would still linger on the phone, pouring out their troubles. “You just have to listen and understand,” Kokuvi says.

In their evaluation of the program, researchers found that targeting urban workers based on their occupation and rural residents based on mobile phone data both did a reasonably good job of identifying the truly poor—and were probably as targeted as possible in Togo’s data-limited environment. And they found no evidence that the program favored certain ethnicities or genders or geographic areas. 

But Nathaniel Olympio, who heads an opposition party, raised concerns that the program excluded people based on their political views. He observed that in 2018, the president’s political opponents had boycotted the election to highlight restrictions on personal freedom and violence against protesters—and Novissi required electoral cards issued in 2018 or after. “Novissi [was] a weapon of political retaliation against conscientious objectors,” Olympio wrote in an email.

Felix, a 51-year-old taxi driver in Lomé, says he wasn’t eligible for Novissi for that very reason: A detractor of the current president who declined to give his last name out of fear of reprisals, he says he would never seek to obtain an electoral ID under the current political conditions. “This government doesn’t want the people to develop,” he says. “They don’t want the people to get rich and disturb them.”

International development experts involved in the project defended the integrity of the Togolese staff they worked with. “They’re really trying very hard to do things in a more meaningful way,” says Tina George, a regional task team leader at the World Bank. Others shared concerns about building the system on an electoral database but ultimately decided the benefits outweighed them. A spokesperson for GiveDirectly wrote in an email, “We believe you have to operate with the options in front of you, especially during an emergency.”
 

The rapid expansion in benefits that Novissi made possible is undeniable. Mukherjee, of the Center for Global Development, pointed out that Togo’s previous government-to-people cash transfers had never included more than 60,000 households, whereas the combined rounds of Novissi reached almost a million people. “The order of magnitude and the speed with which that happened, it’s kind of mind-boggling,” he says.

Even though it was cobbled together to address a crisis, the program may become permanent. In June the World Bank approved a $20 million grant to Togo for additional emergency relief, most of it to be distributed as cash transfers through the Novissi platform. To improve the accessibility of future disbursements, Lawson is building a database that will collect biometric and socioeconomic data on all the country’s citizens; an additional $72 million in development assistance from the World Bank will support it. She credits Novissi with generating the political will to take these further steps. “Prior to that it would have taken me a century,” she says. “Now we are very aligned.”

Novissi has attracted attention outside the country. According to Lawson, several African countries have expressed interest in replicating it. Some experts say programs such as this could represent a new way of delivering aid in emergencies. For example, in July 2020, when forecasts showed the imminence of what would be record-setting floods in Bangladesh, the World Food Programme distributed what it called “anticipatory humanitarian assistance” in the form of mobile money to 145,000 people in the flood’s projected path. A subsequent evaluation found that households receiving the cash did more to prepare for the disaster, including evacuating the area.

Stefan Dercon, the former chief economist of the U.K.’s Department for International Development, who studied the Bangladesh program, envisions a world where poor countries have such systems set up in advance of the next earthquake or hurricane. “Whenever a need arises, even if we can’t predict it, we can reach them—in ways we could never do with the same speed and cost-effectiveness,” he says.

The enthusiasm for cash assistance has ballooned. GiveDirectly raised more than $300 million in 2020, disbursing money to twice as many beneficiaries as it had in all previous years combined. Gentilini, of the World Bank, wonders whether the expansion of cash assistance during the pandemic will outlast the public-health measures that inspired it. “I see momentum for a new social contract between state and citizens,” he says.
 
This reporting was supported in part by the Solutions Journalism Network.

Source: Bloomberg Business News