Ultra Poor Graduation

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Photo credit: BRAC

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>> Authored by Shameran Abed, Director, BRAC Microfinance Programme

Shameran Abed, BRAC’s Director of Microfinance, joined the Microfinance CEO Working Group in January. He and BRAC are welcome to additions to this collaboration. He joins the Working Group’s efforts to support the positive development of the microfinance industry and brings tremendous insigShameran Abedht into the discussion around pathways out of poverty.

This month, the results from six randomised controlled trials (RCTs), published in Science magazine highlighted a model of development that is an adaptable and exportable solution able to raise households from the worst forms of destitution and put them on to a pathway of self-reliance. The graduation approach — financial services integrated within a broader set of wrap-around services — is gaining steady recognition for its astonishing ability to transform the lives of the poorest.

These findings can be contrasted with the results of six RCTs published in January by the American Economic Journal: Applied Economics, which cited limited evidence of “microcredit” transforming the lives of the poor.

In many ways, that was not surprising. There is only so much that microcredit alone can do to address a phenomenon as complex as poverty, especially within the rather short, 18-month timeframe of a research project. This partly explains the diversification most financial service providers have made into savings, microinsurance, financial education, and other models of financial inclusion that integrate different development services.

While the transformative effects of microcredit alone — or even microfinance — remain up for debate, it is now clear that access to savings and credit provided together with other wrap-around services not only provides a viable pathway out of poverty for the poor, they do so for the very poorest!

Following 30 years of work in building livelihoods for the poor, largely through microfinance and agricultural extension, BRAC learnt the hard way that we were not making effective poverty reduction gains for those most in need. We were consistently failing to reach the millions of households at the very bottom.

Classified as the “ultra poor,” this sub-segment of the extreme poor, who live on less than USD 0.80 per day, fail to meet their daily energy requirements, are chronically ill, and live on the fringes of society. In these circumstances where basic needs are unmet, microfinance alone can do little to provide a pathway out of poverty.

In 2002, BRAC developed a model designed to create livelihoods for the ultra-poor in a way that also addressed the other dimensions of abject poverty creating barriers to their development. Capitalising on our previous social safety net programme experience, BRAC’s Targeting the Ultra Poor programme (the basis of the graduation approach) combined asset transfer with livelihood development and social support.

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For two years, clients receive an integrated package of cash stipends, an asset (such as a cow or chickens) with training, and basic healthcare. Early into the programme, clients cultivate strong savings behaviour, and learn the basics of financial management. The programme also includes a large social component: regular household visits from our staff and integration in the community.

Notably, the model in Bangladesh does integrate microcredit for some clients; 70 percent of the graduates in Bangladesh actually received their assets as “soft loans,” which they repay over the course of two years.

The results have been remarkable. Since 2002, 95 percent of the 1.4 million clients who have come through this programme have graduated from ultra-poverty. The programme is costly in one sense, because it’s grant-based and financially unsustainable, but the social returns are high and extend well beyond the end of the intervention period.  An RCT has shown that even years after members graduate, most continue to experience growth in their household income and well being.

The achievements of ultra-poor graduation are even greater because this is not a success story limited to Bangladesh. An initiative led by CGAP and the Ford Foundation sought to test the replicability of the BRAC model by piloting it in several contexts internationally.

The RCT results published in Science, which covered pilots in India, Pakistan, Ethiopia, Ghana, Honduras and Peru, show definitively that they were successful. In all six of the countries studied, all treatment households witnessed significant improvements across a range of indicators that continued beyond the end of their programmes. Today, the graduation approach is continuing to break ground with a range of other actors that include microfinance providers, multilateral agencies, NGOs (e.g. Fundacion Capital, UNHCR, Concern Worldwide) as well as governments looking to improve costly social safety net programmes that protect the poor from destitution, but fail to put them on a ladder out of poverty.

As a sector that has come under fire for failing to make conspicuous reductions in poverty, the success of ultra-poor graduation carries notable implications for the role that financial services can play in putting millions onto pathways out of extreme poverty.

One is a lesson to microfinance providers that, actually, the extreme poor can be extremely credit worthy – once the initial investment is made. Indeed, some of BRAC’s most reliable and disciplined microfinance clients are graduates from our ultra-poor programme. Microfinance institutions may not be the ones to make that investment, but they can help ensure that “graduates” of such programmes have a bridge that transitions them from ultra-poverty into mainstream microfinance.

Secondly, this model shows that financial services, when integrated within a broader set of wrap-around services, is unquestionably transformational, even for those in the most desperate forms of poverty.

