1
Role of cash transfers in pro-poor market development
programs aimed at the ultra-poor
Jan Maes
Poverty Outreach Working...
2
Targeted cash and asset transfers versus systemic market interventions?
Thisdiscussionfollowedapreviouson-line discussio...
3
Trickle Up doesnot approach assettransfersas safetynets. Inorderto ensure thattransferredassets
are usedproductively,Tri...
4
poorest to graduateout of extreme poverty, adaptinga methodology used by BRAC in
Bangladesh.7
Usingthe large-scale Bolsa...
5
Guiding principles for targeted asset transfers
At thispart of the discussion,participantsexpressedaninteresttolearnmore...
6
An Economic Strengthening Pathway
In a recentpaper8
JasonWolfe (enterprise developmentadvisor,USAID) describesan Economi...
7
that theyare implementedwhile simultaneouslyaddressingwidersystemicconstraintsthatkeepthe
ultra-poorfromfullyparticipati...
8
Links and References
For more informationonthe CGAP/FordFoundationGraduationProgram, see
http://www.cgap.org/p/site/c/te...
Upcoming SlideShare
Loading in …5
×

MaFI POWG synthesis on asset-transfers, final 11-19-10

952 views

Published on

A synthesis of the e-forum organised by POWG and MaFI (working groups of the SEEP Network). Edited by Jan Maes.

