12 December 2016
Serving the poorest effectively is expensive and difficult, because such populations are often geographically and socially isolated and because of the complex, multi-dimensional nature of poverty.
The graduation approach focuses on helping the poorest and most vulnerable households develop sustainable livelihoods, increase incomes, and move out of extreme poverty. It consists of a carefully sequenced, multisectoral intervention comprising social assistance to ensure basic consumption, skills training, seed capital, and employment opportunities to jump-start an economic activity, financial education and access to savings, and mentoring to build confidence and reinforce skills. The interventions are time bound (generally 24–26 months) to preclude long-term dependence. The participating household’s trajectory, however, continues beyond the phase of the program interventions. Sustained progress rests on continued income earning and asset building and effective social protection systems to cushion against shocks. Given the Sustainable Development Goals’ (SDG) global focus on eradicating extreme poverty by 2030, the graduation approach should form an integral component of national social protection and poverty reduction strategies, along with social transfers, guaranteed employment, social insurance, and labor market support.
While the share of the world’s population living in extreme poverty has seen spectacular reductions since the 1990s, over 700 million people still live on less than US$1.90 a day. Reaching SDG No. 1—eradicating extreme poverty by 2030—requires, among other strategies, targeted interventions to help the poorest increase their standard of living. However, serving the poorest effectively is expensive and difficult, because such populations are often geographically and socially isolated and because of the complex, multi-dimensional nature of poverty. Even when interventions do manage to reach the extreme poor, they often have little lasting impact, with many households falling back into extreme poverty.
While there have been many attempts at developing models for improving economic conditions of the poorest, at least one model has proven to be highly successful in building sustainable livelihoods and “graduating” people out of extreme poverty. Since 2002, BRAC’s Challenging the Frontiers of Poverty Reduction/Targeting the Ultra Poor Program (CFPR/TUP) has supported over half a million very poor households to increase their income and assets in a sustained fashion in Bangladesh. The 2016 follow-up to a randomized evaluation by Bandiera et al. (2016) finds positive impacts on employment, income (37 percent increase in earnings), assets (household asset value more than doubled), savings (cash savings increased nearly nine-fold), and consumption (9 percent increase in per capita nondurable consumption) that are sustained after two years from the end of the intervention (four years after the asset transfer). Households not only earned and saved more but also diversified their assets and income sources: the value of productive assets tripled (Bandiera et al. 2016). Impacts were observed to be even larger seven years after the asset transfer, and five years after the end of the program (the change in spending on nondurables was 2.5 times higher after seven years than after four, and the increase in land access doubled). Further, since CFPR/TUP targeted women in extreme poor households, it allowed for women’s increased control over household economic resources and greater power in decision making.