1. Enhancing social and economic opportunities of the poorest in Latin America through graduation programmes
A high share of people in Latin America are poor or at risk of falling into poverty
A quarter of Latin America’s population still live in poverty. The pace of extreme poverty reduction has slowed in recent years so large segments of the population are still vulnerable, and suffer from social and economic exclusion. Inequalities persist and are more acute among rural households. The poorest are still left behind and even people who recently improved their standard of living are still vulnerable to falling back into poverty.
Social protection programmes, especially cash transfer programmes, have been providing a safety net for many of the poor and extreme poor around the world. In Latin America, these programmes reach approximately 110 million out of 158 million people living in poverty. Nowadays, there is increasing interest in enhancing the productive and social capabilities of programme participants to make them more resilient and self-sufficient.
Integrating graduation programmes into government policies to eliminate extreme poverty
Graduation programmes are an effective way of lifting people out of extreme poverty. These programmes aim to enhance the productive, financial, human and social assets that allow households to cope with shocks without falling back into extreme poverty and continue on the path to development on their own terms.
Graduation programmes1 combine five components (Figure 1.1): i) consumption support; ii) savings mobilisation; iii) entrepreneurship, soft skills and financial literacy; iv) livelihoods training; and v) asset transfer. Although proven to be a cost-effective approach, leading to statistically significant economic and social gains for its participants, the “first generation” of graduation programmes were implemented by non-governmental organisations in controlled environments, with limited capacity to be scaled up.
One way to address this limitation is to incorporate graduation programmes into government social programmes. In 2011, Fundación Capital began working with governments to do just that, including not only each country’s specific contexts, but also considering culture, cost and implementation processes. The aim of the programmes is to move large numbers of the extreme poor (mostly women) into the market economy by preparing them for self-employment and to use formal financial services.
While maintaining the key building blocks of the graduation model, Fundación Capital has introduced important innovations such as using cash rather than in-kind asset transfers, using ICT through the development of a tablet-based training system, and testing partnerships with the private sector to find market channels for micro-entrepreneurs' products and services. These innovations are helping to reduce costs, and standardise, simplify, and facilitate implementation, thereby enhancing impact at scale.
Fundación Capital works with governments in Colombia, Honduras, Paraguay, and Mexico to form critical partnerships so that pilots can be taken to scale. As a result of these efforts, to date more than 145 000 people are benefiting from the programmes and 70% of the participants are women.
With the support of the Ford Foundation and Canada´s International Development Research Centre (IDRC), and with the leadership of the University of Los Andes, Fundación Capital has established a Learning and Evaluation Platform in Latin America. The goal of this platform is to generate evidence about whether the integration of graduation into social policy in less controlled environments is effective, and to identify key lessons needed to expand such programmes.
Individual coaching and tailored approaches are key to success but also a challenge in scaling up
The Graduation Learning and Evaluation Platform, through IDRC-supported research,2 shows that graduation programmes in Colombia, Paraguay, Mexico and Honduras are providing a novel and effective way of tackling extreme poverty, which combines social protection with economic opportunities, enhanced resilience and better livelihoods for women. From the evaluations carried out so far there is evidence of positive impacts of the graduation programmes on the well-being of extremely poor households. There is also some evidence that compared with participating men, women perform better in terms of financial savings, empowerment and well-being.
The process evaluation shows the importance of the field worker (coach) in providing individual mentoring to participants, as this helps to increase “soft skills” such as increased self-confidence more rapidly and enables individuals to engage more effectively into the productive activity. This is a successful element of graduation programmes, but is a challenge in terms of scaling up. The evaluation also shows that participants can be highly heterogeneous in terms of endowments (human, physical and psychological), and therefore, in terms of performance. Segmenting support according to the capabilities of participants is therefore another challenge for implementing the programme at scale.
What next? From economic empowerment to gender equity
Economic empowerment of women is a major achievement of the graduation approach. However, strategies may currently fall short in addressing the social norms, unequal control of resources and power dynamics within which programmes are anchored. There is also evidence to suggest that women’s economic empowerment programmes can increase intimate partner violence. Moving forward, graduation programmes need to identify, test, and evaluate relevant tools and practices for advancing a gender transformative approach; one that addresses systematic barriers, including social norms, roles, and practices that are at the core of gender inequalities.
By the end of 2020, Fundación Capital expects to partner national governments in investing more than USD 70 million in the implementation of graduation programmes. These programmes will reach an estimated 75 000 families, or approximately 400 000 people.
Source: Montesquiou, A., and Sheldon, T. (2014), From Extreme Poverty to Sustainable Livelihoods A Technical Guide to the Graduation Approach, September 2014 http://www.cgap.org/sites/default/files/researches/documents/graduation_guide_final.pdf.
Notes
← 1. For more information: https://fundacioncapital.org/our-work/graduation/.