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The following article was originally posted by Alex Pattee on the MicroCapiltal.org blog. By Syed M Hashemi and Aude de Montesquiou; published by CGAP (Consultative Group to Assist the Poor), March 2011, 16 pages; available at: http://www.microfinancegateway.org/gm/document-1.9.50806/Reaching_the_Poorest.pdf
The following article was originally posted by Alex Pattee on the MicroCapiltal.org blog.
By Syed M Hashemi and Aude de Montesquiou; published by CGAP (Consultative Group to Assist the Poor), March 2011, 16 pages; available at: http://www.microfinancegateway.org/gm/document-1.9.50806/Reaching_the_Poorest.pdf
This document presents findings from the CGAP-Ford Foundation Graduation Program, an initiative launched in 2006 to test and adapt the Challenging the Frontiers of Poverty Reduction/Targeting the Ultra Poor (CFPR/TUP) approach of BRAC, a Bangladeshi development organization that was established in 1972 as the Bangladesh Rehabilitation Assistance Committee. The BRAC approach is premised on the idea that, with the right mix of interventions, the poorest can “graduate” out of extreme poverty. The Graduation Program consists of a series of 10 pilot projects in four continents involving various partners to test the transferability of BRAC’s approach to other regions.
The Graduation Program applies the BRAC approach through five building blocks: targeting to ensure only the poorest households are selected for the program; provision of cash or food to stabilize food security; savings services and education to build assets and “financial discipline;” and transfers of assets such as livestock to launch self-sustaining economic activity.
The first conclusion drawn by the authors is that some groups of people may simply be unable to embark on new economic activities and create their own pathways out of extreme poverty. The second lesson is that, while the program takes market challenges and opportunities into account, it does not directly tackle the conditions of the marketplace in which entrepreneurs do business and thus cannot eliminate certain challenges entrepreneurs will likely face. The third lesson is that the absence of physical infrastructure (such as access to clean water or customers), health infrastructure (availability of basic health services), and vulnerability to ecological and other macro-level shocks can prevent sustained progress out of poverty.
Mr Hashemi and Ms de Montesquiou argue that initial results of the Graduation Program demonstrate that a well-sequenced, intensively monitored program combining access to savings, livelihood training and an in-kind asset transfer can lead to asset and income diversification, increased consumption, and some level of empowerment. The authors suggest that more research be conducted to determine the following: whether the initial changes observed in participants’ lives are sustained over time; what contributes to and what inhibits success for households for this type of program; and the role of access to finance in poverty reduction and how financial services can be better provided to those in extreme poverty. Finally, Mr Hashemi and Ms de Montesquiou conclude that an understanding of how the pilots can be successfully and cost-effectively scaled up is needed, including an analysis of the relative efficiency of this approach versus other interventions targeted to the poorest.
The distribution of the Graduation Program’s pilot projects is intended to encompass regional, economic, cultural and ecological diversity. Because the pilots are in various stages of completion, this paper includes only early results from the West Bengal state of India and Haiti.
By: Alexandra Pattee, Research Associate
About BRAC (Bangladesh Rehabilitation Assistance Committee): Established in 1972 as the Bangladesh Rehabilitation Assistance Committee, BRAC is a development organization based in Bangladesh. According to its website, “BRAC works with people whose lives are dominated by extreme poverty, illiteracy, disease and handicaps. With multifaceted development interventions, BRAC strives to bring about change in the quality of life of poor people in Bangladesh.” As of 2009, BRAC reported total assets of USD 990 million, gross loan portfolio of 636 million and 6.2 million active borrowers.