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Graduation Program: Creating Pathways out of Extreme Poverty into Sustainable Livelihoods

Over 80% success rate achieved by combining safety nets, livelihood support and microfinance for the poorest

April 4, 2013

In a CGAP pilot program, Haitians living in extreme poverty receive basic health care, food, shelter, and micro-financing to help them climb out of poverty. These Haitians graduated from the pilot program.

Targeting the extreme poor, this program provides consumption support, asset transfers, access to savings, and intensive coaching to graduate the poor out of extreme poverty. After 18 to 36 months, most participants move out of extreme poverty into sustainable livelihoods with food security, stabilized income, increased assets, improved health and self-confidence. Six pilots reaching nearly 3,000 participants saw graduation rates between 75% and 98%. Five pilot programs have now scaled up, reaching more than 20,400 households.
Up to 98% of participants

graduated from extreme poverty, with lending and technical assistance to expand financial inclusion in more than 70 countries

Source »

Challenge

Globally, 1.3 billion people live in extreme poverty. The CGAP-Ford Foundation Graduation Program was designed to address the reality that there are few sustainable pathways out of extreme poverty for the most vulnerable. Both microfinance and livelihoods programs tend to reach people at, or immediately below, the poverty line – but not those who are extremely poor: those at the lowest level of the economic ladder. While they do benefit from social safety net programs, which typically include cash transfers, food aid and/or public-works employment, most such programs lack effective exit strategies and fail to prepare beneficiaries for market activities. So, once the support ends, beneficiaries fall back into the ranks of the food-insecure. The development problem identified was two-fold as both a targeting challenge and an approach challenge. Although the poorest of the poor are those most in need, they are often inadvertently overlooked by many development interventions.

Solution

CGAP created the CGAP-Ford Foundation Graduation Program in 2006 to learn how safety nets, livelihoods and microfinance can be sequenced to create pathways for the poorest to “graduate” out of extreme poverty in a time-bound manner. The program is built on five core elements: targeting, consumption support, savings, skills training and regular coaching, and an asset transfer. The interdisciplinary approach of the Graduation Program cuts across social protection, livelihood development, and access to finance. Ten pilot projects operate in Ethiopia, Ghana, Haiti, Honduras, India, Pakistan, Peru and Yemen. Project monitoring, qualitative research and/or impact assessments through randomized controlled trials (RCT) are built into each pilot. The program uses a targeting approach to identify the poorest households. Within 18 to 36 months, between 75% and 98% of participants graduate and become more food-secure, enjoy stabilized and diversified incomes, increase assets, have better healthcare access, increase self-confidence, and have a plan for the future.

Results

The program is building resilience among its participants. RCT impact evaluations are conducted in eight pilots to measure the benefits that can be confidently attributed to the Graduation Program. Results are in from four sites. Six pilots have been completed to date involving between 150 and 1,000 participants each for a total of 2,976 participants in the pilot phase, with graduation rates between 75% and 98%. Four of the six pilots specifically targeted women, while the pilots in Pakistan and Honduras targeted the poorest households in selected communities irrespective of gender. Five of the six graduated pilots have scaled up, with targets to reach 5,000 to 60,000 people. Four pilots are still ongoing with a total of 2,400 participants in Ethiopia, Ghana, Peru and Yemen.

The benefits in the lives of the poorest provide strong evidence that the Graduation model can work across time and location. For example, in Honduras and Pakistan, early results indicate a rise in food security and increased asset value/ownership, in particular livestock ownership. The pilot in West Bengal (PDF) showed higher food consumption, rise in control over business income and a significant increase in health indicators of the participants.

Esther Duflo, Founder and Director of the Abdul Latif Jameel Poverty Action Lab, said about the results: “Let me be clear: These are very good results . . . seeing people 10 to 15 percent richer after two or three years. I don’t think you could have expected anything much better.”

One of the most intriguing results is that reported “happiness” increased in the two sites (Honduras and West Bengal) where it was measured. These indicators of hope and an orientation toward the future may be one of the keys to unlocking poverty traps.

Open Quotes

Now, I can stand on my own two feet. Close Quotes

Achiron Bibi
West Bengal

Bank Group Contribution

Amount: $1.42 million of CGAP funds in two tranches, leveraged with more than $2.5 million from the Ford Foundation, the MasterCard Foundation, USAID, the Government of Yemen, and Plan International.

Project Duration and Dates: 2006 to 2013

Partners

Since 2006, CGAP and the Ford Foundation have partnered to test and adapt this approach initially pioneered by the Bangladesh Rural Advancement Committee (BRAC). Partnerships are a crucial success factor for the Graduation Program, since few organizations have the capacity to offer all the components of the model effectively on their own. The pilots are implemented through partnerships with financial service providers, NGOs, and government safety net programs. There are also partnerships with leading research institutions for impact evaluations and qualitative research of the pilot projects.  CGAP plays a coordinating role with all partnerships.

Moving Forward

Evaluating people’s resilience is part of the graduation criteria for most pilots. There is continuing work to develop appropriate risk-management tools to decrease the likelihood that one shock will cause them to fall back into extreme poverty. For sustained impact, scale is important. While some pilots are still under way, the program is already working with partners on the operational requirements of scaling up. This will require close attention to costs, asset availability, market impacts and the training of appropriately qualified staff, among other factors. In most countries, governments will have the primary role in achieving scale.

Graduation Program participant Achiron Bibi, from the Trickle Up pilot project in West Bengal, India.

Beneficiaries

Achiron Bibi joined the Graduation Program in West Bengal. She wanted to build a fish pond, start a vegetable garden, and expand her bangle business. This would allow her to send all five children to school and help treat her husband's stomach tumor. Two years later, she had a vegetable garden through the program, built the fish pond with government support, and doubled the initial stock through savings to expand the bangle shop. Her children are in school, and her husband sought help from a government clinic. Achiron sums it up: “Now, I can stand on my own two feet.”

In the News

The Economist, May 12, 2012, "Hope springs a trap"

The Huffington Post, July 18, 2012, "The Power of Hope: Graduation Programs for the Extreme Poor Do More Than Directly Reduce Poverty"

Geo-Reference

Haiti: Rural Boukan Kare, Twoudino and Lagonav
India: West Bengal and Andhra Pradesh
Pakistan: Coastal Sindh
Honduras: Lempira
Peru: Cusco
Ethiopia: Tigray
Yemen: Aden, Lahj, and Taiz
Ghana: Tamale, East Mamprusi and Bulsa