  • Be the first to comment

  • Be the first to like this

MaFI POWG synthesis on asset-transfers, final 11-19-10

  1. 1. 1 Role of cash transfers in pro-poor market development programs aimed at the ultra-poor Jan Maes Poverty Outreach Working Group The SEEP Network November 2010 This document summarizes an on-linediscussion organized jointly by the SEEP Network’s Poverty Outreach WorkingGroup (POWG)1 and the Market Access Facilitation Initiative(MaFI)2 duringJune 2010. The focus of this discussion was on the roleof cash and/or assettransfers in makingmarkets work for the ultra-poor, those without any productive assets and chronically food insecure. The discussion started from the premise that addressing systemic market constraints isa necessary butinsufficient approach to improve the livelihoodsof the ultra-poor. In addition to making markets work better for the ultra- poor, targeted assetand cash transfers can bean effective way to enable ultra-poor households to benefit from better functioningmarkets. Asset and cash transfers area legitimateelement of a 'systemic' intervention aimed at improvingthe livelihoodsof the ultra-poor.Based on TrickleUp’s graduation programpilot(sponsored by CGAP and Ford Foundation), discussion participants provideexamples and guidelines on how best to implement targeted assettransfer interventions. The followingMaFI and POWG members actively contributed to the discussion: Jo Sanson (TrickleUp), Jason Wolfe (USAID), Luis E. (Lucho) Osorio-Cortes (Practical Action),Janet Heisey (TrickleUp), and Marcus Jenal (Intercooperation Bangladesh). 1 The SEEP Network’s Poverty Outreach Working Group (POWG) is a learning and knowledge exchange community led by SEEP members focusing on innovative approaches to reach very poor people with sustainable, demand-led microfinance and microenterprise development services. See http://seepcommunity.com/group/povertyoutreach 2 The Market Facilitation Initiative (MaFI) is a joint effort of the SEEP Network and the Livelihoods Network, with the support of Practical Action. MaFI aims to assist practitioners working in Pro-Poor Market Development to move from market assessments and program design to implementation by advancing practical principles, techniques, and tools. See http://seepnetwork.org/Pages/MarketFacilitationInitiative.aspx
  2. 2. 2 Targeted cash and asset transfers versus systemic market interventions? Thisdiscussionfollowedapreviouson-line discussion3 organizedbyMaFIon whethersystemicmarket interventionsreachthe ultra-poor(andassistthemingainingaccesstobetterincome-generating opportunities) orcanultra-poorhouseholdsimproveeconomicallyonlyif theyare the recipientsof focusedinterventionsthatstrengthentheirlivelihoodassets directly. Bothcashand assettransfersare examplesof suchdirectinterventionsandhave gainedinimportanceasa weapontofightextreme povertyandinequality. Onthe otherhand,directhouseholdorindividualinterventions,especiallyif theyinvolve cash orassettransfers,are oftenfrowneduponbypro-poormarketdevelopment practitioners.The reasonsare familiar:cashtransfersare notsustainable,theycreate dependency, or theycannot be replicatedatscale. Atthe endof that original discussion,Mike Albu (one of the discussants) concluded thatdirectassettransfers andsystemicmarketinterventionscangohand in hand. “If little thoughtis given to the widersystemic constraintsfacing theextremepoor,assettransfers may changelittle and fail to havea lasting impact.But wheregood analysisof themarketsystemhas shown thatassetpovertyisa binding constraint and otherinterventionsarein place to ensurethe wider marketsystemworkswell enough to maintain the gainsthatextremely poor beneficiariesachieve,then direct assettransfersmay be a highly appropriate'systemic'intervention”. The ensuingdiscussion,summarizedinthispaper,shiftedthe focustothe role andanticipated outcomesof such cash or assettransferprograms,practical lessonslearnedfromfieldapplicationsof programsemployingthem, andspecificrecommendationsonhow such transfers canbringabout systemic,large-scale andsustainableaccesstomarkets bythe ultrapoor. How are (conditional) cash transfers and asset transfers different? Before discussingtheirrole andimpact,participantsinthe discussionemphasizedthe critical distinction betweencashtransfersandassettransfers. Cash transfers,usuallyconditionalcashtransfers(CCT) are small sumsof moneygiventopoor households(oftentothe motherof those households) onthe conditionthatrecipientsparticipate incertainsocial services.Theyare asocial protectionmechanism (oftenthroughlarge-scalegovernmentprograms) aimedatstrengtheningthe humancapital of the extreme poor,improvingtheirhealth,educationandnutrition.Since cashisusedasan incentive,such programsalso contribute directlytoincreasedfinancial assets(incomes) of beneficiaries. Assettransfers on the otherhand are usuallytargetedgrantsinthe formof productive assetstoverypoorpeople aimedat strengtheningtheirincomegeneratingpotential. Oftenthese productiveassetsare notgiven inkind,butin the formof cash, withan explicitconditionthat the moneyisspentonproductive assets. Thisillustratesthe maindistinctionbetweencashandassettransfersthatthe formerare meantfor consumptionandthe latterforproductionpurposes. Referringtoan assettransfer pilotprogramimplementedbyTrickle UpinIndia(one of several so-called graduationprogramssupportedbyCGAPand FordFoundation),JoSanson(Trickle Up) emphasizedthat 3 This discussion was summarized in “Do systemic interventions reach the poorest of the poor” (Marcus Jenal) provide proper reference
