Transcript Slide 1

An Introduction to Household Economic
Strengthening
HES Examples
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
ES Benefits: Practical Examples
FONKOZE in Haiti: By
offering a continuum of
provision, protection and
promotion services,
FONKOZE provides
integrated programming to
move people along the
economic strengthening
pathway
http://www.fonkoze.org/ab
outfonkoze/whoweare/how
works.html
Jummai
Abdul
Modu
Bolakall
Savings and
loans (village)
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.
Market impact (both
locally and non-locally
sourced)
Sale of food items
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
Can
generate
income
Significant
training or
prior
experience
is needed
Potential Concerns
Potential Benefits
Common asset transfers:
• Livestock and poultry
• Seeds / seedlings
• Tools / machines
Typically requires a holistic look at the sectors related to
the assets
IGAs, skills training, vocational skills
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
Can create
large-scale
and
sustainable
benefits
Can be costly
Requires
significant
technical
expertise
Potential Concerns
Potential Benefits
• Value chain development addresses the constraints that prevent
pro-poor growth of an industry
• 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