Graduating People Out of Extreme Poverty

A week ago, on December 8, 2010, I had the opportunity to attend the Microlinks After Hours Seminar #47 titled "Creating Pathways for the Poorest: Lessons Learned from the CGAP- Ford Foundation Graduation Program." The presentations by Aude de Montesquiou, Microfinance Analyst of the CGAP-Ford Foundation Graduation Program and Bill Abrams of the well-known US based non-profit Trickle Up were informative, as well as stimulating.

Recognizing that microfinance has difficulty reaching the poorest and that access to services alone—especially credit— is often inadequate to help the poor truly break out of poverty, CGAP has partnered with the Ford Foundation to implement the Graduation Program. They are working together with ten institutional partners to develop and refine their approach to poverty reduction. Each partner is focused on delivering the proper mix of assistance and sequencing of safety nets + livelihoods + microfinance to create pathways for the poorest to graduate from extreme poverty.

Based on methods pioneered by BRAC of Bangladesh and others, the underlying approach includes market analysis, regular coaching and access to credit to foster sustainable livelihoods. Ms. Montesquiou explained that the graduation model is constructed along a broader continuum than traditional microfinance to effectively reach the poor, beginning with participant selection and running up through consumption support, savings services, skills training and asset transfer. Along with non-profit implementers such as Trickle Up, there are several widely known microfinance institutions participating in the Graduation Program including SKS, Fonkoze, Bandhan, and ODEF.

While there is no shortage of interesting discussion points and fresh ideas that arise when researching graduation programs, some that resonate with me include:

• Scalability,
• Cost effectiveness,
• Partnerships, and
• Leveraging this type of service through government-to-person (G2P) programs to strengthen the base of an emerging economy.

In September 2010, USAID released a press statement titled “Bilateral Donors' Statement in Support of Private Sector Partnerships for Development.” In that statement, USAID noted that “true partnerships must leverage the skills, expertise and resources of all parties, and that all parties must share in the risks and rewards of the partnership.”

This collaboration between CGAP, the Ford Foundation and their many local implementing partners like TrickleUp is an example of “true partnership”. With its ongoing work to understand and enhance the graduation model, the Graduation Program is shining much needed light into how development practitioners can reach deeper when seeking to bring financial access to the poor. Moreover, the program gives real attention to the challenges of struggling micro-entrepreneurs. Holistic programs like this one will help ensure that microenterprise development creates real and lasting pathways for the poorest to escape poverty.