Integrating Graduation into Cash Transfer Programs: Experiences from Latin America
The ‘Integrating Graduation into Cash Transfer Programs: Experiences from Latin America’ webinar took place on 22 August 2019. The event was organised by the Social Protection for Employment Community (SPEC) and the Fundación Capital and supported by the Australian Department of Foreign Affairs and Trade (DFAT) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). It discussed the integration of the graduation approach into broader social protection schemes in the Latin American context. The webinar highlighted the lessons learned in the country experiences of Colombia, Paraguay and Mexico.
The session was moderated by Lisa Hannigan (Director, Poverty and Social Transfers, Department of Foreign Affairs and Trade, DFAT, Government of Australia), who was joined by speakers José Julian Velasquez (Senior advisor, Victims unit, Government of Colombia), Jorge Maldonado (Researcher, Los Andes University) and Tatiana Rincón (Vice-President, Social Promotion and Livelihoods, Fundación Capital).
You can watch the webinar recording here and access the webinar presentation here.
Fundación Capital and the graduation approach
The webinar opened with an introduction to Fundación Capital, a social enterprise that seeks to improve the financial lives of people living in poverty across the globe. The institution works mainly in Latin America, in collaboration with governments and financial institutions, acting on three main areas: Financial inclusion, productive inclusion, and digital inclusion.
The graduation approach is employed in the foundation’s productive inclusion initiatives, mainly for being considered an effective and evaluated social and productive inclusion approach for tackling extreme poverty. The graduation approach is time bound, however, Fundación Capital relies on the notion that social protection should not be constricted by a time frame.
The implementation of graduation programmes can be divided into five main components, as illustrated in the figure bellow:
In collaborating with governments, Fundación Capital developed a series of innovative methods when implementing a graduation approach in a social protection programme. The institution uses information and communications technology (ICT) systems, reducing costs and allowing for better monitoring of agents in the field. Furthermore, Fundación Capital opts for cash-based assistance, rather than in-kind asset transfers, to motivate programme participants to jumpstart their chosen productive activity. Peer collaboration is also highly encouraged – good practices from other organisations are incorporated in the formulation process of graduation programmes.
With support from the Ford Foundation and the International Development Research Centre (IDRC) Canada, Fundación Capital started providing technical assistance to governments of four Latin-American countries, namely:
The programmes’ designs varied greatly:
Opportunities of integrating graduation into Conditional Cash Transfers (CCTs)
Many challenges were pointed out in the process of integrating the graduation approach with CCTs. One of the core components of graduation refers to targeting as well as providing a small stipend to allow some “breathing space” to people living in extreme poverty. These two elements were already considered in the establishment of CCT programmes in Latin America. Additionally, specific challenges were brought up:
- Coordinating several government institutions proved to be challenging, especially when considering the different scopes of work of different institutions.
- Budgetary regulation of public funds is not flexible and there are several rules that make operation difficult, such as timing, and the programming of budget.
- Graduation programmes last between 18 to 24 months, while government budgetary cycles are annual.
Despite the challenges, it is possible to integrate graduation within social protection and government social programmes. So far, evaluation results of government-led programmes in Latin America are like those obtained by NGOs that operate in “controlled environments”.
- Evaluating the graduation approach
Fundación Capital assigns a special focus to the conduction of evaluations of graduation programmes. With the assistance of Los Andes University, a comprehensive evaluation agenda was established, composed of both qualitative and quantitative approaches:
- Quantitative:
- Outcomes Assessment (OA): Measure and analyse project participant data prior to implementation and again afterwards.
- Impact Assessment (IA): Gather data on the participant population and on a group of people with similar characteristics to this population.
- Qualitative:
- Process Evaluation
- Life Stories
- The findings
After the conduction of the evaluation of graduation programmes conducted by the foundation in Latin America, the results were very similar in all country-cases:
With regards to the cash benefits received by programme participants, it was found that participants adequately used the cash provided as seed capital in order to start or expand their business. This data further justifies the usage of cash transfers instead of in-kind assistance, which allows beneficiaries to choose the way in which they will spend their benefit. To better illustrate the efficiency of this mechanism, in Paraguay, US$ 500 USD was given to programme participants. Six months after the end of the programme, their businesses were worth US$ 633 and US$ 760.
