Graduation and Social Protection in Latin America

One of the biggest challenges of social public policy is how to design effective programs for the large number of poor and extreme poor households who cannot access the contributive social security system. The “classical”, organized welfare model that emerged in the late nineteenth century is based on mandatory social insurance and contributive social protection for employed workers.

But how can the poorest segments of the population access these programs? How do you create pathways to lift the poorest households out of poverty in a sustainable way and facilitate their access to social protection?

The experience of the pilot projects that are being implemented under the CGAP-Ford Foundation Program has a lot to contribute to improve public policy design in this respect. At Fundacion Capital, we believe that graduation approaches should be seen as one component of a broader social protection system and that such approaches have the potential to advance social protection.

The relationship between social protection and the graduation approach goes beyond the economic aspect of the development field. Increasingly, many argue that basic income security and the access to essential social services should be seen as a civic right – or even a human right. Brazil, for example, has anchored this kind of transformative social protection policy in its 1988 Constitution. Guaranteeing the well-being of the population and preventing, managing, and overcoming poverty is part of the raison d’etre of the modern state. As such, governments need to provide a long-term system of social protection for its poorest citizens – and other excluded groups such as the elderly or the disabled – for whom entering the contributive social protection system may not be easily feasible. The magnitude and persistence of poverty worldwide have led an increasing number of policymakers and development practitioners to look into the potential of social protection and graduation.

So, this is a good point to raise the following questions: How can the graduation model contribute to social protection? To what extent is the graduation approach relevant to designing social protection programs? And does the “graduation” concept in its several definitions have the same meaning in the realm of social policy?

Here are a few thoughts to answer these questions:

• “Graduation” can refer to the sustainable exit from extreme poverty. Graduation here is defined as reaching a certain level of human, social, physical, and productive assets that allow households to become self-sufficient and build the necessary capacity to cope with shocks without falling back into extreme poverty. This is the approach that has been replicated in several pilot projects around the world through the CGAP-Ford Foundation program.
• “Graduation” can also be understood as the completion of or exit from a particular social assistance program. Because of the large scale of conditional cash transfers programs in Latin America (they reach about 113 million people out of the 174 million living in poverty in the region) this interpretation of “graduation” is of particular importance, as governments are aware of the need to find sustainable exit strategies in order to reduce their fiscal burden and give the opportunity to other vulnerable households to join such programs.
• Another approach to “graduation”, especially from a public policy perspective, is the integration of different social programs, so that poor people can move from one program to another in order to strengthen their capacities and address the multiple dimensions of poverty. For example, when participants leave a food security program, how can you ensure that they enter into other programs that strengthen their labor or asset building capabilities? How do you prevent them from falling back into extreme poverty?
• Chile’s social protection system Chile Solidario is one of the few public policies that have been designed with the aim of combining different social protection programs. The system, which comprises 36 institutions, is based on an initial psychosocial analysis that transfers households into the program most adapted to their needs, such as Puente (for extreme poor families), Vinculos (for the elderly extreme poor), Caminos (for children separated from their parents), or Calle (for the homeless). When exiting a program, households still have preferred access to public services and can join other programs within the system. As such, ‘graduating’ from one program does not mean graduating from the system. To summarize, graduation and social protection have somewhat different and complex approaches. However, the development and combination of these concepts through the design and implementation of innovative social programs for those who cannot access contributive social protection could provide real, scalable solutions for the poorest.

For example, the Government of Colombia is working under the three perspectives of graduation. With the technical support of Fundación Capital, a new pilot program for reaching the ultra poor will be implemented in the coming months (see Proyecto Graduación at http://www.fundacioncapital.org) Additionally, the government is seeking exit strategies for Familias en Acción, the largest social program, which reaches 2.5 million families through conditional cash transfers.

Finally, over the last years the government has been working on the integration of several social programs through Red Unidos, which is a network of 25 government entities that links extreme poor households with public social services. Red Unidos was designed after Chile Solidario, and currently reaches about 1.5 million families with the support of 10.000 field workers.

In the view of lifting the billions of people still living in poverty and extreme poverty around the world, we at Fundación Capital strongly believe in the urgent need to find innovative and scalable solutions. As such, we recommend, on the one hand, using the lessons learnt of graduation models such as the ones implemented by BRAC and CGAP-Ford Foundation to strengthen social protection policies, and on the other hand, ensuring that households who exit social programs are protected by appropriate social safety nets because even if their socioeconomic conditions have improved, they remain vulnerable to shocks. By doing so, the link between graduation approaches and social protection policies will no longer be missing.