2.7. Graduation Approach to Finance
According to UNHCR, the graduation approach is “a sequenced, multi-sector intervention that supports the poorest and most vulnerable households to achieve sustained income and move out of extreme poverty within a specified period. Graduation programs provide a comprehensive package that includes consumption assistance to meet basic needs, skills training, seed capital or employment opportunities to jump-start an economic activity, financial education and access to savings, and mentoring to build confidence and reinforce skills” (See: UNHCR Graduation Approach).
A graduation approach is unique from other financing methods in that it explicitly targets the poorest households and provides them with resources to “graduate” into eventually developing a small to medium-sized enterprise.
The approach can be summarized by the following steps:
- Address immediate consumption needs. The poorest households are often consumed with day-to-day survival, therefore eliminating the possibility of saving, investing or dedicating time to building new skills.
- Once basic needs are met, aid providers can begin to provide training relating to saving money, transferring assets (such as livestock), life skills, and technology.
- Foundational training, along with consistent counseling, opens up opportunities to consult other financial methods and institutions to continue to improve a household’s livelihood.
See A Technical Guide to the Graduation Approach for a more detailed overview of the graduation approach in finance.