The challenge
The very poorest households were missed by both microfinance and safety nets.
The case
BRAC's Graduation model gives the poorest households a two-year bundle of support: a productive asset such as livestock, a temporary cash stipend, regular coaching, a savings account and basic health care. Between 2007 and 2014, local NGOs tested it in randomized trials with about 10,500 participants in Ethiopia, Ghana, Honduras, India, Pakistan and Peru. A year after support ended, participants had higher consumption, assets, food security and income than the control groups in most sites. Honduras was the exception: a poultry disease killed most of the chickens participants had chosen, and gains in consumption and assets did not last. Long-run follow-ups in India and Bangladesh found the gains lasted for years.
Why it worked
Tackling several barriers at once lifted people out of extreme poverty where single interventions had failed. The Honduras result shows the model depends on choosing assets that fit local conditions.
Sources
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