The CGAP-Ford Foundation Graduation Program is a global effort to understand how safety nets, livelihoods and microfinance can be sequenced to create pathways for the poorest out of extreme poverty, adapting a methodology developed by BRAC in Bangladesh. The Program is working in partnership with local organizations to implement ten pilots in eight countries, with impact assessments and/or qualitative research at all sites.
People at the very bottom of the economic ladder are often excluded, or exclude themselves, from access to formal finance. Their income is usually too low and unreliable to permit loan repayment or investment in anything but basic food consumption. Since 2006, CGAP and the Ford Foundation
have been exploring how adaptations of BRAC’s Targeting the Ultra-Poor
program to a “graduation model” can create pathways out of extreme poverty for people living in diverse geographies. The term “graduation” refers to participants moving out of safety net programs and “graduating” into income-earning activities that let them sustain themselves without external subsidies. Over the past five years, BRAC’s Targeting the Ultra-Poor program has reached 300,000 households, and over 75 percent of them are now food secure and managing sustainable economic activities.
Pilots: Adapting BRAC’s experience to other contexts, ten graduation pilots are now underway in Ethiopia, Ghana, Haiti, Honduras, India, Pakistan, Peru, and Yemen, involving diverse institutional forms, economic contexts, and cultures. The pilots are implemented through partnerships with financial service providers, non-governmental organizations (NGOs), and government safety net programs.
The graduation model
is a comprehensive and intense approach to moving people out of extreme poverty in a sustainable and time-bound manner. It is structured around the careful sequencing of five core “building blocks”:
- Consumption support
- Skills training and regular coaching
- Asset transfer
End Goal: After 18 to 36 months of program participation, the end goal is “graduation” out of extreme poverty and into sustainable livelihoods. Each pilot sets its own context-driven measurement criteria for graduation, though common elements across pilots include food security, stabilized and diversified income, increased assets (including savings), improved access to healthcare, increased self-confidence, and a plan for the future. Put together, these criteria attempt to assess not only the status of an individual at a specific point in time, but also that person’s potential resilience to shocks and vulnerabilities.
The Graduation Program recognizes that not all participants will want to take on credit. However, financial services do have a role in participants’ trajectories beyond graduation. Continuing to save after the end of the program can help participants protect assets and accumulate money for future investments or emergencies. In some cases, participants choose to borrow to expand their activities or start new enterprises. A shared goal across pilots is that by the end of the program, members are creditworthy and in a position where they can access credit if they want to.
The pilots are experimental, and all partners involved in the Graduation Program are eager to learn what works and what doesn’t, and how to improve. As part of a robust learning agenda, teams of researchers are conducting randomized evaluation impact assessments
of eight pilots. Randomized evaluations isolate the effects of the Graduation Model and measure the impacts that can be confidently attributed to the program itself. Qualitative research, including a “life histories” approach and ethnographic methods
, is also being conducted in eight sites to get a better understanding of chronic poverty and the constraints facing the ultra-poor. This research offers a more granular understanding of the process of change in pilot participants’ lives and behavioral changes.