Social protection: innovative programs deliver financial services at scale

Participants of the Innovations in Social Protection project

Participants of the 2014 Innovations in Social Protection and Livelihoods Development initiative

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Pathway

Agricultural value chains that reach to small scale producers


>>Authored by Jesse Marsden, Manager, Research and Operations

April is the Month of MicrofinanceLearn more

April is the Month of Microfinance
Learn more

We at the Microcredit Summit Campaign have advocated for scaling up the full range of microfinance services (savings, credit, insurance, and beyond) as one sector’s contribution to a broader effort to end extreme poverty. Experience of the development community suggests that ending extreme poverty will take a multifaceted approach that matches and sequences the right combination of financial and non-financial services with an ever-varying set of binding constraints faced by individuals living in extreme poverty.

Some 40 years have passed since modern microfinance got underway with micro loans to villagers in Jobra, and innovation and learning have helped micro-financial services and interventions greatly evolve to now include a wide array of forms and functions. Last August, the Microcredit Summit Campaign led a learning tour to deeply investigate some of the newest and most promising innovations in delivering micro-financial services to those living in extreme poverty.

Six delegates representing ministries that oversee social protection programs in Ghana, Malawi, and Mozambique took a twelve-day journey with us across two continents in advance of the 17th Microcredit Summit. They observed innovative approaches for social protection programs to address the causes and symptoms of extreme poverty.

The learning and exposure visit, called “Innovations in Social Protection and Livelihoods Development,” was an initiative led by our 100 Million Project in partnership with The MasterCard Foundation. Delegates to the program from participating learned first-hand what is working well and what challenges exist for program implementers in Ethiopia and Mexico.

Policy makers then developed innovation plans for 2015 to act on lessons learned from their trip after returning home. In one example, the Malawi delegation, based on their innovation plan, fully redesigned their social protection plan (which they were preparing before their trip) to include savings schemes and digital transfer technologies to support implementation. This will have an impact on some 860,000 households (or more than 4 million individuals) living in extreme poverty served by the program.

Rainy season roads

Rainy season roads in Ethiopia

Ethiopia’s Productive Safety Net Program

The Ministry of Agriculture oversees the implementation of the Productive Safety Net Program (PSNP) in Ethiopia which is designed to address food insecurity, a key development and poverty issue in the country. PSNP uses a cash transfer process in combination with participation in a public works scheme, generating water and soil related improvements in remote areas of the country in order to build the capacity of drought stricken areas to endure weather related shocks. In return for working in a 10-person group for a set number of days per month, a monthly cash transfer is granted for six months each year that the individual participants.

These groups of 10 people select a public works improvement project to implement from a set of options developed by PSNP administrators based on the local conditions. Options often include projects to control and prevent the erosion of farming or grazing areas, rain capture systems to mitigate the impact of drought, and even infrastructure improvements such as bridges or access roads. An engineering expert is assigned to each group to ensure quality construction of the improvement and safety of the structure built.

Participants are considered “graduated” from PSNP once her or his status as “food secure” is verified by the Ministry of Agriculture, which states that “A household will be graduate when, in the absence of receiving PSNP transfers, it can meet its food needs for all 12 months and is able to withstand modest shocks.”

The Relief Society of Tigray

The delegates traveled to the northern Tigray Region of Ethiopia to visit public works completed or underway as part of PSNP outside the city of Mek’ele. The Relief Society of Tigray (REST), one of the largest NGO microfinance implementers in the country, hosted the delegation and our visits to sites where REST acts as the local partner to PSNP. Ministry and REST representatives highlighted this effective government-NGO partnership as a key to the program’s success.

The delegation visited a number of key water-related improvements and some of these images depict the massive amount of work conducted over the last seven years since the initiation of the program.

Mexico’s Conditional Cash Transfer Program

The learning program continued in Mexico where the delegation enjoyed a day of briefings, exploring the Oportunidades program (now known as Prospera), Mexico’s conditional cash transfer program (CCT) overseen by PRONAFIM in the State of Yucatán.

The briefing focused on the structures and relationships necessary within the policy framework to make Prospera work under the national-level Ministry of Social Development (SEDESOL). The delegates learned how the national development bank, BANSEFI, plays an integral role as a facilitator of cash transfers and an accounting hub for the program, and how important it is for the national government and regulatory authorities to be involved throughout the implementation of the program.

