Opinion: How to find a resilient solution to extreme poverty

In the last two weeks, the devastation in Haiti from Hurricane Mathew has grown more and more shocking. Families woke up to see their neighborhoods in tatters, and the number of recorded deaths has risen to horrific proportions — from 100 to a staggering 800 and still increasing. In the months and years ahead, it is the extreme poor, many of whom are landless women without a steady job or income, who will suffer the most.

Although there is some initial evidence of what “works” to help these extremely poor families bounce back after disaster, far more research is needed to identify models that successfully build resilience after economic shocks.

Significant evidence so far points to the success of graduation style programs to get people out of poverty. These programs help the poorest “graduate” from destitution into sustainable livelihoods, largely by fostering self-dependence and resilience before disaster hits. In 2015 the Consulting Group to Assist the Poor at the World Bank and Ford Foundation released research documenting how graduation programs worked across contexts, in six countries, with six different implementers, to assist the poorest people out of poverty.

Graduation programs, modeled after BRAC’s Targeting the Ultra Poor program in Bangladesh, provide wraparound services over the course of 24 months. They combine financial literacy and technical skills training, with support: food stipends; health care; weekly visits from a coach; and an asset transfer such as a goat or a cow so that the participant can start her own business. Such programs have helped 1.7 million households in Bangladesh graduate out of poverty into sustainable livelihoods. Remarkably, 95 percent of graduates stay on an upward economic trajectory five years after the program ends.

How would these women fare if disaster strikes?

Anecdotal evidence indicates that graduation programs can help the poorest withstand and recover more rapidly from the economic shocks that often result from natural disasters. Take for example, Fonkozé, Haiti’s largest microfinance institution that has been running graduation programs, with some assistance from BRAC, since 2007.

“In late 2012, two hurricanes passed through the Central Plateau with dire consequences for our members,” said Steven Werlin, who works for Fonkozé's CLM program. “Those in the program at the time suffered extensive losses in livestock and harvests. It was right afterwards, in early 2013, that Concern Worldwide evaluated participants in our pilot four years after graduation. They found that two-thirds had either sustained their progress since graduation or made further progress, despite the hurricanes.”

BRAC has seen similar situations in South Sudan. In August 2015, one year into the 24-month program, violence began in the northern part of the country. Inflation rates skyrocketed and severe food shortages led to a state of emergency. Yet despite these economic shocks felt by others in the community, 97 percent of the 240 women in the program were still able to increase their consumption thanks to the resources, assets, and skills they obtained during the program. Their families benefited too; participants’ children were 53.3 percent less likely to be underweight compared to those of women not in the program. These South Sudanese women went from the poorest people in their communities to small business owners able to withstand the country’s economic volatility.

Another example from Innovations for Poverty Action, which conducted the six randomly controlled trials on the graduation pilots, has seen several examples of how graduation programs can foster resilience.

“Several of the sites where we did graduation research experienced calamities and other shocks, including in Pakistan during the devastating floods of 2010,” said Nathanael Goldberg, director of IPA's social protection program. “The success of the participants in Pakistan indicates the graduation approach can be helpful in managing shocks. In our current work, we are exploring how interventions similar to graduation, sometimes with additional complementary services, can help households manage risk, including due to climate change. In more extreme situations, such as in Yemen, the graduation approach produced some useful outcomes for beneficiaries but was largely not able to overcome the severity of the country’s instability.”

Graduation programs are targeted specifically at the poorest people, so other models are needed to foster resiliency at wider national levels. In Brazil, for example, conditional cash transfers proved to be effective and also showed economic returns.

During Brazil’s short, sharp recession in 2011, Bolsa Familia, which provides conditional cash transfers to poor families, proved instrumental in helping the economy recover and buffered the impact on the poorest families. According to the International Policy Center, the program generated reliable and sustained income for families in poverty, despite the economic hardships felt across the country. At a time when household consumption would usually be dropping, Bolsa Familia recipients were able to maintain their consumption. Children’s nutrition intake was also not impacted and children stayed in school and out of the workforce.

Even more remarkable was the economic impact: A study from IPEA found that every 1 percent of the gross domestic product invested in Bolsa Familia resulted in a positive change of 1.44 percent in GDP and 2.25 percent in household income. Investing in the poorest families paid off — it stimulated local markets and funds were channeled into small and microenterprises, which also boosted job creation.

The key lesson here is that countries best able to diffuse the adverse impact of crisis are those that already have in place solid social protection programs that can act as a social buffer and economic stabilizer. Schemes operating in well-prepared countries provide policymakers with immediate responses to help offer adequate protection to those affected.

In the last few years, graduation programs have been launched in more than 40 countries worldwide. That number will only grow in the coming months. These programs and other models can help soften crises for the poorest people, while also stimulating local markets and economies. Now is the time to develop and invest in research to better understand how families build resilience and manage risk, especially in disaster-prone and climate-affected regions. This evidence will ensure that we know where to invest to help countries such as Haiti bounce back.

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