Graduation into Sustainable Livelihoods: What’s in a Name?

As we travel around the world gathering and sharing insights from implementation, impact findings, and the new generation of graduation programs, we find that the term “graduation” is often misunderstood. At times, this leads to confusion about the approach as a whole.

When CGAP partnered with the Ford Foundation more than a decade ago in an initiative to test and adapt BRAC’s Challenging the Frontiers of Poverty Reduction/Targeting the Ultra Poor approach, we needed a simple term to describe the strategy to help the poorest on a pathway out of extreme poverty. The term “graduation” was adopted because it implies moving people beyond an inflection point, where the likelihood of slipping back significantly decreases. We came from the world of financial inclusion and felt the benefits of graduation’s fully integrated and sequenced set of interventions could best be sustained by moving people into mainstream financial services.

But this vision was too narrow to reflect the full potential of what the approach could do. So we broadened our perspective to see “graduation” as breaking not just the market failure in financial services, but also enabling the poorest to better access new livelihoods and even small business opportunities and employment, as well as accessing the broader range of social protection programs.

Hence “graduating” refers to households leading economically viable livelihoods that increase their incomes, make them food secure throughout the year, and allows them to access financial services, seek schooling and health care facilities, and generally get them beyond the extreme poverty line. Of course these “graduation” criteria are contextualized and concretized based on regional differences and the specific conditions creating and maintaining extreme poverty.

Graduating is also about creating the enabling conditions—confidence, knowledge, skills, and linkages to public and other services—that allow for continued, sustained upward mobility. Relevant issues include malnutrition, health, children's education, wider occupational choices and women's agency. For this, of course, extreme poor households need to link up with other social protection elements, such as health care, schooling, or insurance.

New wave of graduation: graduation 2.0

As the “graduation” agenda gains traction, the new generation of program designs offers an exceptional opportunity to learn how we can sustainably reduce extreme poverty at scale. New programs’ innovations and adaptations may allow for similarly strong impacts while lowering the costs of the first generation of graduation inputs.

While interventions differ, here’s a core set of characteristics new programs have in common:

• They deliberately try to reach the extreme poor, either those under the $1.90-per-day line and/or those identified as the poorest and most marginalized within their own communities;
• They are holistic in order to tackle the multifaceted constraints of extreme-poverty;
• They are financially inclusive. Although the access-to-finance component might not be as critical when participants first enter the program, we expect the research underway will likely show that access and usage of appropriate financial services is crucial to deepen economic inclusion and continue upward progress; and
• They offer a “big push” based on the idea that a large investment will really make a meaningful change.

We need to learn just how big the “push” needs to be to achieve strong impact at lower costs. We are also trying to learn if the “extreme poor” can be further sub-categorized. Some amongst them, the “slow climbers”, will need more time and more intensive assistance.  Others, the “fast climbers”, could probably do with a less intensive and therefore less expensive set of inputs. They could possibly even “graduate” in a shorter timeframe.

The Graduation into Sustainable Livelihoods Approach is just one pathway to addressing extreme poverty.  Employment, for example, is another critical pathway. And hence private sector and public sector job creation initiatives (including pro-poor fiscal policies) should be actively encouraged. We also recognize that the national contexts pose great challenges for massive replication of graduation programs since underdeveloped markets impose limits to employment opportunities and demand for microbusiness products, natural disasters and ecological hazards disrupt lives and livelihoods, supply side constraints in schooling and health care deny people the opportunity to educate children and the right to medical services, and political instability and violence can rapidly undermine any development intervention.

That said, if the graduation approach can be scaled, it has proven its potential to provide a successful model for economic inclusion and to become an integral component of many national poverty reduction strategies.