The delegation also met participants of the program Jovenes con Oportunidades (“Youth with Opportunities”), which provides higher education scholarships to youth of families participating in other social development programs of PRONAFIM. The families we met were participating in a health clinic through SEDESOL, enabling their college-age children to receive scholarships to attend universities or polytechnic schools. In this way, the program contributes to improved health while it supports access to higher education among low-income families.

The delegation spent the next day visiting the Cristo Rey Cooperative in the town of Izamal. Cristo Rey is a CCT distributor, partnered with BANSEFI, for the Prospera program. The delegation learned about their operations including a deep dive into the structure and aims of the child savings program that serves over 3,000 children. The presentation also included a look at the IT infrastructure Cristo Rey requires to be an effective partner in Prospera.

What we learned

The purpose of the learning tour was not to learn everything there is to know about successfully using social protection interventions to end extreme poverty. Not everything is known yet. But, it was an opportunity for the six members of the delegation — all of whom work with similar financial and social interventions in their home countries — to develop new ideas based on evidence of success in order to help reshape or improve the programs they oversee. As mentioned, Malawi has completely re-envisioned their program. Others have also begun asking how they can access a new learning tour looking at the use of digital solutions to help deliver programs.

The picture of microfinance is one of innovation and creatively combining services in very intentional ways to meet a huge variety of binding constraints faced by those living in extreme poverty. Agricultural financial tools, cash transfers, graduation model programs, and technology all featured prominently in the learning tour, and these are showing exciting promise in meeting the needs of the extreme poor at scale and in ways that still remain flexible. We look forward to exploring these pathways more!

Learn more about the 100 Million Project.

Relevant resources

Join our next E-Workshop on agricultural risk management with FAO and ILO

FAO Photo 2

Photo courtesy of FAO

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Pathway

Agricultural value chains that reach to small scale producers


Join our next Campaign Commitment E-Workshop!

Agricultural Risk Management:
Innovations you should know about

April 21, 2015 | 10 AM (GMT-4)

The Microcredit Summit Campaign is proud to present the next installment in our Campaign Commitment E-Workshops Series. The UN’s Food and Agricultural Organization (FAO) and the International Labour Organization (ILO) will lead you through a discussion into new tools for understanding and mitigating the many and varied risks facing smallholder farmer.

Both FAO and ILO launched Campaign Commitments in 2014. We look forward to learning about their accomplishments on these fronts and where they are breaking new ground. Hear about how ILO and FAO are identifying key areas of service gaps and other challenges facing smallholder and substance farmers, be introduced to ILO’s 4-dimensional risk mitigation tool, and learn about the ways non-financial services are working to support reducing vulnerability.

JOIN US…
Tuesday, April 21st
10:00 AM (GMT-4)

…for the E-WORKSHOP
“Agricultural Risk Management: Innovations you should know about”

This webinar will be conducted in English. We will live-tweet using the hashtag #Commit100M in English, Spanish, and French.

Presenting Organizations
International Labour Organization
Food and Agricultural Organization
Microcredit Summit Campaign

ILO and FAO both launched Campaign Commitments! We invite you also to…

Get Inspired. Set a Goal. Make a Commitment.

Join the movement to help 100 million families lift themselves out of extreme poverty:

From Microcredit to What?! by Sam Daley-Harris

April is the Month of Microfinance. http://monthofmicrofinance.org/

April is the Month of Microfinance. http://monthofmicrofinance.org/

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Reposted with permission


>>Authored by Sam Daley-Harris, founder and former director of the Microcredit Summit Campaign. He is currently running the Center for Citizen Empowerment and Transformation.

When the American Economic Journal recently published a group of independent studies suggesting that tiny loans to the poor usually don’t raise incomes, it left me scratching my head (although this response to those studies did ring true). As the first director of the Microcredit Summit Campaign, I’ve had the privilege of observing anti-poverty fighters like Grameen Bank founder Muhammad Yunus and BRAC founder Fazle Abed for decades. They, and others like them, never said, “We’re giving millions of microloans a year, we’re done!” Instead, they kept asking this question: “What more do our clients need to move themselves and their families out of poverty.” That question, the effectiveness of their responses to it, and the scale of their institutions have helped their country, Bangladesh, be among the poorest countries in the world most likely to achieve all of the Millennium Development Goals on time.

I first met Muhammad Yunus in 1987. By then Grameen Bank had already worked with its clients to develop the bank’s “16 Decisions,” pledges the clients made that included: 1) we shall not live in dilapidated houses, we shall repair our houses and work towards constructing new houses, 2) we shall grow vegetables all the year round, eat plenty of them and sell the surplus, 3) we shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health, 4) we shall educate our children, 5) we shall build and use pit-latrines, and 6) we shall drink water from tube wells. If it is not available, we shall boil water or use alum.