  3. 3. 3 Trickle Up doesnot approach assettransfersas safetynets. Inorderto ensure thattransferredassets are usedproductively,TrickleUpIndiabuilds inprotectionmechanisms,suchasstipends tohelp participantssurvive throughparticularlydifficultperiods (suchasleanseasons,pregnancy). Many livelihoodactivities initiatedthroughassettransfers,suchasanimal husbandryandagriculture,require a longleadtime before theyyieldprofits,andthe extremepoorusuallydonothave the luxuryof putting aside activitiesthatbringinincome orfoodmore immediatelytoinvestinalongertermactivity. Withoutsuchtargetedstipendsandotherinputs(training,etc) participantsmaywell be compelledto sell assetsinorderto feedtheirfamilies,ortosimplyneglecttheirassetsastheyfocusonmeetingshort termneeds. Box 1: Key terms Ultra-poor The ultra-poor have no productiveassets.They are chronically food-insecure,highly vulnerableto shocks and typically depend on occasional wageor domestic labor for cash income. Systemicmarket interventions Market interventions that address systemic constraints within an entiremarket system (as opposed to addressingsingularmarketinteractions),takinginto accountmultiple interactions amongdiversemarket players,standards,advocacy,market rules et cetera. Social safetynet Non-contributory transfer programs seeking to prevent the poor or those vulnerableto shocks and poverty from fallingbelowa certain poverty level. Safety net programs can be provided by the public sector (the State and aid donors) or by the privatesector (NGOs, private firms,charities,and informal household transfers).Safety net transfers includecash transfers,food-based programs,in-kind transfers,conditional cash transfers,pricesubsidies,publicworks,etc.4 Social safety nets do not typically include assettransfers. Cash transfers Provision of assistancein the form of cash to the poor or to those who face a probable risk of fallinginto poverty in the absenceof the transfer.The main objective of these programs is to increasepoor and vulnerablehouseholds' real income. 5 Conditional cash transfers(CCT) Conditional cash transfer programs transfer resources to poor households conditional on them taking activemeasures to build up the human capital of their children (enrollingtheir children in school,takingthem for regular health care visits).CCT programs have two clear objectives.First,they seek to providepoor households with a minimum consumption floor. Second, in making transfers conditional,they seek to encourage the accumulation of human capital,and break a vicious cyclewhereby poverty is transmitted across generations.6 Assettransfers Transfers of productive assets.In contrastto cash transfers (thataimto increasea household’s income directly),assettransfers aimto increasethe household’s assetbase for future income generation. Graduationprogram The CGAP-Ford Foundation Graduation Programis a global effort to understand how safety nets, livelihoods,and microfinancecan besequenced to create pathways for the 4 Grosh M, del Ninno C, & Tesliuc E (2008) ‘For Protection and Promotion: The Design and Implementation of Effective Safety Nets’. Washington DC: The World Bank 5 Fiszbein, A. and Schady, N. (2009) Conditional Cash Transfers: Reducing Present and Future Poverty World Bank Publications. 6 Grosh M, del Ninno C, & Tesliuc E(2008) ‘For Protection and Promotion: The Design and Implementation of Effective Safety Nets’. Washington DC: The World Bank
  4. 4. 4 poorest to graduateout of extreme poverty, adaptinga methodology used by BRAC in Bangladesh.7 Usingthe large-scale Bolsa Familia programinBrazil as an example,LuisE.Osorio-Cortes(Practical Action) explainedthe critical factorscontributingtothe successof conditional cash transfer programs. In additionto cash transfer(inthe formof a monthlyallowance rangingbetween$10 to $70) to very poor families inreturnforkeepingtheirchildreninthe classroomandpayregularvisitstohealthclinics, the Braziliangovernmentintroducedwide-rangingmacro-economicreformsincludingprivatization, reductionof trade barriersand marketliberalization.Millionsof Brazilianshave sinceclimbedoutof poverty,owing-accordingtoOsorio-Cortes- toasystemicapproach(thatinadditiontomacroeconomic reformalsoincludedimprovedhealthandeducationsystems) accompanyingarelativelylow costcash transferprogram. Marcus Jenal (IntercooperationBangladesh)notedthatthe twopreviousexamples(assettransferand conditional cashtransfer,respectively) are at completelydifferentlevelsof intervention intermsof effectiveness,cost,sustainabilityandimpact. Trickle Up’sassettransferprogramworks on a microlevel and there isnothingthatsuggeststhatit alsotargetsthe systemaroundthe directbeneficiaries. Furthermore, thisintervention seemsrathercostlyas measuredininvestmentperbeneficiary, especially takingintoaccount the highlevel of additional supporttothe programgrantees. The Bolsa Familia programin Brazil,onthe other hand, includes interventionsatmacro level targeted at the system(structural reforms)inadditiontodirect supporttothe poor(inthe form of cash grants) to take advantage of these macroeconomicchanges. Suchinterventionsare fairly cheapandreacha massive scale,targeting55mpeople inthe case of Brazil. The interestingquestiontoaskfromboth