NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Where are the poor, exactly? You may recall the September 2012 update of “Where will the world’s poor live?”, by Andy Sumner, confirming that middle-income countries are home to most of the world poor — 74 percent of those living on less than $1.25 a day and 79 percent of those on less than $2.

In the countries that have some incarnation of the “graduation program” targeting the ultra-poor that BRAC began first experimenting with in the 1990s, communities themselves are also grappling with the question: Where are the poor? It’s a question that large scale aid agencies, impact investors, social enterprises, multinational companies – either through market development or corporate social responsibility efforts – and a host of others ask on a regular basis. So, we thought those stakeholders and others would benefit from learning a bit more about our process.

Ultra-poor programs are designed to identify those caught in the trap of extreme poverty, too poor to benefit from microfinance and other conventional development programs, and “graduate” them to the bottom rung of the economic ladder, where they can continue moving up, through microfinance or other means. In these programs, the community itself has a huge say in identifying who are its poorest members – and thus likely candidates for the program.

“It starts with building rapport,” says Rabeya Yasmin, director of BRAC’s Targeting the Ultra-Poor program. “In this process, one program staffer and a few of the villagers walk around the village to decide whether this village is a potential location for BRAC’s ultra poor program – does it have a reasonable concentration of poorest households?”

Once the village is chosen, the second step is to engage with the villagers to decide the meeting venue for what’s called the Participatory Wealth Ranking, and finally invite the villagers to the meeting, usually on the following day.

While it has different twists in each context, the ranking typically involves drawing a map of the village in the dirt in front of 40-50 or so villagers, and having them point out and discuss the economic condition of all the households in that village.

“They’re asked to consider things like what a given family’s house is made from – whether the roof is tin or thatched, for instance – or whether children are going to school, whether either parent has a steady job or income source, or for how long they’ve had that job, whether they own any other productive assets and so on,” Yasmin adds.

The villagers actually do the wealth ranking for every household in their village, not just the poorest only. Typically the exercise divides a village community into four to six categories; the bottom two categories corresponding to extreme poverty and thus the first list of potential program participants.

The very next day, BRAC staff conduct a door-to-door survey, filling up a three-page questionnaire and then an analysis of the households’ overall condition on the basis of the program’s selection criteria, culling down to a short-list of potential participants. Final selection happens after verification by mid-level managers. At every step, program staffers pay attention for possible inclusion and exclusion errors in selection.

“Of course these still don’t guarantee 100 percent targeting success,” says Syed Hashemi, founder-director of the BRAC Development Institute at BRAC University, which is assisting with monitoring and evaluation of ultra-poor programs run by other organizations in eight countries. “There will always be some inclusion and exclusion errors, but I feel we can live with a small margin of error.”

The programmatic interventions then begin: a 24-month combination of a transfer of productive assets for a livelihood, a weekly stipend as a short-term income support for usually six months, enterprise development training, life skills development training, and tailor-made health care and savings services.

In each village, a Poverty Reduction Committee is formed to do the important task of integrating BRAC’s ultra poor members into the wider community. Finally, intensive handholding by program staff aims to create sustainable livelihoods, hopes and aspirations among targeted families.

What kinds of aspirations and livelihoods? It helps that in Bangladesh BRAC also got into the milk processing business, collecting and processing about 100,000 liters of milk per day from farmers with usually one or two cows each, a majority of whom are women, ultimately accounting for 20-30 percent of domestic dairy sales. While BRAC’s dairy social enterprise does earn surplus funds that help BRAC self-fund 75 percent of its $572 million country expenditure for Bangladesh, its chief purpose is to provide a steady income to the poor, including those in hardest-to-reach locations most likely to have ultra-poor families.

(Image credit: BRAC/Oscar Abello).

The result? One of BRAC’s many internal evaluations has shown that more than 90 percent of participants “graduate” from a rigorously defined category of extreme poverty, meeting at least six out of 10 indicators, and have stayed out even four years after the program ends. Most of these participating women go on to become successful microfinance clients, with positive effects on consumption, food security, and a range of other variables.

Independent scholars have recorded similar results: MIT’s Esther Duflo, whose scientific approach to analyzing impact has blown the lid off many assumptions about aid, co-authored this assessment of a BRAC-assisted graduation program pilot in India, while scholars from The George Washington University have done the same with BRAC’s own ultra-poor program in Bangladesh.

The time-bound nature of the program is important. For one, there is the natural sense of urgency to complete the set of interventions, given some flexibility on exact deadlines within the two-year timeline. It also gives the program a cost structure that is stable and predictable enough to look attractive to donors – depending on foreign exchange rates, the cost is around $325 per two-year cycle per household. Those adapting BRAC’s ultra poor program include CGAP and the Ford Foundation (coordinating 10 pilots in eight countries), The MasterCard Foundation (partnering with the BRAC Development Institute in qualitative research and monitoring), Fonkoze, Bandhan, Plan International, Trickle Up and more.

“It’s challenging adapting the model to the different contexts; meso-level constraints are particularly challenging – absence of markets, difficult agro-climatic conditions, poor infrastructure, and inadequate supply of schools and health services,” adds Hashemi.

There is also the possibility of the interventions ending too early for some women and their families, but that’s a risk you have to take when the goal is improving self-reliance. Think of it as a way to build-in some measure of failure into the program; the reward being meaningful steps out of extreme poverty for a vast majority of those whose lives the program touches.

With such a large and growing proportion of the world’s poor living in countries getting wealthier each year, better targeting of aid and impact investing programs has never been more essential.

Some countries are beginning to launch anti-poverty programs with their own limited resources. Others are debating budget cuts in the face of continued economic malaise.

Meanwhile, the private sector’s growing interest in development projects has whetted an appetite for high-impact, cost-effective programming.

But asking the community who among them really is the neediest goes beyond aid and investment effectiveness; it’s a matter of dignity too.

Oscar Abello is a marketing and communications associate at BRAC USA.