Building Stable Livelihoods for the Ultra-Poor

A multifaceted livelihood program has improved the standard of living for over 550,000 people in Bangladesh and India following randomized evaluations by J-PAL affiliates.

Beneficiary of BRAC's program in Bangladesh | Photo courtesy of BRAC

A multifaceted livelihood program providing ultra-poor households with a productive asset, training, coaching, access to savings, and consumption support was designed by BRAC in Bangladesh and has been replicated by several implementing partners across the world. Research by J-PAL affiliates has shown the model has led to large and lasting improvements in consumption, food security, asset holdings, savings, and in some contexts improved psychosocial well-being.

The Scale-Up: The “Graduation approach” has been scaled up by BRAC to over 120,000 female participants across Bangladesh and nearly 40,000 women by Bandhan Konnagar in India.

Originally developed by Bangladeshi non-profit organization BRAC to help poor women graduate from extreme poverty, the “Graduation approach” has been adapted and scaled to assist hundreds of thousands of ultra-poor households transition from insecure to sustainable livelihoods. BRAC began implementing the program in 2002. Rigorous evidence from a randomized evaluation conducted over the next five years by J-PAL affiliates Oriana Bandiera, Robin Burgess, and Imran Rasul together with Narayan Das, Selim Gulesci, Munshi Sulaiman, and Raniya Shams helped BRAC generate support to scale up the Graduation approach in Bangladesh and other parts of the world.

Bandhan Konnagar, the non-profit arm of financial institution Bandhan, adapted the model in West Bengal, India. A randomized evaluation by J-PAL affiliates Abhijit Banerjee, Raghabendra Chattopadhyay, Esther Duflo, and Jeremy Shapiro, and subsequent policy outreach by J-PAL’s regional office in South Asia assisted Bandhan Konnagar in raising resources to expand the model in eight Indian states during 2012-2015.

The Problem: Ultra-poor households often depend on insecure livelihoods and face a variety of impediments to sustainably transition out of poverty.

Ten percent of the world’s population lives on less than US$1.90 per day, the World Bank international poverty line. Many of these families depend on insecure and fragile livelihoods, including casual farming and domestic labor. Their income is often irregular or seasonal, putting laborers and their families at risk of hunger. The first target of the Sustainable Development Goals is to eradicate extreme poverty for all people everywhere by 2030. Achieving this target will require the poorest of the poor to shift to more secure and sustainable livelihoods.

Self-employment is often the only viable alternative to menial labor for the ultra-poor. Yet many lack the necessary cash or skills to start a viable business. To alleviate these constraints, many international and local nongovernmental organizations have begun supporting multi-faceted programs that foster a sustainable transition to more secure livelihoods.

The Research: J-PAL affiliates evaluated the Graduation approach in seven countries across a diverse set of contexts and implementing partners.

The Graduation approach combines six complementary interventions into a comprehensive livelihoods program. Implemented together over two years, the program is a “big push” to help those living in ultra-poverty to transition to more secure livelihoods. The six components are:

  1. Productive asset: One-time transfer of a productive asset such as a cow, goat, or supplies for petty trade
  2. Technical skills training: Training to manage the productive asset
  3. Consumption support: Regular cash or food support for a few months to a year
  4. Savings: Savings account access or encouragement to save
  5. Home visits: Frequent home visits by implementing partner staff to provide accountability, coaching, and encouragement
  6. Health: Health education, health-care access, and/or life skills training

Encouraged by evidence from an evaluation during the first phase of the program, BRAC partnered with J-PAL affiliates to conduct a randomized evaluation of the Graduation approach in Bangladesh in 2007. At the same time, a different set of J-PAL affiliates teamed up with Bandhan Konnagar to rigorously evaluate a very similar model in West Bengal, India. Results from these studies showed that the Graduation approach increased self-employment income and led to broad and lasting economic impacts. In Bangladesh, the program enabled the poorest women to shift out of farm labor and into running small businesses, increasing their earnings by an average 38 percent four years after the productive asset transfer. In India, Graduation households experienced a five-fold increase in livestock revenue relative to comparison group households and were more likely to report having enough food to eat.

"Very few programs are designed for this segment of the poor. For a total cost of Rs. 24,000 (US$360), this program provides a sustainable path out of poverty over two years."
-Mr. Chandra Shekhar Ghosh, Chairman and Managing Director, Bandhan Financial Services Limited

To date, researchers have rigorously evaluated the Graduation approach in Bangladesh, Ethiopia, Ghana, Honduras, India, Pakistan, and Peru, with ongoing follow-up surveys measuring longer-term effects. Across a diverse set of contexts and implementing partners, this cost-effective program has led to large and lasting impacts on ultra-poor households’ standard of living.

From Research to Action: Rigorous evidence fostered support for replicating and scaling the Graduation approach around the world.

In 2007, at the start of the randomized evaluation including J-PAL researchers, BRAC was planning to expand the program to 270,000 people over the next five years. BRAC was interested in working with J-PAL researchers to evaluate the model’s impact at scale and compare the results to an earlier impact evaluation led by an internal team of BRAC researchers. The randomized evaluation generated further evidence of the model’s effectiveness and spurred BRAC to consider how the model could be further adapted to encourage school attendance and improve child nutrition. During 2012-2015, BRAC scaled the Graduation approach to over 120,000 women – helping to improve the lives of more than 430,000 people including the benefits to their immediate families.1 BRAC also began pilots in Afghanistan, Pakistan, and South Sudan to contextualize the model to these settings.

In India, Bandhan Konnagar and the policy team at J-PAL South Asia are collaborating to share evidence of the model’s effectiveness with governments, donors, and civil society. They have developed partnerships with USAID Development Innovation Ventures (DIV) and an Indian conglomerate to fund Bandhan’s expansion of the model to over eight states in the country including Assam, Bihar, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Telangana, and Tripura. Since 2011, Bandhan Konnagar has reached nearly 40,000 ultra-poor women across the country, benefiting over 130,000 people in total. In 2016, Bandhan Konnagar and J-PAL South Asia signed an agreement with the Jharkhand state government to work with 4,000 women in the state’s poorest two districts.

Researchers and practitioners are seeking to better understand how to most effectively optimize the model’s components in different settings. BRAC and Bandhan Konnagar have provided technical assistance to implementers interested in adopting the approach.

In total, the Graduation approach has been adapted to support a transition to sustainable livelihoods for ultra-poor families in about 20 countries. In Ethiopia, for example, the model is being incorporated into the national Productive Safety Net Program, which will reach an estimated 675,000 households. The results from high quality research are spurring international interest in further innovation. J-PAL affiliates and other researchers are beginning evaluations of the next generation of the program including a model with less-intensive coaching component and a version for urban areas.

References

Bandiera, Oriana, Robin Burgess, Narayan Das, Selim Gulesci, Imran Rasul, and Munshi Sulaiman. “Labor Markets and Poverty in Village Economies” Working paper, March 2016.

Banerjee, Abhijit, Esther Duflo, Nathanael Goldberg, Dean Karlan, Robert Osei, William Parienté, Jeremy Shapiro, Bram Thuysbaert, and Christopher Udry. 2015. “A Multi-faceted Program Causes Lasting Progress for the Very Poor: Evidence from Six Countries.” Science 348 (6236): 1260799-1–1260799-16. doi:10.1126/science.1260799

1Based on an estimate of 3.5 people per household