approachestheniswhichhas the highestimpact inthe longterm? One has to keepinmind,however,thatbothtypesof programshave quite differentoutcome objectives.The conditional cashtransferprogramenablespoorhouseholdstoincrease theirincome while improvingnutrition,healthandeducationof theirchildren, whereasinTrickle Up’sassettransfer program,such governmentsocial safetynetsare anexternal variable (theultra-poormightormightnot enjoythem),butthe mainexpectedoutcome istojumpstartnew income-generatingactivitiesby targetedultra-poorhouseholdsthroughproductiveassettransfers. Inthiscase,cash stipendsare also provided,astemporaryincome supporttogive these householdssome breathingspace while building up theirnewmicroenterprises. JanetHeisey(Trickle Up) remarkedthatTrickle Up’sgraduationprogrampilotinIndiahelpsbuildthe social capital of ultra-poorprogramparticipants bylinkingthem toexistingsafetynetprograms.One program objective istoimprove healthcare practices throughprovisionof basicinformationaround healthandhygiene andbyintroducingparticipantstolocal healthcare providers. Trickle Up’slocal partnerorganizations alsohelpcreate linkageswithsocialsafetynetprograms(guaranteedwork schemes;publicdistributionschemes,etc.),asappropriate. Finally,forlivelihood-specifictrainingsuch as farming,Trickle Uptriesto engage government agricultural extensionagents withthe expectation that participants will continue tohave accesstothese individuals,orat leasthave anunderstandingof howserviceslike thiscanbe accessed,afterthe programends. 7 http://www.cgap.org/p/site/c/template.rc/1.11.1925/ accessed November 13, 2010.
  5. 5. 5 Guiding principles for targeted asset transfers At thispart of the discussion,participantsexpressedaninteresttolearnmore abouthow to implement assettransferprogramsmost effectively. JoSanson(Trickle Up) startedoutby statingthat asset transferprograms needtobe precededbyanintensive planningprocess(thatincludes the whole household)and a marketassessment forpotential microenterprises. Startingamicroenterpriseisa difficultprocessforthe extreme poortargetedbyTrickle UpinIndia,as theyare usedto sell low-skill laborfor wagesandhave little experience withasset-basedlivelihoodactivities.Theyoftenfindthatthe income-generatingactivitythattheyfirstidentifyisnotthe one theyeventuallychoose, once they spendtime thinkingthroughthe laborandotherresource requirements,the timingof returns,risks,and so on.This planningprocess cantake months andtakesintoaccount both the specificneedsand capacitiesof the household aswell as local marketopportunities,whichhave beenassessed inadvance of these discussions. Still accordingtoJo, the objective of assettransfersistobuildsustainable livelihoods - all the transferredassetsare productive assets(livestock,inputsforfisheries,agriculture,etc). Progress is measured notonlybythe profitabilityandsustainabilityof the livelihoodactivities resultingfromthose assets,butalsothe extenttowhichparticipantscontinuetoreduce vulnerabilitytoshocksbyusing profits(andloansfromsavingsgroups – see below) tosuccessfullydiversifyintootheractivities. As healthexpensesusuallyconstitute amajorarea of "leakage"thatcan undermine the accumulationof productive assetsamongthe ultrapoor,Trickle Up alsoprovidesbothdirectsupportaround preventativehealth,andlinkparticipantstopublichealthservicesfromwhichtheyare entitledto receive benefitsbutoftendonotdue to lack of knowledge,confidence,andsocial capital todemand entitlements. Specifictechnical knowledge(skills) relatedtoeachlivelihoodactivityisanotherconditionthat needsto be in place.Forthistarget group,whogenerallyhave noorverylittle formal education,"justintime" trainingmethodsgenerallyworkbest,where local partnerstaff regularlyvisiteachhouseholdtoprovide advice basedonthe stage of developmentof eachactivity.Beingable toimmediatelyputlearningtouse appearsto be importantforinstillingknowledge,whichisthe pay-off forbeingfairlylaborintensive. Anothercrucial stepisto setup self-helpgroups (SHG) bythe programparticipantstoinstill anethosof saving(howeversmall amounts) andtoassistinthe livelihoodplanningprocess. SHGandprogram participantsare selectedthroughaprocessof participatorywealthranking(PWR) andtherefore groups are notformedspontaneously. Trickle Up’sSHGs inIndiatendto have from10 to 20 female only members. Inadditiontosavingsandloans,animportantfunctionof the SHGs isto buildmutual support and social capital amongprogram participants. Onlyultra-poorwomenare selectedandmembersof a givenSHG are from a fairlyhomogenoussocioeconomicbackground. Asa result,the amount participantscanand will save regularissimilar.If there wouldbe significantdifferencesinsavings capacityamong SGH members, the cohesivenessof the group wouldbe jeopardizedandlesssuccessful members mightleave the grouporbe excluded.
