What It Will Take to 'Graduate' 1.2 Billion People Out of Extreme Poverty

As we celebrate our success in defeating global poverty, let's not forgot the portion of those still caught in its trap, struggling to reach the bottom rung - and the innovative solutions being deployed to get them there.
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A new report from the World Bank brings welcome news on the global poverty front.

Despite the worldwide recession of the late 2000s, the total number of people living in extreme poverty has actually gone down in recent years -- so much, in fact, that we've reached the first of the UN's eight Millennium Development Goals five years ahead of schedule, a startling achievement. The number living in "extreme poverty" decreased by 100 million between 2005 and 2008.

As of four years ago, "only" 1.29 billion people lived below $1.25 a day. Preliminary data shows the trend continuing in 2010.

That's cause for celebration, for sure. But as Bill Abrams, president of the Trickle Up, a US-based nonprofit targeting those living in extreme poverty, points out in a recent letter to The New York Times, "giant numbers and statistical conceits can conceal as much as they reveal." The World Bank study defines extreme poverty as living on an average income of $1.25 per day, which actually lumps together a fairly wide spectrum.

The problem is the poorest of the very poor. Innovative tools like microfinance get a lot of attention, and deservedly so. The rise of micro-lending should get partial credit for our unexpected success in defeating poverty in recent decades. But among our greatest concerns should be those who struggle to survive at the lowest end of the spectrum -- the ultra-poor, who remain so mired in extreme destitution that microfinance is of no immediate use to them. They can't pay back loans, because any income they're fortunate enough to receive goes straight toward meeting basic nutritional needs.

Disproportionately female and rural, the ultra-poor receive the least attention. Recent years have seen some promising advances, however, with innovative solutions born in the global South now spreading around the world.

Since 2006, a group of foundations and non-governmental organizations have come together under the umbrella of Consultative Group to Assist the Poor (CGAP) and the Ford Foundation, piloting local adaptations of a program, originally started by BRAC in Bangladesh, tailored to meet the unique needs of the ultra poor. Called the Graduation Program, this effort sees a number of leading names in international development cooperating to tackle this problem, including The MasterCard Foundation, which is supporting BRAC Development Institute in qualitative research and monitoring, and others like Fonkoze, Plan, Trickle Up and more.

The idea is to "graduate" people out of extreme poverty through a rigorously tested sequencing of events. These programs are a global effort to understand how safety nets, livelihoods, and microfinance can be sequenced to create pathways for the poorest to graduate out of extreme poverty, in places as diverse as Peru and Yemen. The idea is to help the poorest up the bottom rung of the economic ladder, where they can take advantage of microfinance and other more traditional programs.

How does it work? First, the ultra poor need an immediate source of income. A temporary stipend helps create short-term stability, giving them breathing space while they learn the basics of livelihood, healthcare and personal finance. Second, they need to develop a steady income of their own for longer-term stability. Through livelihood training and confidence building, and by giving them a productive asset like a goat or a cow, we can help the ultra-poor create their own employment opportunities, whether it be cultivating a garden to sell vegetables or raising cows to sell milk.

Finally, we've found that they need regular support for a period of time. This means that every week, a program officer visits the participant's home to offer in-person coaching and guidance. Often, there are stories of these program officers going above and beyond the call of duty. I recall one about the area manager in Pakistan who ventured into a rural village at midnight to take a pregnant participant to a health center so she could safely deliver her baby.

This is an intensive process. There's no shortcut out of extreme poverty, as Khondoker Ariful Islam, BRAC's Afghanistan country representative, told The Guardian recently in an article about the organization's work with the ultra-poor in Bangladesh. "It is expensive but necessary when you are dealing with someone who has no goods, no savings, no assets," says Islam. It's not a safety net, but a chance for people to get themselves off government safety nets in places where they exist.

After two years, the participants "graduate" from the program. They no longer need the stipend or coaching at this point, but can go on to take out micro-loans to grow their own businesses. Studies have shown that three years after leaving the program, about 80 percent of program participants have remained out of extreme poverty, often more than quintupling their income.

The ultra poor have by far the longest climb up the ladder out of poverty, but there's a growing base of evidence that shows that with the proper tools, they can join the ranks of the millions who've already lifted themselves out. As we celebrate our success in defeating global poverty, let's not forgot the portion of those still caught in its trap, struggling to reach the bottom rung - and the innovative solutions being deployed to get them there.

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