Transcript Slide 1

An Introduction to Economic Strengthening
[Insert Place, Date]
The LIFT Project
• Funded by USAID Global Health Bureau’s Office of
HIV/AIDS
• Five-year project
• Implemented by three core partners (FHI360, CARE
and Save the Children) and numerous resource
organizations
• Offers:
• Access to tools and resources
• Opportunity assessments and portfolio reviews
• Support for linkages between NACS and ES
• M&E Support
• Program quality and implementation support
Training objectives
• Introduce LIFT
• Understand economic strengthening (ES) and its
rationale
• Learn about major concepts and approaches in ES
• Review lessons in ES programming
• Share additional resources
• Introduce more in-depth training
What is Economic Strengthening?
• “A portfolio of interventions to reduce the economic
vulnerability of households and empower them to
provide for the essential needs of the children they
care for, rather than relying on external assistance.”
(PEPFAR working definition, 2011)
Why is Economic Strengthening Important?
• Enables households to meet their needs.
• Health, nutrition and economic well-being are closely
linked.
• Positive health and nutrition outcomes usually can’t
be achieved while households lack access to income.
For LIFT, economic strengthening supports PEPFAR’s
primary objectives:
• HIV prevention
• Care, treatment and support
• Impact mitigation
ES Benefits: Practical Examples
ES for OVC Caregivers in
Uganda: Caregivers who
joined savings groups with
literacy training increased
household assets and
improvements among
OVCs in # of meals eaten
and living conditions over
non-participants.
© Paul Rippey
ES Benefits: Practical Examples
Guaranteed labor program in
India: Children of a safety net
program offering guaranteed
work to the impoverished
were less likely to engage in
child labor, had greater school
attendance and improved
health outcomes.
© BBC
ES Benefits: Practical Examples
Savings Groups in Burundi: Providing social messaging through
savings groups was found to improve financial decision making
authority for women, reduce exposure to violence, reduce
acceptance of violence, and increase consumption of household
goods relative to luxury goods.
© SAWSO
Risks of Not Addressing Economic Needs?
Group Discussion: Households and ES
• Break into groups of approximately 5 people
• Discuss one household that you have previously
supported with ES or that requires ES
• Share:
• What factors made them require ES
• How they supported themselves financially
• What major risks they faced
• How they would deal with negative events
Important Concepts in ES
• Households often become poor after experiencing a
shock (e.g. sickness caused by HIV)
• Vulnerability to shocks varies between households,
within households and over time
• Household livelihood strategies are shaped in part by
vulnerability
• Coping mechanisms and safety nets are important to
building resilience to shocks
• Tailor interventions to vulnerability , capacity and risk
tolerance
• With support, households can transition along a
pathway to graduation from external support
Types of Coping Strategies
Minor Coping
Moderate Coping
• Selling protective
• Selling productive
assets
assets
• Seeking wage labor
• Borrowing at
• Migrating for work
exorbitant rates
• Borrowing
• Further reducing
• Reducing spending
spending and food
and food consumption
consumption
• Drawing on social
assets
Severe Coping
• Depending on charity;
• Breaking up
household
• Migrating under
distress
• Going without food
Income
Income Growth
Types of ES Interventions
Promotion
Income Stabilization
Risk Reduction
Protection
Loss Management
Destitute / Distress
LIVELIHOOD
PHASE
Provision
Time
HIGH
HOUSEHOLD VULNERABILITY
Promotion
Smooth household income and promote asset
growth
Smooth household consumption and
manage household cash flow
Protection
Provision
Build self-insurance methods and protect key
assets
Recover assets and stabilize household
consumption
HIGH
HOUSEHOLD LIVELIHOOD & FOOD SECURITY
Expand household income and consumption
LOW
LOW
LIVELIHOOD
OBJECTIVES
Current State of ES Programming
• A lot of poor practice
• Requires specialized skill sets and expertise (just as effective
health programs do)
• Traditionally, many ES activities have been implemented poorly,
with untrained staff and have had limited results
• Budgets have often been insufficient
• Some interventions that are no longer widely practiced
elsewhere (e.g. NGOs providing loans) are still widespread in ES
programming
• Limited learning from practices and experiences elsewhere
Common Problems and Effective Solutions in
Economic Strengthening
Common Problems
Effective Solution(s)
• No demand for products produced by
target households or no jobs available
• Consult market assessments / labor market
assessments.
