Increased Resilience in the face of Covid-19: RCT results from the Graduation Program Emprendiendo una Vida Mejor in Honduras
A recent evaluation of Emprendiendo una Vida Mejor (Starting Up a Better Life) of Honduras, a graduation program linked with the government’s national cash transfer scheme, found strong evidence of resilience among the participants to cope with the COVID-19 shock. The evaluation was undertaken after one year of completion of the program. During the interval the participants went through not only the COVID 19 shock, but also faced a drought and a hurricane. The evaluation provides important lessons for policymakers in relation to recovery efforts for the extreme poor people from the devastating impact of COVID-19 and other social, economic, and environmental shocks.
The evaluation results were shared through a webinar “Increased Resilience in the face of Covid-19: RCT results from the Graduation Program Emprendiendo una Vida Mejor in Honduras”, organised by Social Protection for Employment Community (SPEC), Fundación Capital, the Inter-American Development Bank (IDB) , the Government of Honduras and the University of the Andes (UNIANDES) and hosted by socialprotection.org. If you missed the webinar or want to watch it again, you can find the recording of the event here and the presentation here. This blog is based on the discussion in this webinar.
Graduation approach refers to a comprehensive, time-bound and sequenced set of intervention that aim to lift people out of extreme poverty and put them on a sustainable livelihood trajectory. This approach is also referred to as economic inclusion approach, from the perspective of integrating extreme poor people with economic activities and with the community. Graduation approach is increasingly adopted by governments across the world. The 2021 State of Economic Inclusion Report of Partnership for Economic Inclusion (PEI) identified 219 graduation/economic inclusion programs in 75 countries reaching 92 million people.
Graduation approach has proved to be effective in sustainable poverty reduction. A review found evidence of sustained impact of 80 graduation programs in 37 countries. (Paul V. B. et al. 2021). The PEI report observed that there is a strong potential for using graduation approach in the long-term recovery efforts to address the economic impact of COVID-19.
About Emprendiendo una Vida Mejor (EVM)
As presented by Jorge Maldonado from the Universidad de los Andes, EVM is implemented by the Government of Honduras with funding from Inter-American Development Bank (IDB) and technical assistance from Fundación Capital. Fundación Capital, a non-profit social enterprise, works to improve the economic and financial lives of poor people around the world, partnering with governments and the private sector. The first phase of EVM supported 755 families from July 2018 to December 2020. Currently the Honduran government is preparing for a second phase with support from IDB and Fundación Capital. EVM provides a set of interventions including consumption support, savings promotion, asset transfer, technical support, and coaching. The participants receive a one-off cash transfer of USD350 for purchasing assets (supplies) for starting up a productive activity or boosting an existing activity, such as a grocery store, a restaurant, or a small plant nursery. They continue to receive a quarterly cash transfer from the national conditional cash transfer Bono Vida Major (up to USD411/year), which serves as consumption support – a usual component of graduation approach. Intensive coaching is an important component of EVM, with business-coaches visiting the participants every two weeks to provide training on financial management, how to run a productive activity and life skills.
Evaluation results
An evaluation of EVM was conducted by the Platform for the Evaluation and Learning of the Graduation Programs in Latin America, based in the Faculty of Economics of the Universidad de Los Andes, in Colombia. Applying Randomized Control Trial (RCT) methodology the evaluation observed socio-economic changes against set indicators for the program participants (treatment group) and a comparable group of non-participants (control group) before and one year after the intervention. The following were the key indicators: assets, income, financial inclusion, subjective wellbeing, consumption, food security and poverty. At the baseline, both groups had similar status for all the indicators and other demographic and socio-economic variables. At the end-line (one year after completion of the project cycle), the treatment group showed significantly better results than the control group in most of the indicators. The average value of their business-assets increased 210% percent (or USD $496) higher than the control group. Monthly income from the productive activities increased significantly that was maintained during and after COVID-19 related lockdowns. Before lockdowns, average monthly income was USD28.5 or 342% higher than the control group, which remained similar during the lockdowns. It remained USD13.3 higher than the control group after the lockdowns, which was still significant. The treatment group showed improvement in financial inclusion, with USD51.07 higher formal savings than the control group. Improvement in financial inclusion led to a decline in informal borrowing from loan sharks by 13.1%. Household food consumption of the treatment group increased 19% higher than the control group. The proportion of households under extreme poverty declined by 7.4%.