Critics will likely ask, which are the most crucial elements? Is it financial access that is making wrap-around services transformational, or is it the wrap-around services that make financial access transformational?

The answer is most likely some combination of the two, but so long as this interaction is producing these results, I am satisfied in knowing that access to financial services remains a vital ingredient in the solution to extreme poverty.


Shameran Abed is the director of the BRAC microfinance programme, which serves more than five million clients in seven countries in Asia and Africa, and has total assets exceeding USD 1 billion.

Starting its work in the early 1970s, BRAC was one of the earliest known organisations to use the modern microfinance model of lending small amounts to groups of women. Working alongside several other development programmes, the success of the microfinance programme supported BRAC in its growth to be the largest development organisation in the world in terms of staff numbers.

Mr Abed also serves on the boards of BRAC Bank’s mobile financial services subsidiary, bKash, and Guardian Life Insurance. Additionally, he sits on the Microfinance Network Steering Committee and the World Economic Forum Financial Inclusion Steering Committee. Prior to joining BRAC, Mr Abed was a journalist and wrote primarily on political issues.

Mr Abed is a lawyer by training, having been made a barrister by the Honourable Society of Lincoln’s Inn in London, UK. He completed his undergraduate studies at Hamilton College in the United States, majoring in economics and minoring in political science.


BRAC launched a Campaign Commitment in 2014! We invite you also to…

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BRAC declares Campaign Commitment to graduate 250,000 households from ultra-poverty

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Summary: The Microcredit Summit Campaign welcomes BRAC as the newest Campaign Commitment member, joining a global coalition to help 100 million families lift themselves out of extreme poverty. Read the full Press Release.
BRAC group meeting

Image courtesy of BRAC

BRAC is a development organization founded in Bangladesh in 1972 and has since become one of the largest NGOs in the world in terms of employees and number of clients served, spreading successful poverty alleviating solutions born in the developing world to other countries. In 2002, BRAC launched the Ultra-Poor Graduation Program, which aimed at lifting the ultra poor out of their situation of poverty so that they can access mainstream development services such as microfinance. The program targets extremely deprived women and their households, and maintains BRAC’s holistic approach to development by providing targeted asset grants, skill training and healthcare support. Since 2002, 1.4 million households have already graduated from BRAC’s Ultra-Poor Graduation Program. With this tremendous success, BRAC plans to continue the spread of this model to reach even more households around the globe.

When asked about the origins of BRAC’s Ultra-Poor Graduation Program, Program Manager Sadna Samaranayake responded,“The extreme poor, living on less than $1.25 a day, are far from homogenous. Among them are households trapped in the direst forms of destitution, who are chronically hungry, lack assets, income, or support from their communities. It was to address the needs of these populations, the ultra-poor at the margins and beyond the reach of microfinance and other development programs, that BRAC pioneered what is now known as the Graduation approach. Even the poorest can “graduate” from ultra-poverty with a set of carefully tailored interventions designed to help achieve increased incomes, food security and better resilience overall. A complement to MFI, NGO and government strategies to reach the ultra-poor, BRAC is committed to advancing knowledge and implementation of the Graduation approach.”

Some key excerpts of BRAC’s Campaign Commitment:

  • In Bangladesh alone, BRAC commits to graduating 250,000 households out of ultra-poverty by the end of 2016.
  • BRAC commits to publishing an in-depth implementation guide in September 2014 to help governments, microfinance institutions and NGOs execute their own ultra-poor graduation programs. Additionally, BRAC commits to providing technical assistance and consultation where requested to governments, NGOs and MFIs looking to implement the graduation approach.
  • BRAC commits to hosting a national conference on the graduation approach in a country where BRAC operates in 2014.
  • BRAC commits to hosting annual Immersion and Training Visits in Bangladesh for interested parties including policy makers, microfinance institutions, multilateral funders, and donors to witness the graduation program in action. During these visits, participants will get an in-depth look at the program, from field staff training ultra-poor women on how to realize a return on their new assets, to the healthcare, savings and social integration elements of the approach.

The next round of these Immersion Training Visits are on the weeks of August 18th and August 25th. Contact Sadna Samaranayake at sadna@bracusa.org to register.

Read the BRAC Commitment Letter.


Join BRAC and State your Campaign Commitment

Join us in the global coalition to help 100 million families lift themselves out of poverty – state your Campaign Commitment at mycommitment@microcreditsummit.org

Need additional guidance in formulating your own Campaign Commitment? Refer to our Commitment Development Toolkit.

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