Wednesday, 7 May 2014

The Graduation Approach: A Promising Pathway out of Extreme Poverty?

The fifth in the Graduation and Social Protection blog series

The Graduation into Sustainable Livelihoods Approach (Graduation Approach) tries to put extremely poor people on a journey towards sustainable livelihoods and autonomous income within an 18 to 36 months timeframe. Policymakers attending the Reaching the Poorest Global Learning Event 2014 organized last February in Paris by the CGAP-Ford Foundation Graduation Program expressed enthusiasm for introducing the Graduation Approach in their countries to reach large numbers of the poorest.

It is estimated that there are nearly 1.2 billion people living with less than US$1.25 a day. The Graduation Approach is an ambitious effort to try to address the multiple constraints of the extreme poor, originally developed by BRAC in Bangladesh. The CGAP-Ford Foundation Graduation Program has been testing the Graduation Approach with 10 pilots in eight countries since 2006.

What impact so far?

By 2012, between 75 percent and 98 percent of participants at six of the 10 CGAP-Ford Foundation Graduation Pilots met locally-determined criteria for graduation into sustainable livelihoods, including indicators of improved nutrition, increased assets, and enhanced social capital. The Program’s robust learning agenda includes 8 randomized control trial (RCT) impact evaluations, and qualitative research in all sites, on top of regular monitoring by program staff. A pooled analysis of research results will be available mid-2014. Early results so far from randomized RCTs in Bangladesh and at six of the 10 CGAP-Ford Foundation Graduation Pilots show that the Graduation approach can significantly improve the lives of the poorest. There are signs of significant and sustained positive impact for households participating in the program, especially in terms of increased income, consumption and food security. Improvements in other measures of well-being are also documented by qualitative research in particular: “hope” and/or “happiness”, and female empowerment have increased in all sites where it was measured. Early research also suggests that the cost-effectiveness of the program is high.

How does it work?

The Graduation Approach combines a mix of interventions to escape extreme poverty, ranging from safety nets and the creation of livelihoods, to access to financial services. Participants receive consumption support, access to savings services, technical skills training, a variety of assets, and regular individualized life skills coaching over a period of 18-36 months.

Purposefully targeting the extreme poor, the Graduation Approach is built on five core elements:

1)  Consumption support gives participants “breathing space” by stabilizing their consumption and easing the stress of daily survival. It can be offered through a pre-existing government safety net program, in contexts where this is available.
2)  Savings allows households to build assets, instills financial discipline, and familiarizes participants with formal financial services.
3)  Asset transfers help jump-start one or more economic activity. Livelihood support services and market infrastructure must be analyzed beforehand through a thorough market analysis in order to identify sustainable options that can absorb new entrants.
4) Technical skills training provides knowledge on managing assets, running a business, and information on where to go for assistance and services (e.g., veterinary care).
5)  Life skills coaching on a weekly basis over the 18 to 36 months of the program helps to boost participants’ self-confidence, while supporting them with business planning and money management, along with health and disease prevention services and social support.

What are the next steps?
We are excited that a number of governments – such as Peru and Colombia-- and large donors -- such as the UNHCR, and IFAD -- view the Graduation Approach as offering a significant opportunity to strengthen their strategies and programming for people living in extremely poor conditions. They are in the early stages of planning or implementing this approach on a large scale: some will serve the extreme poor through their safety net programs, whereas others will focus on specific segments such as, refugees, internally displaced persons, or food-insecure households. From their experiences over the next few years we hope to learn how the key components of the graduation approach can be integrated into existing social protection, poverty alleviation, food security or economic development programs.

For more information, please see and Reaching the Poorest: Lessons from the Graduation Model.

Aude de Montesquiou is a Microfinance Specialist at CGAP.

This blog post is part of a series for the international conference on ‘Graduation and Social Protection’ which is co-hosted by the Government and Rwanda and the Centre for Social Protection from the UK Institute of Development Studies, with financial support from Irish Aid, the UK Department for International Development (DFID) and UNICEF. The content of this blog series reflects the opinions of each individual author, and not necessarily those of IDS, UNICEF, DFID, IRISHAID or the Government of Rwanda.

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