• Balance “push” and “pull” interventions.
• Organization’s services end once the
project’s funding runs out.
• Design approaches for sustainability of
access to products and services from the
beginning.
• Organizations provide services that they
• Avoid areas with weak or no capacity.
have no experience or capacity in (example: • Engage in strategic partnerships .
microfinance)
• Projects repeat mistakes that have already
been made elsewhere
• Focus on learning from other experiences
prior to starting implementation.
• Share learning widely.
Common Problems and Effective Solutions in
Economic Strengthening
Common Problems
Effective Solution(s)
• Projects do not know their performance
and only measure what donors require.
• Implement a results measurement system
with baselines and regular monitoring.
• Same activities are provided to all target
households, even though needs and
capabilities vary.
• Tailor interventions to households.
• Households that improve their economic
situation stop receiving services and
subsequently relapse.
• Work to develop household resilience.
• Link graduates to new services to ensure
incentive for graduation.
Take-Home Tips for Effective ES Interventions!
Provision
Objective: Recover assets and stabilize household
consumption (food, healthcare, shelter, clothing, etc.)
Food Transfers
Cash Transfers
Asset Transfers
Labor Schemes
Can avoid sale of
productive assets.
Hording food
Allows income to be used
for other purposes
Intra-household utilization
May improve nutritional
status, enabling productive
activities.
Sale of food items
Market impact (both locally
and non-locally sourced)
Administration and
handling costs
Potential Concerns
Potential Benefits
Provision – Food transfers
Provision – Cash transfers
• Unconditional or conditional transfers
Potential benefits:
• Can support consumption and investment
• Low administration fees (if ongoing)
Potential concerns:
• Unconditional transfers may be misused
• Cash safety
• Difficult to monitor spending
• Lump sums may be overwhelming for beneficiaries
• Few suppliers who accept vouchers
Can support consumption
and investment
Unconditional transfers may
be misused
Low administration fees (if
ongoing)
Cash safety
Difficult to monitor spending
Lump sums may be
overwhelming for
beneficiaries
Few suppliers who accept
vouchers
Potential Concerns
Potential Benefits
Provision – Cash Transfers:
Conditional and Unconditional
Provision – Physical asset transfers
Common asset transfers:
• Livestock and poultry
• Seeds / seedlings
• Tools / machines
Can
generate
income
Significant
training or
prior
experience
is needed
Potential Concerns
Potential Benefits
Typically requires a holistic look at the sectors related to the assets
Exercise:
Discuss which provision strategy you would use in each of the
following scenarios:
1. Marginal, remote area is hit poor weather for consecutive years
and agricultural households have little to eat. They are selling
off agricultural equipment and livestock. There is limited
availability of nutritious food in local markets for them to
purchase.
2. Households in urban areas have plenty of food options but no
income to purchase it owing to the sickness or death of their
primary wage earner.
Protection
Objectives: Build lasting self-insurance methods and protect key
assets; Smooth household consumption and manage
household cash flow.
Financial safety nets
(savings, microinsurance)
Social safety nets
(social capital, supporting institutions)
Financial literacy
Extending legal services
(protecting assets and inheritances)
Protection – Financial safety nets
Financial safety nets help households smooth consumption to
purchase goods and services, such as food and healthcare.
Examples of financial safety nets include:
• Savings
• Microinsurance
By accessing savings or insurance households are better able to
protect their productive assets following a shock and therefore
maintain current and future earning potential.
Protection – Savings Groups
• Savings enable the poor to self-ensure
• Cash based savings provide liquid assets to smooth consumption.
• Savings groups are informal where small amounts can be saved
and lent to members
Increases capital available for
smoothing consumption
Interest paid on savings
provides a return on investment
Improves social capital;
collective bargaining and
marketing
Group managed; they
determine savings and lending
rates
Requires income stream to
ensure that households have
money to save
Retro-fitting savings and loans
to existing groups may be
problematic
Potential Concerns
Potential Benefits
Protection – Savings Groups
Protection – Microinsurance
• The vulnerable self-insure, which means they assume all the risk
of a shock.
• Microinsurance spreads the risk of a shock between the
vulnerable and less vulnerable.
Lessons learned:
• Preferred practice is to link to a formal insurance provider, who
can spread the risk and reduce the cost of premiums.