Additionally, it was noticeable that participants changed their mindset from the short-term to a medium- and long-term perspective, overcoming the reality that families living in extreme poverty usually think short-term, being forced to focus on daily needs. Consumption amongst participants did not increase, instead, the beneficiaries tended to save and reinvest more.
Digital solutions have been key to programme quality, delivery, and training. Reducing costs and increasing the possibility of scalability have been instrumental in narrowing the digital gap. In this sense, future implementations should employ digital solutions into their design, such as relying more heavily on e-coaching instead of face-to-face coaching.
Despite not having been a key part of the experiences presented, future programme designs should promote gender equality, especially when considering that targeted promotion of equality in the household can prevent issues such as intrahousehold violence and early pregnancy.
Finally, the necessity to strengthen ties with the private sector was highlighted, mainly when scaling up the project, to promote small value chains for the participants.
The Colombian experience – Transformando Mi Futuro
Basic safety nets, such as cash transfers, focus on providing a minimum level of wellbeing, shielding people from misery. These safety nets are generally focused on children, while in graduation programmes the focus shifts to the working age population, in an attempt to improve this population’s resilience.
In Latin America graduation programmes were initially implemented by governments. One of these experiences, the Colombian programme Transformando Mi Futuro organized by Colombia’s victim’s unit, consisted in distributing indemnifications to victims of the armed conflict in the country. The purpose of the programme was to provide comprehensive support to victims who were interested in reinvesting their compensation into productive activities. In addition to the economic outcomes of the programme, Transformando Mi Futuro incorporated in its design the aspect of emotional recovery.
The benefits were assigned in accordance to each personal experience, and how they have been affected by the conflict. The programme aimed to develop abilities related to the participants previous professional experiences, thusly improving their socioeconomic capital. Beneficiaries were indicated how to better manage their resources and themselves by coaches, who were responsible for accompanying the development of the victims of the armed conflict. In essence, the effectiveness of Transformando Mi Futuro lays on the willingness of government officers to promote and engage in the implementation of the programme.
The programme promoted an improvement on participant’s soft skills. The life skills coaching component was highlighted as one of the programme’s biggest success, due to its power to effectively change the lives of the beneficiaries. This continuous support empowered beneficiaries to better guide their choices, thusly improving their chances of getting out of poverty.
In this case, the main challenge to the graduation approach is scaling up to reach more beneficiaries. This remains a challenge when the efficiency of the programme is determined by the officer or coach who will guide programme participants – entailing in the development of large-scale capacity building exercises. Further, it is necessary to recognize that participants are heterogeneous, possessing different demands and composing different categories according to their abilities, which indicates the necessity to tailor the programme to individual needs.
Q&A Session
During the Q&A session, many questions were raised around perspectives of gender equality.
Throughout the application of Fundación Capital’s graduation programmes in Latin America, the underlying theme of gender equality was a matter of interest to programme participants regardless of gender and age, as a part of the process of changing beneficiary’s attitude towards life. However, this result was not expected, as a gendered approach was not predominately present on programme designs. Still, the graduation approach has the power to disrupt the social organization of households, specially when referring to women gaining more economic power.
Additionally, questions surrounding the theme of technology were addressed. In the Colombian Transformando Mi Futuro experience, for instance, it was found that e-coaching was an efficient manner of reaching beneficiaries through mobile devices. This process not only allowed participants to learn about savings, but also to become more familiarized with the internet, facilitating their entry into the labour market and increasing participant’s self-confidence.
Questions referring to programme design, implementation, and financing, mainly in relation to the design of projects that are friendly towards the illiterate, with regards to the action of the coaches in guiding future investments, and in promoting internal markets, were also discussed.
The full Q&A session can be accessed here.
This blog post is part of the Linking Social Protection to Sustainable Employment webinar series, which brings together the summaries of webinars organised by Fundación Capital and SPEC on the topic. Please join the Online community Social Protection for Employment if you are interested in following the most recent discussions on the topic. If you have any thoughts on this webinar summary, we would love to hear from you. Please add your comments below!