  6. 6. 6 An Economic Strengthening Pathway In a recentpaper8 JasonWolfe (enterprise developmentadvisor,USAID) describesan Economic Strengthening Pathway model,whichpresentsanew wayto linkvulnerable households(whoprioritize riskreductionabove income maximizationandallocate theirscarce resourcestomaintainconsumption) to growth-orientedstrategies. “Reconcilingthe needforbothrisk-sensitiveandgrowth-oriented strategiesisthe centerof the challenge toreduce householdvulnerabilityandimprove familyresiliency. The overall programframeworkshouldvieweconomicstrengtheningnotasa single event –a household was vulnerableandnowit isnot – but as a pathwaytowardsgrowthanddecreasingvulnerability.” Trickle Up’sgraduationprogram pilotinIndia(sponsoredbyCGAP) aimstograduate ultra-poor households fromcash transfers orfood assistance (tostabilizeconsumptionandmeetbasicneeds) toa more growth-orientedstrategyfacilitatedbyaproductive assettransfer,livelihoodtrainingandaccess to savingsandloans. Jasonadds that the pathwayconceptembraces the dynamicnature of workingwithreal people(as opposedtoidealizedeconomicmodelsof unrealisticallyrational humanbehavior). Onone hand,people change theirperceptionsandbehaviorsinresponse tointerventions,and practitioners have tohave some schemainmindfor how they thinktheirbehaviorwill change so thatinterventionscangrowwith them. On the otherhand, there are toomany projectswithutterlymismatchedinterventionsforthe householdsthey're tryingtobenefit. Forinstance,manygostraightforpromotinghigh-returnincome- generatingactivities thatactuallyexpose householdstogreaterriskinthe short-termwithoutensuring that these same householdshave waysof managingandmitigatingthe risk. Jo Sanson remarkedthatemployingapathway conceptiscrucial for determiningthe appropriatenessof differentinterventions,aswell asassessingeffectiveness.Otherwise youcanendup tryingto compare applesandoranges,as the needsandcapacitiesof targetpopulationscandiffersomuch,requiringquite differenttypesof interventions,especiallyinthe earlystages.Thisissomething of astruggle,as specificallytargetingpeople whoare towardsthe bottomof the economicstrengtheningpathwaydoes usuallyrequire more resourceswithlessdramaticresults,atleastinthe shortrun - it'sso much easierto demonstrate manyof the qualityof life type resultsthatpeople like tosee (andwe all aimtoachieve) whenyou're alreadystartingatthe "expandhouseholdincome andconsumptionstage". JanetHeiseyaddedthat careful monitoringisakeycomponenttoensure successful outcomes. For instance,initsIndiagraduationpilot Trickle Upneededtofine-tune andintensify the coachingby partnerstaff and to strengthen the livelihoodplanningcomponentof the program.Thisstrategy evolved as Trickle Up gainedgreaterclarityaboutthe nature of the population itserves andthe objectives it seekstoachieve throughthe intervention. Summary Cash andassettransfers are provingtobe effective waystoenable ultra-poorhouseholds tobenefit frommarketopportunitiesandascendthe economicstrengtheningladder.Itisimportant,however, 8 Wolfe, J. (2009) Household Economic Strengthening in Tanzania: Technical Guidance for PEPFAR II Programming. http://www.scribd.com/doc/33448072/Household-Economic-Strengthening-in-Tanzania-Framework-for-PEPFAR- Programming
  7. 7. 7 that theyare implementedwhile simultaneouslyaddressingwidersystemicconstraintsthatkeepthe ultra-poorfromfullyparticipatinginmarkets. Cash transfersandassettransfersare differentinterventionswithdifferentobjectives. Cashtransfers seektoincrease a poorhousehold’sincome(andconsumption)directly,andif such transfers are conditional,they alsoencouragehumancapital (education,health,nutrition…) formation.Asset transfers,onthe otherhand, aim to increase the household’s productiveassetbase enablingverypoor householdstogenerate more incomethemselves. Trickle Up’sexperience inIndiawiththe CGAP/FordFoundationgraduationprogramhasyielded importantlessonsonhowtoimplementtargetedassettransferprogramssuccessfully. Thisincludesan intensiveplanningprocess withparticipants andathorough marketassessment forpotential microenterprises. Healthshocksare a majorthreat to accumulationof productive assetsamongthe ultrapoor, andTrickle Up provides bothdirectsupportsaroundpreventative health, aswell as linking participantstopublichealthservices. Just-in-timeskill trainingduring regularhouse visitsisalso importantto helpmostlyilliterate participantstogainthe confidenceandknowledge toconducttheir newmicroenterprise activities.Lastly,participantsformself-helpgroups (SHG) toinstill anethosof savingandto assisteach otherincontinued livelihoodplanning. Targetedassettransferscan be consideredaspartof an EconomicStrengthening Pathway,allowing householdstomove fromarisk-reducingconsumption-maintainingstage tomore growth-oriented livelihoodstrategiesandreducedvulnerability.Employingapathway conceptiscrucial for determining the appropriatenessof differentinterventions,aswellas assessingeffectiveness,allowingpractitioners to fine-tunetheirstrategiesascircumstancesandbehaviorof programparticipantsisbetterunderstood alongthe way.
  8. 8. 8 Links and References For more informationonthe CGAP/FordFoundationGraduationProgram, see http://www.cgap.org/p/site/c/template.rc/1.11.1925/ For paperson impactof cash transferprograms: Adato,M. and J. Hoddinott(2007). Conditional CashTransferPrograms:A “Magic Bullet”forReducing Poverty? http://www.ifpri.org/sites/default/files/publications/beijingbrief_adato.pdf JohnA. MaluccioJ. and R. Flores(2005). ImpactEvaluationof a Conditional CashTransferProgram:The NicaraguanRedde ProtecciónSocial. http://www.ifpri.org/sites/default/files/publications/ab141.pdf Skoufias,E.(2005). PROGRESA andIts Impactson the Welfare of Rural HouseholdsinMexico. http://www.ifpri.org/sites/default/files/publications/ab139.pdf AkhterU. Ahmed,AgnesR.Quisumbing,MahbubaNasreen, JohnF.Hoddinott,andElizabethBryan (2009). ComparingFoodandCash Transfers tothe Ultra-PoorinBangladesh. http://www.ifpri.org/sites/default/files/publications/rr163.pdf

×