Provides access to
finance for
healthcare
provision
Increases income
for healthcare
providers
Difficulty affording
the premium
Potential Concerns
Potential Benefits
Protection – Microinsurance
Protection – Strengthening Social Safety Nets
• Support increased access to existing social safety net programs
that people can fall back on in times of need.
• Safety nets can be provided by government agencies, CBOs, and
other community groups.
Examples of social safety nets include several previously mentioned
provision activities:
• Transfers, cash and in-kind transfers such as school supplies and
uniforms
• Food-based programs such as supplementary feeding programs
and food stamps, vouchers, and coupons
• Fee waivers and exemptions for health care, schooling
Protection - Extend legal protection
• Facilitating access to legal services helps protect control and
access to protective assets.
Work with legal service providers to:
• Help enforce inheritance laws
• Protect asset ownership (e.g. land, housing)
Protection – Financial literacy
Enables better
management of
household cash
flows, understanding
profit and loss, and
effective use of
financial goods and
services.
Training must be of
adequate quality and
duration to be
effective
Potential Concerns
Potential Benefits
• The vulnerable often have inconsistent and variable income
streams
• Financial literacy can be provided by external parties or directly
by the NGO
Promotion
Objectives: Smooth household income and promote asset growth;
Expand household income and consumption
Linkages to formal credit and
savings
Enterprise development /
value chain development
Workforce development
(vocational and skills training)
Promotion – Formal savings and credit
Can support
the
development
of viable
livelihoods
Risks
creating
asset loss
and
indebtedness
Potential Concerns
Potential Benefits
• Microfinance is the delivery of appropriate financial products and
services for the poor. It includes, savings, insurance and credit.
Formal savings and credit, continued
Lessons learned:
• Ongoing access to finance is critical. Borrowers will generally
want rising amounts and easy access.
• It is very difficult for NGOs to manage microfinance. Partnering
with specialized agencies is advisable.
• Borrowers will often assume NGOs are providing loans as grants.
Working with a formal credit provider increases the chances that
loans will be repaid.
• Vulnerable households are often not attractive to lenders.
• Borrowers who are late on payments you provide often will not
attend your other activities (such as trainings)
Rather than providing finance, consider:
• Providing loan fund and operating costs to the MFI
• Creating a loan guarantee fund to share the risk
• Revenue sharing with MFI and CSO
Promotion – Enterprise development
Can support
the growth
of new
businesses
New services
are not
always
economically
viable
Potential Concerns
Potential Benefits
• Enterprise development includes linkages of microenterprises to
business development services and technical services
• Examples:
- Identifying products, pricing, mapping
- Marketing
- Business registration and legal support
Examples of promotion – Value chain
development
• Value chain development addresses the constraints that prevent
pro-poor growth of an industry
Can create
large-scale
and
sustainable
benefits
Can be costly
Requires
significant
technical
expertise
Potential Concerns
Potential Benefits
• Example interventions:
- Supporting linkages of firms to markets
- Supporting improved technical capacity
Examples of promotion – Workforce
development
• Most prefer employment to entrepreneurship.
• Access to employment can offer reliable livelihoods.
Workforce development interventions could include:
• Apprenticeships and internships
• Vocational skills training
• Workforce readiness; preparing resumes, appropriate attire,
tools and resources, skills training
Lessons learned:
• Ensure there are job opportunities before training
• Link trainees to employers from the beginning
• Ensure the quality of the training
Quiz!
Linkages with NACS
• NACS: Nutritional Assessment, Counseling and
Support
• What is the potential integration with ES activities?
Next Steps and LIFT Support
• [Tailor this slide to explain LIFT’s vision for working with the set
of partners attending the training or in the country in which the
training is being conducted].
Additional Resources
•
•
•
•
•
MicroLinks (www.microlinks.org)
CGAP (www.cgap.org)
CYES Network (www.cyesnetwork.org)
SEEP Network (http://www.seepnetwork.org)
Savings Revolution (www.savings-revolution.org)
Follow-Up Training
• LIFT offers the following training:
• Longer, specific ES training (e.g. savings groups, value
chain development)
• M&E for ES
• Selecting participants for follow-up training:
• Specialist in economic strengthening
• Will be responsible for implementing ES activities
• Motivated to learn
Thank you!
[Insert contact information for trainers]
Jacky Bass
Technical Director
[email protected]
www.theliftproject.org