Graduation Programmes for the Ultra-Poor

How giving the poorest households an asset, training, support and a small stipend helped many escape extreme poverty, based on BRAC's model and multi-country trials.

The very poorest households often cannot benefit from microfinance or job schemes. They may lack skills, assets, health and confidence. In 2002, the Bangladeshi organisation BRAC designed a programme to help them “graduate” out of extreme poverty.

The graduation package

The approach combines several elements over about two years:

An asset transfer: often livestock such as goats or cows, or goods for a small business.
Training in managing the asset or business.
A consumption stipend: small regular cash or food support, so families don’t sell the asset to survive.
Savings: encouraging households to save regularly.
Coaching: frequent home visits by staff for encouragement and advice.
Health support and links to services.

The evidence

In 2015, economists including Abhijit Banerjee and Esther Duflo published results from randomised trials in six countries: Ethiopia, Ghana, Honduras, India, Pakistan and Peru. They found that participating households had higher consumption, more assets, more savings and better food security, and these gains lasted at least a year after the programme ended.

Long-term research in Bangladesh found that benefits persisted and grew for years, as families expanded their livestock and businesses.

Why it works

Economists suggest the programme helps households escape a poverty trap: a situation where people are too poor to invest and earn more. A big enough push lets them reach a level where they can keep growing.

Scaling up

Governments in several countries have adopted graduation programmes, sometimes using existing social protection systems. In India, some state rural livelihood missions have adapted the approach.

Costs and debates

The programme is relatively expensive per household. Some researchers ask whether simple cash transfers of the same value could achieve similar results at lower cost. Studies comparing the two have found mixed results.

The goat business

A landless widow in a village receives two goats, training and a small weekly stipend. A coach visits every week. Two years later, she has six goats, some savings and sends her children to school regularly. Her household no longer skips meals.

Thinking the poorest cannot be helped out of poverty

Well-designed programmes combining assets, support and coaching have produced lasting gains for the ultra-poor in many countries.

Key takeaways

BRAC's graduation approach combines assets, training, stipends, savings and coaching.
Trials in six countries found lasting gains in consumption and assets.
The programme may help households escape poverty traps.
Costs are high, and comparisons with cash transfers are debated.