Graduation Programs as Part of Targeted Social Policy

After more than 15 years, conditional cash transfer (CCT) programs have become the backbone of targeted social policies in Latin America. In fact, more than 100 million Latin Americans live in households on the receiving end of these programs. There is general agreement about the benefits of CCTs and their success in improving the health and education of children in families that participate. But CCTs do not go far enough to bring about the significant changes needed if we are really serious about overcoming extreme poverty. For that reason, we must innovate and create programs that maintain the progress that transfer programs have achieved while allowing recipients to find reliable pathways that move them out of poverty and into sustainable livelihoods.

Although some maintain that CCT plans could include the goal of overcoming poverty, I believe the way forward is to complement this approach with additional programs that target the extreme poor. I use the term “graduation programs” to refer to initiatives that enable poor families to move along development paths that allow them to increase their well-being over time by using sustainable income-generating strategies.

In Latin America and elsewhere, there are interesting examples of programs that have demonstrated that extremely poor households can develop skills and implement plans that later translate into income-generating activities. Some of these programs, developed under strict evaluation processes, combine different interventions that are sequenced for maximum impact. The 10 CGAP-Ford Foundation Graduation Pilot projects, based on the BRAC model in Bangladesh, use this approach. One of the main challenges for targeted social policies, therefore, is to incorporate the positive experiences of these private initiatives and transform them into public-sector interventions.

Two topics merit discussion:

• The benefits and tensions around the possible linkage of social policies, mainly CCTs, with development policies that can better facilitate movement to a sustainable self-generating income path; and
• The constraints or bottlenecks that make it difficult for pilots of graduation programs, whether alone or linked with social policies, to be scaled up and incorporated into countries’ public policies.

Benefits and risks of aligning different social programs

Related to the first topic, joint implementation of CCT and the Graduation Approach has several benefits, mainly the combined effect on human capital and physical assets that positively affect the livelihoods of poor families and their economic autonomy. Some risks are also associated with this combination. One is the temptation to impose new goals on CCT programs, for example, monetary poverty alleviation. This could pose logistical difficulties, such as multiple goals for a standardized intervention, and budget management problems due to scale. There are also limitations associated with the fact that in developing countries the public sector usually is not flexible and often faces significant constraints related to human capital and lack of specific skills.

For public interventions, the poor tolerance for social services users’ failure, which will always occur in the process of learning and defining sustainable income-generating activities, could make it difficult to mobilize resources for such interventions. This is especially true when conditions such as poor infrastructure, isolation, limited public and private services, are not conducive to their success.

Finally, joint implementation of CCT plus graduation could place additional pressure on women to take care of their children and engage in new economic activities at the same time, and on children who may be required to help their mothers in running these small businesses or will have to assume more responsibilities in the household – for example, watching young children.

Difficult articulation of policies

Designing a social policy that includes a graduation component, whether or not it is tied to a CCT, is complex. There must be a way to scale up and incorporate successful private initiatives like successful graduation programs, into the public sector. Several steps are needed to move from a proposal that has been tested by the public or private sector and proven effective on a small scale to a public program or policy that is part of the state apparatus, with resources.

Based on Peru’s development of a public-sector graduation program called Haku Wiñay, I believe that the process of moving from a successful graduation pilot to public policy involves three major phases: 

• Learning about the idea and testing it to demonstrate the feasibility of achieving the desired objectives with a particular intervention;
• Pilot and test within the public sector to validate that the idea can be implemented in the public sector and at a larger scale, testing whether it works better independently or when linked to other policies, such as CCTs;
• Design of a public policy or program with broad coverage based on lessons learned from previous pilots including how to design, define guidelines, and set resources for a public policy or program.

In all of these stages, independent evaluations are crucial for adapting, innovating and informing the entire process. Policymakers face many challenges in incorporating successful private initiatives such as the graduation approach. These challenges also represent new opportunities to improve social policy in developing countries. While much work lies ahead for researchers and policy makers in determining the best way to scale up these graduation initiatives, each person that is moved out of poverty in a sustainable manner is worth our perseverance.

*with the collaboration of Jhonatan Clausen