Can We Sustainably Reach the Poorest?

Recent reports reveal that we’re making some progress in the fight against poverty, but there’s been little effect on the most challenging to reach—the ultra-poor. While the number of people living in extreme poverty has declined so significantly that we’ve achieved one of the Millennium Development Goals (MDGs) years ahead of schedule, according to a report from the World Bank, the same report also reveals that at the current rate of progress there will still be approximately 1 billion people living below $1.25 per day in 2015, and the challenges faced by those 1 billion people are quite different depending on how far down the poverty spectrum you look.

For those closer to the $2 per day line, microfinance services offer a lifeline to help strengthen their economic activities. The challenge of fighting poverty among the poorest is far greater. These people are generally the most vulnerable and isolated, live on less than $1.25 per day, are food insecure and rely heavily on sporadic wage labor. For the ultra-poor to succeed, interventions must focus on stabilizing a volatile household economy before economic strengthening activities begin.

Several innovative programs for reaching this target population, including strategies developed by livelihood and microfinance organizations, have emerged over the past several years, many of which were discussed during a lively session at the Microcredit Summit in Valladolid, Spain, in November 2011. Among these are the initiatives from the CGAP-Ford Foundation Graduation Program, a global effort to understand how safety nets, livelihoods and microfinance can be sequenced to create pathways for the poorest out of extreme poverty, which have adapted a methodology developed by BRAC in Bangladesh. “The Graduation Model has the potential to pick up where microfinance has left off in helping households who are most in need,” writes Nathanael Goldberg, Senior Policy Director for Innovations for Poverty Action. Goldberg’s report, “Ultra Poor Graduation Pilots: Spanning the gap between charity and Microfinance,” provides a good introduction to the graduation projects and some interesting preliminary results.