Guest Articles

July 11

Krishna Thacker

The Future of the Graduation Approach: Taking a Proven Anti-Poverty Measure to Scale

Like many very low-income Indians, Jema Naik and her husband, Basanta combine subsistence farming with other income-generating activities. And like so many others, the Naiks worried constantly about how to meet even the most basic needs for themselves and their young daughter, especially if the harvest was bad. Basanta used to migrate to Goa, the nearest big city, for as long as six months at a time, competing with a huge pool of other unskilled men for day labor. Along with the serious material privations the family faced, both Jema and Basanta suffered from periodic bouts of depression from the relentless stress.

Then Trickle Up, a MetLife Foundation grantee, approached Jema and encouraged her to join one of its “graduation” self-help groups. The graduation methodology is a holistic response to extreme poverty, one that understands the mental as well as physical dimensions of poverty. Graduation programs combine individual mentoring and moral support with intensive practical support. For those who have trouble meeting daily nutritional needs, a graduation program will provide direct consumption support, in the form of either food or cash to buy food. Once food intake has stabilized, the graduation methodology will work with the participant to identify a viable livelihood. Then the program will provide technical training in that livelihood activity and provide a related asset (e.g., livestock for agricultural livelihoods, a sewing machine and cloth for tailoring, or a startup inventory of goods to stock a grocery). Graduation programs also emphasize financial services: savings for everyone, credit for those participants whose chosen livelihoods might benefit from loans. Graduation is intensive and tailored to the individual, with an emphasis on helping each participant find work that aligns with his or her interests and talents and that will generate a sustainable livelihood.

When Jema Naik joined Trickle Up’s graduation program, she met other women who intimately understood her struggles and whose fellowship eased her sense of isolation. They boosted her confidence and encouraged her to pursue Trickle Up’s suggestion that she launch a small business. With a grant from Trickle Up of 7,000 rupees (USD $101), Jema opened a small grocery store. Trickle Up also provided technical training and life-skills coaching for Jema because she had no experience managing a business – or setting goals beyond survival. With Trickle Up’s assistance, financial support and the encouragement of her group, Jema has steadily invested in her grocery store and also leased an additional acre of more productive land for cultivation.

Jema’s experience with extreme poverty is one that remains common. An estimated 700 million people worldwide still live below the USD $1.90 per day threshold of extreme poverty. Anti-poverty measures, including microcredit and other inclusive-finance interventions, have achieved remarkable successes especially among the economically active poor, but the most extreme poverty is qualitatively different. Extreme poor populations are geographically and socially isolated, and suffer from multiple interlocking and mutually reinforcing issues including ill health, lack of education, lack of communication, transportation or sanitation infrastructure, and a pervasive sense of hopelessness.

Beginning in 2002, BRAC in Bangladesh began experimenting with a program that would address the multiple dimensions of extreme poverty. Their work, which came to be known as “Challenging the Frontiers of Poverty Reduction/Targeting the Ultra Poor” (or CFPR/TUP), showed promising results and captured the attention of anti-poverty stakeholders worldwide. Two of them, the Ford Foundation and CGAP, teamed up in 2006 to test the graduation methodology. They wanted to know whether CFPR/TUP’s success had something to do with the specific context of Bangladesh (or the renowned organizational prowess of BRAC) or whether, alternatively, the graduation approach would work in different countries with different implementers. They launched 10 pilot programs in eight different countries – one of which was Trickle Up’s program in India – and included a rigorous research and learning agenda.

The research results, published in the journal Science among other outlets, found meaningful and lasting gains among graduation participants that were directly attributable to that intervention. Graduation programs were found to have a statistically significant impact on consumption (7.5 percent increase in food consumption), beneficiaries’ productive assets (15 percent increase) and savings (96 percent increase) one year after the program ended (which means three years after the assets were transferred and training was conducted). Impact assessments also show that beneficiaries spent more time working, went hungry on fewer days, experienced lower levels of stress and reported improved physical health. New results from one of the CGAP/Ford Foundation sites in India six years after the program revealed even greater impact, with a doubling in per capita consumption compared with the three-year mark.

When MetLife Foundation decided in 2013 to focus our strategy on financial inclusion, the graduation approach was a natural fit. It builds the financial capability of a population – the extreme poor – who otherwise would likely remain outside the formal financial system altogether. MetLife Foundation support has helped Trickle Up replicate success stories like Jema Naik’s for the past four years. We have made USD $1.59 million in grants to Trickle Up for programs in the United States and Mexico as well as to the graduation programs in India which remain ongoing. Trickle Up graduation programming in India, in fact, has captured the attention of the Indian government, which has long been interested in effective responses to the most extreme poverty. The government has asked Trickle Up to expand into three more Indian states and has pledged significant additional resources.

Government involvement, in fact, is likely the future of the graduation approach. If the early CFPR/TUP work in Bangladesh proved that the graduation approach is effective, and the CGAP/Ford Foundation pilots proved it could work in other countries with other implementers, then the question since those pilots ended in 2014 has become this: How can graduation achieve a scale commensurate with the scale of extreme poverty? The very factors that make graduation so effective – highly personalized, intensive intervention sustained across 18-36 months – also make it costly.

Increasingly, the answer is to embed graduation within government-run social protection programs that already operate at massive scale. Many developing country governments, for example, provide cash transfer programs to their extreme poor citizens. Instead of operating those cash transfer programs in isolation, governments could use them as the channel for the initial, consumption-support step of the graduation approach, and then fold in the asset transfer, technical skills training, financial inclusion and mentorship steps, too. That has been the strategy in Peru, for example, whose graduation program was built on a pre-existing cash transfer platform and has already reached more than 90,000 extreme poor families in the remote mountain and jungle regions of that country. The global pace of graduation programming has accelerated rapidly since the 2014 conclusion of the 10 CGAP/Ford Foundation pilots. At the end of 2016, there were 57 graduation programs up and running, More than one-third (36 percent) of them were government-led and most of those had only been launched since 2015.

For our part, MetLife Foundation is exploring the possibility of expanding our support of the graduation approach into Vietnam and Bangladesh so that more families like Jema Naik’s can start the journey out of extreme poverty and into sustainable livelihoods. Jema’s husband Basanta no longer has to migrate in search of low-wage day labor. Husband and wife now work together in the shop and on their land, and enjoy raising their daughter together. In just two years, the family earned 50,727 rupees (USD $737) – more than they dared hope. They have enough food and clothes, their daughter is in school, and with Trickle Up’s help, they enrolled in the Indian government’s health insurance programs.

Jema says that opening the shop has changed her life, and says she is committed to helping other women start the climb out of extreme poverty. Based on the available evidence, the graduation approach is one of the most effective strategies devised to date in achieving that goal.


Krishna Thacker is Asia regional director for the MetLife Foundation.

Photo of shop owner Reeti Majhi and her husband Jiten, courtesy of MetLife Foundation.



Base of the Pyramid, digital payments, financial inclusion, graduation approach, poverty alleviation, research, scale