People living in extreme poverty are among the bottom 50 percent of those living below national poverty lines. At the global level, they are those living with less than USD 1.90 a day, estimated in 2012 to be nearly 902 million people. Although the extreme poor are those most in need, they are often, if inadvertently, overlooked by many development interventions. With a few notable exceptions, both microfinance and livelihoods programs typically do not reach the extreme poor.
Adapting a method pioneered by BRAC in Bangladesh and drawing from the most relevant aspects of social protection, livelihoods development, and access to finance to deliver results, the Graduation Approach targets the extreme poor with the goal of moving them out of extreme poverty and into a sustainable livelihood in a time-bound manner.
The Graduation Approach:
- Draws on the most relevant aspects of social protection, livelihoods development, and access to finance to deliver results;
- Combines support for immediate needs with longer term human capital investments, thereby protecting participants in the short-run while promoting sustainable livelihoods for the future;
- Purposefully targets the extreme poor—people at the lowest level of the economic ladder, who usually have few or no assets and are chronically food insecure;
- Focuses on five “building blocks”: targeting, consumption support, savings, an asset transfer, and skills training and regular coaching.
Multiplying the Graduation Experience
In May 2015, researchers from the Abdul Latif Jameel Poverty Action Lab (J-PAL) and the Innovations for Poverty Action (IPA) published an article in the Science Magazine explaining that the Graduation Approach is not only impressive, but has a lasting impact on the lives of the poorest. The research is based on randomized evaluations conducted by the two organizations across six of the countries where CGAP and the Ford Foundation piloted the Approach since 2006. Positive impacts were recorded well after the program ended in almost all of the sites where the program was evaluated.
As more governments and development agencies are demonstrating interest, a global graduation “community of practice” has come together to promote awareness of this approach and further work to design, implement and scale up graduation programs. The specific focus of CGAP and Ford Foundation work in this new stage (“Graduation 2.0”) is to support large-scale implementation and testing, especially by governments, and analysis of key policy-relevant topics including the relative cost-effectiveness of the approach, options to reduce cost and complexity, and challenges of implementation capacity, inter-agency coordination, partnership models and linkage arrangements. A specific area of interest is the role and impact of financial services in the graduation approach and how graduation approaches are or could be synergistic with national financial inclusion initiatives, social safety nets and large-scale digitization of social transfers.