Using a qualitative analysis, the evaluation found evidence of improvement in participants’ perception of wellbeing, migration and gender. EVM addresses the underlying causes of migration such as unemployment or lack of access to land. As a result, there was significantly less migration among the treatment group than the control group. A gender transformative approach is integrated into the design of EVM including in the monitoring and evaluation framework and the curriculum for coaching. The gender approach addresses barriers that women face to run a productive activity such as lack of economic power, lack of confidence, lack of agency, lack of participation in communities and gender-based violence. It is worth mentioning, 77.2% of the participants in the first phase were women.
Cost-effectiveness
Graduation approach is apparently expensive in terms of cost per family. However, if the returns of a graduation program are considered, it would appear to be cost-effective. Cost of graduation program varies from country to country and largely influenced by the value of the productive activity. Global experience shows, a graduation program pays off in couple of years. For EVM, per participant cost was estimated as USD 2,268 while the evaluation estimated the return as USD 2,239 in 24 months and USD 2,809 in 36 months. While talking about cost-effectiveness we need to consider the following aspects: cheaper interventions do not have evidence of returns at a similar degree of graduation approach; the returns of graduation programs have proven to be sustainable; graduation programs often have spill-over effects on the local community that is often missed out from cost-benefit analysis; and finally, we need to consider the cost of non-investment for eliminating extreme poverty. In longer term, extreme poor families pay a huge economic and mental cost such as for health services, losing income due to illness or low productivity and passing on poverty to the next generation, as the children never achieve their full potential. In Honduras, families went through a drought, a hurricane and the COVID 19 shock. These have huge impact in terms of economic cost and wellbeing. Families participating in EVM overcame these shocks and still they had some savings.
Adaptability of graduation program to shocks
During the COVID 19 pandemic, graduation programs in many countries have been implemented with significant adaptation in design. The implementation of EVM’s 1st phase was completed before the outbreak of COVID 19, but similar programs in Colombia and Paraguay supported by Fundación Capital went through such adaptation. Due to restrictions on movement the coaches could not physically visit the participants for face-to-face sessions. So, delivering the coaching component was a key challenge. To address this challenge the programs heavily relied on digital technology. Fundación Capital retrained the staff and coaches for running the activities remotely. Participants also had access to a digital training-curricula called AppTitude, designed specifically for this program. As soon as the movement-restrictions were relaxed the staff started to meet the participants face to face. Fundación Capital recognizes that implementing such program only digitally is very hard, meaning there is a critical need for physical meeting between the staff and the participants to achieve the full potential of the programs.
Three lessons about productive activity
EVM provides couple of lessons around choosing productive activities. Firstly, the participants should be given freedom to choose a productive activity rather than the program imposing it on them but considering the opportunities and challenges of the local markets. As EVM participants had the liberty to choose their productive activity they showed ownership and gave maximum effort to make them success. Secondly, engaging with local communities and gathering local knowledge provide important insights for designing productive activities and other aspects of a graduation program. Thirdly, it is important to diversify productive activities. In this case, if a particular productive activity doesn't work for a family, they have opportunity to build on another productive activity.
Conclusion
As the governments across the world are looking for options for rebuilding livelihoods of the poor people, there is a realisation among the experts and policymakers that social protection systems need to be adaptive to be able to cope with future shocks. The graduation approach shows a great potential in this regard. Graduation programs are cost effective investment with sustainable results. Governments face challenges regarding capacity to implement a graduation program and in getting political support for a big budget, but if there is political will these challenges are not hard to overcome. Experience from Honduras and other countries shows that evidence plays an important role in mobilizing political will.
We appreciate Luis Tejerina from the IDB, Jorge Maldonado from UNIANDES, and Carolina de Miranda from Fundación Capital for presenting, and Aude de Montesquiou for moderating the session.
This was the twelfth webinar of the Linking Social Protection to Sustainable Employment webinar series, which was organized by GIZ and SPEC. Please join the Online Community Social Protection for Employment if you are interested in following the most recent discussions on the topic.
