The ultrapoor want desperately to escape poverty and have richer, more meaningful lives. Governments and NGOs want inclusive growth and prosperity. There is a proven way we can address all these challenges – the ultrapoor graduation model.
“Much of the news about global poverty is depressing, but this is fabulous: a large-scale experiment showing, with rigorous evidence, what works to lift people out of the most extreme poverty.” – Nicholas Kristof, The New York Times columnist. People want to help. All of us do. We in ADB want to eliminate poverty. The poorest—those who spend 80% or more of their income on food, and consume on average only 80% of basic nutritional needs—want desperately to escape poverty and have richer, more meaningful lives. Governments and NGOs want inclusive growth and prosperity. There is a proven way we can address all these challenges – the ultrapoor graduation model. Essentially the argument is this: we need a blend of measures to pull people out of extreme poverty and be sustainably better off over time. The needs of the poorest are complex, so responses have to be holistic; the poorest households are too busy finding enough food to have energy, time, or hope for anything else. The ultrapoor graduation program, created and shaped by BRAC in Bangladesh, is a cluster of services provided over a 24-month period. These include a grant for a productive asset such as a cow or goat, skills training and support, life skills coaching and follow-up, temporary cash consumption support, and, typically, access to savings accounts and health information or services. Implementing partner organizations, mainly NGOs, work with the beneficiaries, visiting households weekly. The program involves significant and careful field monitoring.
This multi-pronged approach is relatively expensive, but the theory of change is that the combination of these activities is necessary to obtain a persistent impact. The hoped-for result is that a single intensive engagement over two years can provide households with increased assets and food security, improved savings and money management, better coping and productive skills, better health, and more optimism about the future. And that the results would be sustained after the program closes.
Supported by the Ford Foundation and financial inclusion group CGAP, 10 organizations in 8 countries piloted the graduation model in areas in Ethiopia, Ghana, Haiti, Honduras, India, Pakistan, Peru, and Yemen. About 3,700 individuals and their families were selected as the poorest by careful onsite participatory wealth ranking. In most places the implementers were microfinance- and livelihood paired-NGOs, although in Yemen 2 government agencies implemented the program. This might be one of the most intensively studied models that I have ever observed. Research was conducted during implementation between 2007 and 2014 by a blend of academics and implementers from various organizations. The most well known are Dean Karlan, the founder of Innovations for Poverty Action and a Yale professor, and his colleague Nathanael Goldberg; and Esther Duflos and Abhijit Bannerjee of MIT and Harvard, respectively, who are also the leaders and founders of the Abdul Jameel Poverty Action Lab. The research involved randomized control trials, often called the gold standard of evaluations, as well as qualitative research in the field and market survey work. The academics examined the “sufficiency” claim of the package of interventions: A year after the conclusion of the overall program, and 3 years after the asset transfer, were program participants earning more income and achieving stable improvements in their wellbeing? The researchers measured impacts on consumption, food security, productive and household assets, financial inclusion, time use, income and revenues, physical health, mental health, political involvement, and women’s empowerment. Details of the methodology, work and findings were published in May in Science, a respected, peer-reviewed journal. The researchers established beyond any reasonable doubt that this 24-month-long multifaceted approach to increasing income and well-being for the ultra-poor is sustainable and cost-effective.
Let’s talk about the changes after the program. Income increases on average by 11.7% and is sustained over time. There are significant and sustained improvements in food security (5% increase over the control level), household productive assets of 15% more than the control group, which do not decline after the program is over, nor does debt increase), household savings higher than comparators by 55%, people spending 10.6% more time in productive work, and have better mental health.
Households continue to report that they are happier and have lower stress a year after the program closes. Participants were more likely to become involved in village-level group activities, and women reported having a greater say in household decisions on health and home improvements during the program (although, unfortunately, not thereafter). The results varied per country, but the robust data shows that the results are consistently achieved in all countries. And no one was worse off. Scaling up is now starting in 20 countries, with replication ranging from 105 households in Zambia to 3 million in Ethiopia; most are either a small pilot under 2,000 people or a medium scale-up of 10-50,000 people. The researchers and implementers are fully committed to assist with reducing the costs of implementation while sustaining the results. They believe in this and are putting brainpower, time, and money behind it. And there are some serious minds at work. So what can you do? Treat this as a key intervention worthy of immediate action. Empower your teams to implement the ultrapoor graduation program.
- No donor is currently taking ownership of this model and scaling it up significantly across countries. Push the development community to replicate.
- Discuss these results with all country governments where poverty is an issue for action. Do field trials or scale this up now in countries, particularly those with high numbers of very poor; or those where government interest is already evident.
- Incorporate missing elements of this holistic program into existing “partial” programs such as cash transfer, financial inclusion projects, agricultural development projects to make the model complete; talk to researchers about how to modify existing programs to make them complete.
With tools like these, we do have a real opportunity to eliminate extreme poverty. We just need to grasp them.