Women in an Internally Displaced Persons in Abuja, the Federal Capital of Nigeria, 2018.

Increasing income and resilience of the poorest: The role of economic inclusion programmes in social protection systems

By 1 : Aude de Montesquiou and Syed M. Hashemi (Partnership for Economic Inclusion 2 at the World Bank) and Alessandra Heinemann (ADB)

While the past two decades saw spectacular progress in the fight against poverty, more than 10% of the world’s population – 735 million people – still live below USD 1.90 per day. Ending poverty in all its forms everywhere as envisioned in Agenda 2030 will prove challenging. Reaching the poorest is in itself difficult, but even more so is getting them onto a sustained pathway out of poverty because of the need for carefully managed, multi-sectoral interventions.

What could help? The graduation approach is one example of targeted household-level economic inclusion approaches with a proven track record of ensuring sustainable pathways out of extreme poverty.3  The graduation approach is specifically defined as a time-bound multi-sectoral “big push” intervention designed to overcome the multiple barriers that prevent extremely poor and vulnerable households from earning enough income and building sufficient human capital and assets to break out of such extreme poverty. The graduation approach typically offers extremely poor and vulnerable households a sequenced package of consumption support, of access to savings services, technical skills, transfer of productive assets, seed capital or an employment opportunity, and of coaching.

It is no wonder, therefore, that governments are starting to implement these types of economic inclusion approaches as a way to build ladders out of poverty for extremely poor and vulnerable families. In fact, nearly 100 graduation-type programmes across 43 countries exist today, directly reaching an estimated 14 million people. Government take-up has dramatically increased since 2016, with 34 governments implementing and/or funding programmes (a two-fold increase since 2016). Some programmes are growing rapidly and increasing geographic coverage: 21 government programmes in 18 countries are already scaling towards national coverage, such as Paraguay’s Seeding Opportunities Family by Family. Some governments are adapting their approaches to certain groups, such as refugees or young people, and in specific contexts related to, for example, conflict or climate change. Most programmes offer a holistic package, tailored to the local context, and many are experimenting with ways to reduce cost and complexity while maintaining effectiveness.

What’s clear in most countries is that only governments have the capacity to fund and reach massive numbers of the poorest and most vulnerable. And as most governments build social protection systems to protect the poor and vulnerable and enable them to escape poverty, the graduation approach for economic inclusion is a critical component. In fact, PEI’s 2018 State of the Sector report indicates that 32 government programmes in 20 countries are following this strategy — incorporating productive components into their social protection systems, typically by adding a package of livelihood support to existing cash transfer programmes.

Yet, integrating narrowly targeted economic inclusion approaches into social protection systems is not easy, though the promise is great. Consider three inter-related challenges:

  • identifying individuals who could benefit from economic inclusion interventions (as opposed to those for whom long-term traditional social assistance is more appropriate),

  • establishing an appropriate package of complementary support and services for different vulnerable populations, on top of basic social assistance, and

  • linking different interventions to ensure that individuals can make the most of different schemes as their needs and circumstances change.

Still, the design of delivery models for these types of programmes is a work in progress, with pioneering governments all over the world creating, testing and refining different ideas. Three broad categories of delivery models are evident amongst the government-led efforts we reviewed:

  1. First, adding productive livelihoods features onto existing social assistance schemes: Ethiopia, Peru, Paraguay and Colombia are adding graduation-inspired economic inclusion components into existing social assistance programs. Peru’s Haku Wiñay, for instance, adds elements of the graduation approach, including asset transfers, skills training, savings mobilisation and life-skills coaching, onto the existing conditional cash transfer scheme of the Juntos

  2. Second, using the graduation approach to link existing social protection, poverty reduction and social services: Creating coherent linkages between social assistance, social insurance, labour market interventions and other relevant social services to extend appropriate levels of coverage to all stages of the life cycle is administratively very complex. This is especially the case when it involves linking existing schemes managed by separate institutions. Several countries, however, are using the household-level economic inclusion approaches to build linkages amongst social assistance programmes for the poorest. Indonesia and the Philippines, for example, are working towards integrating their poverty-targeted programmes so that people can access comprehensive packages of services, which are intended to help them move out of extreme poverty. The United Nations High Commissioner for Refugees is pursuing this model as well, combining services (shelter and food aid, psychological support, productive livelihoods, or job training) it already delivers to displaced persons and integrating them into comprehensive, graduation-like packages.

  3. Third, using the graduation approach to build the foundation of a future social protection system in fragile contexts: Bridging the gap between social protection and humanitarian aid in fragile settings, often in coordination with non-governmental organisations, helps overcome capacity challenges and/or accessibility issues in fragile settings. If designed with (future) social protection systems in mind, identification processes, databases and monitoring arrangements for these interventions can become building blocks for larger programmes.

Ultimately, targeted household-level economic inclusion approaches are not a substitute for effective social protection systems. Rather, they complement and strengthen the performance of social protection systems by promoting economic inclusion amongst the poorest while delivering integrated packages of services. In contexts of stringent fiscal constraints, these approaches can be a pragmatic first step towards progressively building comprehensive social protection systems for more inclusive economies and societies.

1. This post is produced as part of the European Union Social Protection Systems Programme (EU-SPS), building on a PEI working paper, which benefitted from the input of Archibald Edwards, Chief of Social Policy, UNICEF Malawi; Anne Folan, Manager, Anne Folan Associates; Nathanael Goldberg, Senior Policy Director, Innovations for Poverty Action; Sandra Grehl, Advisor, Deutsche Gesellschaft für Internationale Zusammenarbeit; Juergen Hohmann, Social Protection Expert, European Commission’s Directorate-General for International Cooperation and Development; Rebecca Holmes, Senior Research Fellow, Overseas Development Institute; Michelle Kaffenberger, Senior Technical Advisor, PEI; Katharine McKee, Interim Executive Director, PEI; Markku Malkamäki, Senior Social Policy Expert, EU-SPS; Keetie Roelen, Research Fellow in the Centre for Social Protection, Institute of Development Studies; Michael Samson, Director of Research, Economic Policy Research Institute; and Lucy Scott, Research Officer,  Overseas Development Institute.

2. The Partnership for Economic Inclusion (PEI) is a new global multi-stakeholder initiative hosted by the World Bank’s Social Protection and Jobs Global Practice that brings together leaders of the global graduation movement and those working in similar targeted economic inclusion programs. PEI provides policy guidance, innovation testing, tools, technical assistance and capacity building based on emerging good practices and standards. It also works to ensure a strong evidence base on impact, sustainability and cost-effectiveness. PEI’s mission is to accelerate the innovation and large-scale adoption of effective, scalable household-level economic inclusion programs including the “graduation approach,” which provides an intensive, time-bound package of support enabling poor and vulnerable households to build sustainable livelihoods and increase their income, assets and resilience.

3. Rigorous impact assessment in six countries and in diverse contexts demonstrate that participants achieve increases in food security, consumption, income, assets, financial inclusion, and reported health and well-being. These benefits persist and grow after all programme assistance ceases, with proven sustainability in several cases extending for more than five years.