One Organization is Harnessing the Power of the Public Sector to Raise the Floor on Poverty

One Organization is Harnessing the Power of the Public Sector to Raise the Floor on Poverty
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Governments are Using Holistic Approaches to Help Their Most Disenfranchised Citizens

“Graduation programs effectively empower women at the bottom of the pyramid. It raises their self-esteem and confidence and gives them the capital and skills they need to transform their own lives.”

Tatiana Rincón has spent most of the past decade advocating for better lives for some of the most disenfranchised people on earth. As the Director of Social and Livelihood Promotion at Fundación Capital (FK), Rincón works to ensure that families throughout Latin America living in extreme poverty receive the resources and support they need to lift themselves out of poverty.

Rincón and her team at FK are advocates for the Graduation Approach, which recognizes that poverty alleviation initiatives must improve the entire human experience. Such programs provide a stipend for food, and equip heads of households with a sustained source of income generation. Program participants also receive ongoing coaching in financial literacy, entrepreneurship, and social integration. This holistic approach empowers people with the support they need to unlock their full human potential, to escape the poverty trap and begin to define their own way forward. A multiyear and multi-site randomized controlled trial, published in Science magazine in 2015, showed the statistically significant and sustained impact of such an inclusive method of poverty alleviation.

“Extreme poverty,” says Rincón, “is not about a lack of ideas. It’s about a lack of access to capital, skills, and opportunities. People who live in extreme poverty are very resourceful, we just need to empower them with access to the critical resources they need.”

FK’s Graduation programs focused on helping women like Nelsy, who never studied or went to school, but who always had a way with animals. With support from the government’s pilot Graduation program, she received two years of training, and the start-up capital to buy a box of chicks and some feed, and started selling chickens. Latin American governments have supported income generation programs for decades, but they typically only reach middle class or working poor citizens who already have jobs or other income generating activities. Most women like Nelsy don’t have access to such programs, or even microcredit. Their life choices are limited. Born into families plagued by extreme poverty, they can often barely afford enough to eat. A growing number of organizations like FK are seeking to break this vicious cycle of poverty by providing the world’s most marginalized people with the dignity of reliable income, a livelihood, and the ongoing support to escape the poverty trap. Like Nelsy, women around the world are receiving the critical resources they need to change their own lives.

FK had a long history of helping recipients of conditional cash transfers use financial tools to better their futures. Rincón and her team saw the opportunity to build on this experience, to bring together the Graduation Approach and government social protection programs for greater impact and scale. Building on existing social welfare schemes, FK’s public-sector Graduation programs use existing cash transfer programs to provide both food stipends and seed capital for income-generating activities. FK has also produced and deployed a tablet-based entrepreneurship training program that emphasizes self-empowerment, budget management, and financial planning. It also often serves as a first point of digital inclusion, allowing new entrepreneurs to learn the curriculum and the tremendous benefits gained from access to the internet at the same time.

Children in Latin America use the Apptitude Tablet to engage with the internet

Children in Latin America use the Apptitude Tablet to engage with the internet

Fundacion Capital: https://medium.com/ascendant-citizen/fundaci%C3%B2n-capital-presents-apptitude-377f7db25185

Of course, public-sector Graduation programs are not without their challenges. A country’s priorities can change dramatically from one day to the next, shifting political support for social welfare programs. While public-sector programs can reach scale more quickly, managing government bureaucracies to make the commitments needed to make them sustainable can take time. Some leaders claim that Graduation is too costly per capita, but its effectiveness is unrivaled in the poverty alleviation landscape. Public-sector Graduation programs may not be suitable for every country or context, but they deserve consideration as a reliable way to eliminate extreme poverty by 2030 and guarantee economic citizenship and social inclusion for those most in need.

Many experts continue to debate the value of in-kind transfers over seed capital. While development professionals dispute the merits of chickens over cold cash, governments often worry that cash transfer will be misspent. Traditional productive inclusion projects (Graduation is one such type of program) limit the options of the assets participants can choose. Rincón emphasizes the potential of all people to fulfill their potential.Just because someone is poor doesn’t mean they don’t have ideas,” she said. “With the right resources,” Rincón believes, “everyone can unleash their creativity, expand their business, and make a profit.” FK seeks to empower every individual to work to their strengths. Its mobile training program helps would-be entrepreneurs assess their town’s needs and their own abilities. Whereas many livelihood develop programs require participants to adopt certain crafts or businesses, FK’s approach empowers entrepreneurs to choose the productive asset that’s right for them.

Public-sector Graduation programs are not limited to what governments can achieve alone. The Paraguayan government is integrating social protection programs and private-sector investment to expand possibilities for farmers living in extreme poverty. A social fund, underwritten by private investors, absorbs the financial risk, such as the risk of bad weather ruining the harvest of the first product invested in by the group, chamomile. A guaranteed customer ensures livelihoods for thousands of Paraguayos as well as potential financial returns to the investors.

So far, FK’s public-sector Graduation programs have reached 28,000 families in Colombia, Honduras, Mexico, and Paraguay, an estimated 150,000 people. In 2016, governments that work with FK committed to spend more than $70 million to reach 75,000 families by the end of 2018. Promising public-sector Graduation pilots are underway in Tanzania, Mozambique and elsewhere in Africa.

Looking towards the future, Rincón is hopeful about the opportunities that lie ahead. “As a partner to governments across Latin America and Africa, we are excited about the ways Graduation can transform the social welfare landscape,” said Rincón. “For so long, helping those living in the worst kinds of poverty seemed impossibly complicated. Now, finally, we have a process that we know works,” she said, smiling. “We want to do everything we can to help governments take the Graduation approach to scale.”

The growing number of countries embracing Graduation could signal the dawn of a new era in the fight against poverty. With the right innovative and collaborative mindset, and the necessary digital tools, Rincón and her team at FK are working to ensure that cross-sector Graduation programs empower a growing numbers of women like Nelsy to work their way out of poverty, for good.

Read more about Fundacion Capital’s public-sector Graduation Programs on Ascendant Citizen on Medium.

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