Crafting a Graduation Pathway for the Ultra Poor: Lessons and Evidence from a BRAC programme.

2 1 The ultra poor: Why existing approaches fail them? 4 2 BRAC and the ultra poor: Analytics of evolution of approaches 7 2.1 The IGVGD Programme: Evolution and description 7 3 Challenging the Frontiers of Poverty Reduction 11 3.1 Description of the approach 11 3.2 Targeting the ultra poor 13 3.3 Stipend support: A case of smart subsidies 21 4 Getting local elite support: A bold experiment 22 5 Does it work? Evidence from Research 25 Sup – Selected Ultra Poor, NSUP – Non-Selected Ultra Poor 26 Sup – Selected Ultra Poor, NSUP – Non-Selected Ultra Poor 27 Sup – Selected Ultra Poor, NSUP – Non-Selected Ultra Poor 27 6 Conclusion: What makes it work? 29 References 31 Crafting a Graduation Pathway for the Ultra Poor: Lessons and Evidence from a BRAC Programme 4 1 The ultra poor: Why existing approaches fail them? The ultra poor spend most of their income on food, yet failing to afford their basic calorific need. Their livelihoods, consisting of a fragile patchwork of extremely low paying activities, do not generate enough income to manage adequate food intake, tending to be highly seasonal and unreliable. Having to manage on a regular basis with half-empty stomachs and at times skipping meals – especially during the hungry seasons – are everyday realities for the ultra poor. The consequent malnutrition leads to frequent morbidity, and general ill health makes a fragile livelihood even more vulnerable. These vicious dynamics extend beyond the current generations. Maternal ill health and malnutrition leads to the birth of malnourished babies, who begin their lives with physiopsychological disadvantages, which tend to be irreversible, especially given the context of the severity of deprivation in which they are born. Even children who go to school tend to be malnourished, hungry and fall behind in studies, eventually dropping out. These children join the ranks of the unskilled workforce, and having no asset base or basic education, they are much more likely to continue in the persistence of the trap of ultra poverty when they mature and form families. Ultra poverty, especially in South Asia, has a distinctly gendered face; many of the ultra poor households tend to be headed by women, having been widowed or abandoned. Sometimes, these households consist of widowed or abandoned women from different generations; abandoned daughters join their widowed mother, often along with their young children needing care. This creates a uniquely disadvantaged and extremely vulnerable demographic structure. The ultra poor tend to have limited social assets; a reason why they may not to be included as members of self-selected microfinance groups. Many times, the ultra poor do not even own the homestead land on which they set up their shacks – a patchwork of extremely fragile, mostly thrown away items collected and obtained for free. They live on the land of their patrons, often relatively well-off distant kin, making their everyday existence tied-up deeply in the local structures of patronage and dependency.. This is one of the reasons why these households typically tend to be excluded in household listing exercises, as they are considered to be the sub-households of their patrons. Table 1 below shows the difference in some key variables between the ultra poor (those below the lower poverty line) and the moderate poor (those below the upper poverty line but above the lower poverty line) according to the 2005 Bangladesh Household Income Expenditure Survey. 1 The term ultra poor was first used by Michael Lipton (1983), where he defined the ultra poor as those who spend 80% of their total expenditure on food and cannot attain 80% of their standard calorie needs. 2 The process through which a women losing her husband unleashes a process of decent into ultra poverty is structural and has to do women’s weak and vulnerable legal status and inability to protect her legal entitlements to property and alimony. Prowomen legal reform and legal empowerment of women thus is an important structural agenda that is part and parcel of tackling ultra poverty. See Green and Hulme (2005) for an elaboration of this argument. 3 There is a substantial literature on the issue of peer effects of microfinance in terms of selection, monitoring and repayment incentives. See for instance, Stiglitz (1990); Ghatak (1999); Besley (1995); Morduch and Aghion (2005). 4 See Wood (1999). Crafting a Graduation Pathway for the Ultra Poor: Lessons and Evidence from a BRAC Programme 5 Table 1: Key differences between poverty groups Extreme poor Moderate Nonpoor Significance No land (% of HH) 9.8 8.2 5.4 <1% 10 decimal land (% of HH) 50.3 45.0 33.3 <1% Average agricultural day labour in each HH 0.5 0.3 0.1 <1% Average non-agricultural day labour in each HH 0.4 0.4 0.2 <1% Female headed HH (%) 10.8 8.1 10.7 <1% % with primary education per HH (above 14 years) 21.7 31.6 56.6 <1% Literate (% per HH, above 6 years) 29.7 39.4 60.4 <1%