Universal basic income proves to be an effective method of development aid

Simply transferring money to people living in poverty works. They then invest it in food, clean drinking water, education and a sustainable house with solar panels. These are the main findings of a study by the University of Groningen that examined an initiative by INclusion, which was the first Dutch NGO to launch a universal basic income project in Uganda in 2020.

The universal basic income project started in August 2020 in the village of Welle, Uganda, in cooperation with the Ugandan NGO AFARD. The village then had 350 inhabitants, more than half of whom lived in extreme poverty. For the past three years, INclusion gave all the inhabitants of Welle - adults and children - 15 euros per month, without conditions. Such a partial basic income is called an unconditional cash transfer (UCT) in discussion of development cooperation and aid.

Concrete findings

A "baseline measurement" was conducted before the project began, and in December 2022 residents were interviewed again so that it could be assessed what had changed after 2.5 years. The just-released research report was written by Lisa van Dongen, PhD candidate at the Faculty of Economics and Business (FEB). Van Dongen is supervised by professor Robert Lensink and associate professor Annika Mueller, both part of FEB’s Department of Economics, Econometrics and Finance. Some of Van Dongen, Lensink and Mueller’s concrete findings are:

• extreme poverty has decreased from 55% to 10%
• food security increased significantly, as did access to clean drinking water
• elementary school participation increased from 70% to 87%
• there was 75% less dropout from work and school due to illness
• many residents built new, more sustainable homes
• residents also invested in land for agriculture
• the percentage of households owning cattle increased from 9% to 49%
• ownership of solar panels increased from 19% to 74%
  

Given all these positive changes, it is not surprising that the residents also told the interviewers that their stress has greatly decreased - such as daily worries about food and medicine - and that they are now more optimistic about their future.

First Dutch UCT project

INclusion plans to continue providing universal basic income for a total of seven years, until 2027. This will give the residents of Welle time to use the funds in such a way that they won't fall back into poverty soon after the project ends.

INclusion is the first Dutch organization to implement a UCT project, but it is already being used more widely by other organizations, such as the U.S.-based GiveDirectly. INclusion's project differs from other projects in that it is the only one in which 10% of the money is not given individually, but through a village fund. The inhabitants of Welle jointly decide how to spend it. First, the village fund was used for a well in the village. Women and children now spend much less time fetching water every day.

PhD candidate Lisa van Dongen: “During my research in Uganda, villagers proudly showed me the well, which the entire village gratefully uses every day. This shows that such a village fund can have an important impact on the development of the village.”

Former Minister of Development Cooperation Jan Pronk and historian and best-selling author Rutger Bregman are positive about INclusion’s new method of development cooperation and support the organization in a Committee of Recommendation.

"The basic idea," says director of INclusion René Heeskens, "is that people living in poverty know best themselves what they need, and that they are also the most motivated to improve their own situation." That idea is confirmed by this project and other research on this topic. "When you give people living in poverty the opportunity to improve their own living conditions, with a little help, they grab it with both hands."

About INclusion

INclusion is a Dutch foundation founded by a former tropical doctor, Michiel van Lunteren, and a shipbuilding entrepreneur, Geert Schouten. They were convinced that development cooperation could be more efficient and effective. Read more about the foundation on their website.

Questions?

Please contact Lisa van Dongen or Robert Lensink.