Helping the Ultra-Poor “Graduate”

When we talk about “graduation” or describe the Graduation Model as “helping the poorest find their own path out of extreme poverty,” people often assume that we are being simplistic and mechanistic. They think we are saying that the Graduation Model sets in motion an escalator through which all the poorest can start at the lowest level and mechanically, after a certain period of time, lead sustainable economic lives above the poverty line. However, if we insist that the poorest are a separate segment from the “not so poor,” we also believe it is crucial to identify the many disparities within this group. We know many of the poorest will reach “graduation” faster than others, while quite a few will never make it at all. To understand the graduation process, we must understand the differences among the group we call the “poorest.” We need a better understanding of who the individuals are, in order to gauge whom the Graduation Model works for, which people may be better off in other trajectories (as in labor employment), or to assess who will require on-going safety net support.

The CGAP-Ford Foundation Graduation Program works with ultra-poor people in a handful of the poorest nations. Ten Graduation Pilots are underway, in Ethiopia, Ghana, Haiti, Honduras, India, Pakistan, Peru, and Yemen. Several of the pilots are measuring the program’s effects on people’s lives through rigorous randomized impact evaluations. We are also conducting qualitative research to better understand the lives of the poorest. Already we are realizing how varied their stories are, and how much context matters. For example, impact assessment baseline surveys in Honduras and Peru show that Peruvian households who enter the program are in better economic shape than those in Honduras, despite living in far more remote locations. But among those identified as ultra-poor in Peru, the poorer households tend to live higher up in altitude, with more children, and considerably younger heads of households.

The experience from implementing the pilots, combined with the baseline surveys results in Ethiopia, Ghana, Honduras, India, Pakistan, Peru, and Yemen, point to some overall characteristics of extreme poverty, while still emphasizing the importance of local culture and environment. Food insecurity, unreliable incomes, lack of asset and land ownership, and isolation are shared characteristics of extreme poverty. But, if food insecurity is a solid indication of poverty in Ethiopia and Haiti, in Peru even the poorest are relatively food secure. Lack of access to productive land is a good indicator of poverty in South Asia, but not in Ghana where villagers can farm communal land. The absence of productive assets is often a key indicator of poverty, but it is not always easy to differentiate between actual ownership of an asset and leasing of livestock in places like Pakistan, where poor people often take care of animals in return for a small fee. Strict adoption of national poverty indicators or strict means testing can be misleading: qualitative research, listening to communities, and bringing in program staff’s local knowledge helps reach a more nuanced and relevant understanding of what constitutes extreme poverty locally.

The Graduation Program’s qualitative research conducted so far, suggests that beyond “measurable” household characteristics such as dependant–earner ratios, family dynamics and access to social networks strongly influence participants’ success within the pilots. In South Asia, a married woman in a household with interfering in-laws is less likely to succeed than a female-headed household. A woman who has been able to cultivate social networks with the local political leaders for example—even if they are poor—has a greater chance of making it out of extreme poverty. Qualitative research allowed the Fonkoze Graduation Pilot in Haiti to show that households with more dependents and uncooperative men tend to perform worse than others. So the program tailors interventions to provide extra support to those who are likely to be “slower climbers.” At Trickle Up in West Bengal, qualitative research pointed to the particular importance of fieldworker performance in helping “slow climbers” transform their trajectories. As a result, Trickle Up has increased training and support of fieldworkers, and the program gives its staff clearly-defined goals to meet such as making sure participants are on track with their savings goals.

By getting to know the poorest people better, and by closely monitoring their progress, the Graduation Program is trying to apply all the lessons learned from the pilot implementation and research conducted so far to boost participants’ chances of success.

A recent Financial Times article entitled, “Innovators don’t ignore customers” argued that the rapidly dropping share price of Netflix, a DVD rental and online film service could be explained by the fact that the company lost touch with what its customers wanted. Keeping a sharp eye on client demand is thus not only the responsible or developmental thing to do–it simply makes good business sense.