“Economic strengthening” is all about breaking with the “microenterprise myth” that everyone, even the ultra poor, can start a business—that all they need is a loan. Building on a deeper understanding of the idiosyncrasies that characterize extreme poverty, organizations have developed promising interventions that incorporate “push” strategies that help build assets for those who cannot make ends meet and “pull” strategies to bring the excluded into the system.
During USAID’s Microlinks After Hours Seminar “Lessons Learned From Sequenced, Integrated Strategies of Economic Strengthening of the Poorest” on March 21, 2012, Aude de Montesquiou (CGAP
), Jaya Sarkar (Trickle Up
), and Jan Maes (The SEEP Network
) presented integrated strategies that aim to meet the needs of the ultra poor so that they can negotiate their way out of poverty.
Understanding ultra-poor populations and developing appropriate interventions
“A household in extreme poverty is in a state of bankruptcy—not capable of covering its minimum expenditures for daily survival—and the sequenced strategies we are discussing today are very similar to remedies used for bankruptcies: cash injection to pay for most critical needs followed by debt reduction and asset (re)building.” – Jan Maes, The SEEP Network
To overcome the roadblocks of the past, organizations promoting the economic rights of the poorest realize that they need to better understand who their clients are and what their psychological, social and economic characteristics are. De Montesquiou explained that many among the extreme poor lack what is necessary to be successful entrepreneurs, such as confidence, knowledge, assets, and tools. Maes stressed that, even among the extreme poor, we need to recognize that there is a wide range between “destitute” and “struggling to make ends meet.” We need to look at the causes of their poverty and the nature and degree of their vulnerability. By understanding this nuance, we can design appropriate activities, programs, and services that integrate the right components (e.g. asset transfers, handholding, and financial services) with the proper sequencing to address these vulnerabilities.
From pilots to proof-of-concept
Organizations participating in the CGAP Ford Foundation Graduation Program
are testing this model of integration and sequencing. De Montesquiou presented qualitative and monitoring results for Fonkoze
, their partner MFI in Haiti. The Fonkoze Foundation
developed its Chemen Lavi Miyò (CLM), or “Pathway to a Better Life,” program to provide a multipronged livelihood protection and promotion service to carefully target ultra-poor women in rural Haiti. Specifically, CLM provided the women with assets for entrepreneurial use, enterprise training, health services through Partners in Health
, housing support, a consumption stipend, and social links with village elites—all facilitated by the close support of a CLM case manager. This push strategy decreased food insecurity among participants by over 50%. Severe wasting among CLM children decreased from 13% to 4% and Personal Potential Index (PPI) scores show 16% of participants passed the $1/day line. After 18 months, more than 90% of the participants were ready to participate in Fonkoze’s regular microfinance program. Thanks to support from the MasterCard Foundation
, Concern Worldwide
, the Haitian Timoun Foundation
, and Fondation Kanpe
, the program has now been scaled up to include more than 2,000 families.
In her presentation, Jaya Sarkar described Trickle Up’s challenge as “struggling to make our initiatives more effective” and adapting a series of interventions in their graduation pilot in India. Since 2009, the graduation model has been Trickle Up’s standard approach in India. Now, they are mainstreaming learning into the rest of the organization by effectively using the push strategy developed through the pilot project to learn about the ultra poor and better designing pull strategies through other programs. When Trickle Up moved from the pilot phase to proof-of-concept, they shifted their focus, putting an emphasis on self-help groups (SHGs). They found, as Sarkar described, impact in unexpected areas. In particular, they found that groups were taking collective action. SHGs in Mali were creating a social safety net for members and creating access to financial services for non-members in their community, thus enlarging the population that directly benefited from the intervention. In India, they found SHGs are taking action on social issues, improving public shared space, and advocating on behalf of others for better service from banks.
Call to action
“What do the ultra poor need?” asked Jan Maes. That is the key question, and to figure this out, integrated strategies will be needed to learn from a variety of sectors such as microfinance, social safety nets, market development, protection and promotion, women rights, and others. The STEP UP Initiative
from The SEEP Network aims to connect these silos of practice, breaking the “stovepipe syndrome,” to enable multidisciplinary learning. Maes encourages practitioners to join STEP UP
to enhance discussion on these issues.