To be sure, banks like Citi and Barclay’s never had a pit latrine policy with their clients, but this poverty-fighting microfinance institution (MFI) did.

It would take weeks of blogging to cover BRAC’s beyond-the-micro-loan initiatives. But, just as an example, BRAC’s ultra-poor program has been replicated around the world and its schools for children who never entered school or dropped out at an early age are a global model.

Grameen Phone ladies

Grameen Phone ladies

Grameen Phone and Grameen Shakti (a renewable energy company) are giants in Bangladesh and their work with the poor are examples of a microfinance institution continuing to ask what more can be done to improve the well-being its clients.

This eye-popping creativity coming out of microfinance has fascinated me for decades and has taken an entirely different direction with the work of Marshall Saunders, founder of Citizen’s Climate Lobby. In the early 1990s, Saunders worked with Rotary to raise $700,000 for FINCA, teamed with Grameen Foundation and their five-year strategy to help its partners add five million new clients, and then rolled up his sleeves and started Grameen del la Frontera, a microfinance institution in the state of Sonora, Mexico. But along the way, Saunders also got involved as a citizen advocate with the anti-poverty lobby group RESULTS.

Saunders’ view of the world was shaped, in part, by this early encounter with RESULTS. He joined me for a radio interview I was doing on the NPR station in San Diego. During the interview I mentioned that RESULTS had successfully lobbied Congress for $200 million for microcredit.

“At first I thought ‘that’s not right,’” Saunders recalled. “I had busted my butt for three years to raise nearly $700,000 through Rotary, and RESULTS had raised $200 million in their lobbying….it didn’t seem to be realistic, the $200 million. I did make a mental note of it however.”

Saunders continued his work with RESULTS and made a serious commitment to Grameen de la Frontera. He had read about climate change and realized that sea level rise would affect some of his clients.

“It occurred to me that I was trying to get 5,000 more borrowers in Mexico,” Saunders said, “and that Bangladesh might lose millions due to sea level rise. I felt I had to get to the bottom of this. I went to see “An Inconvenient Truth” and went back about a week later…. Then I read that Al Gore was going to train 1,000 people. I said “holy socks, of course that’s what I want to do.”

He joined about 250 others in Nashville, TN for one of the trainings and returned to San Diego to lead the slide show dozens of times. Early on he realized that 98 percent of the information focused on the problem of climate change and that just 2 percent focused on what people could do about it. In addition, many of the actions centered on using more energy efficient light bulbs but didn’t really get at the big picture, public policy.

This microfinance promoter, hunger activist and newly minted climate educator was now reading the newspaper every morning and read that Congress had just approved $18 billion in subsidies to the fossil fuel industry.

“I’d gotten people to change 18 light bulbs yesterday,” he thought, “and that same day Congress approved $18 billion in subsidies to the fossil fuel industry. This is never going to work.”

In 2007 Saunders asked me to coach him in starting Citizens Climate Lobby (CCL). Several months later he led his first presentation with 29 people in the room. He hoped that at least four would agree to become the first chapter of CCL, but all 29 said yes. In 2014, CCL volunteers in the US and Canada had 2,253 letters to the editor published (up from 36 in 2010), had 291 op-eds published (up from 20 in 2010), and had 1,086 meetings with members of Congress, Parliament, or their staff (up from 106 in 2010). Doing something to protect microfinance clients in Bangladesh from the effects of climate change was his first impetus.

When the American Economic Journal recently published a group of independent studies suggesting that tiny loans to the poor usually don’t raise incomes it left me scratching my head. While CCL is truly a unique case, I still wonder why the researchers keep looking at just one intervention when the practitioners know it takes more and why they keep looking at the wrong institutions.


Sam Daley-Harris is the author of Reclaiming Our Democracy (www.reclaimingourdemocracy.org). He founded the anti-poverty lobby RESULTS in 1980 (www.results.org), founded the Microcredit Summit Campaign in 1995 (www.microcreditsummit.org), founded what would grow to become Truelift in 2010 (www.truelift.com), and founded the Center for Citizen Empowerment and Transformation in 2012 (www.citizenempowermentandtransformation.org). Portions of this blog are taken from Reclaiming Our Democracy: Healing the Break between People and Government © Copyright 2013 by Sam Daley-Harris. Published by Camino Books, Inc., Philadelphia, PA. Used by permission of the publisher. All rights reserved.