An Introduction to Economic Strengthening[Insert Place, Date]

The LIFT Project

• Funded by USAID Global Health Bureau’s Office of HIV/AIDS

• Five-year project • Implemented by three core partners (FHI360, CARE

and Save the Children) and numerous resource organizations

• Offers: • Access to tools and resources• Opportunity assessments and portfolio reviews • Support for linkages between NACS and ES • M&E Support • Program quality and implementation support

Training objectives

• Introduce LIFT • Understand economic strengthening (ES) and its

rationale• Learn about major concepts and approaches in ES• Review lessons in ES programming• Share additional resources• Introduce more in-depth training

What is Economic Strengthening?

• “A portfolio of interventions to reduce the economic vulnerability of households and empower them to provide for the essential needs of the children they care for, rather than relying on external assistance.” (PEPFAR working definition, 2011)

Why is Economic Strengthening Important?

• Enables households to meet their needs. • Health, nutrition and economic well-being are closely

linked. • Positive health and nutrition outcomes usually can’t be

achieved while households lack access to income.

For LIFT, economic strengthening supports PEPFAR’s primary objectives:

• HIV prevention• Care, treatment and support• Impact mitigation

ES Benefits: Practical Examples

ES for OVC Caregivers in Uganda: Caregivers who joined savings groups with literacy training increased household assets and improvements among OVCs in # of meals eaten and living conditions over non-participants.

© Paul Rippey

ES Benefits: Practical Examples

Guaranteed labor program in India: Children of a safety net program offering guaranteed work to the impoverished were less likely to engage in child labor, had greater school attendance and improved health outcomes.

© BBC

ES Benefits: Practical Examples

Savings Groups in Burundi: Providing social messaging through savings groups was found to improve financial decision making authority for women, reduce exposure to violence, reduce acceptance of violence, and increase consumption of household goods relative to luxury goods.

© SAWSO

Risks of Not Addressing Economic Needs?

Group Discussion: Households and ES

• Break into groups of approximately 5 people • Discuss one household that you have previously

supported with ES or that requires ES• Share:

• What factors made them require ES • How they supported themselves financially • What major risks they faced• How they would deal with negative events

Important Concepts in ES

• Households often become poor after experiencing a shock (e.g. sickness caused by HIV)

• Vulnerability to shocks varies between households, within households and over time

• Household livelihood strategies are shaped in part by vulnerability

• Coping mechanisms and safety nets are important to building resilience to shocks

• Tailor interventions to vulnerability , capacity and risk tolerance

• With support, households can transition along a pathway to graduation from external support

Types of Coping Strategies

Minor Coping Moderate Coping Severe Coping

• Selling protective assets

• Seeking wage labor • Migrating for work• Borrowing• Reducing spending

and food consumption• Drawing on social

assets

• Selling productive assets

• Borrowing at exorbitant rates

• Further reducing spending and food consumption

• Depending on charity; • Breaking up

household• Migrating under

distress• Going without food

Provision

Promotion

Protection

Income

Income Growth

Income Stabilization

Risk Reduction

Loss Management

Destitute / Distress

LIVELIHOOD PHASE Time

Types of ES Interventions

HIG

HH

OU

SEH

OLD

VU

LNER

ABIL

ITY

LOW

LOW

HO

USE

HO

LD L

IVEL

IHO

OD

& F

OO

D S

ECU

RITY

HIG

H

Provision

Protection

Promotion

Expand household income and consumption

Smooth household income and promote asset growth

Smooth household consumption and manage household cash flow

Build self-insurance methods and protect key assets

Recover assets and stabilize household consumption

LIVELIHOOD OBJECTIVES

Current State of ES Programming

• A lot of poor practice • Requires specialized skill sets and expertise (just as effective

health programs do) • Traditionally, many ES activities have been implemented poorly,

with untrained staff and have had limited results• Budgets have often been insufficient• Some interventions that are no longer widely practiced elsewhere

(e.g. NGOs providing loans) are still widespread in ES programming

• Limited learning from practices and experiences elsewhere

Common Problems and Effective Solutions in Economic Strengthening

Common Problems Effective Solution(s)

• No demand for products produced by target households or no jobs available

• Consult market assessments / labor market assessments.

• Balance “push” and “pull” interventions.

• Organization’s services end once the project’s funding runs out.

• Design approaches for sustainability of access to products and services from the beginning.

• Organizations provide services that they have no experience or capacity in (example: microfinance)

• Avoid areas with weak or no capacity. • Engage in strategic partnerships .

• Projects repeat mistakes that have already been made elsewhere

• Focus on learning from other experiences prior to starting implementation.

• Share learning widely.

Common Problems and Effective Solutions in Economic Strengthening

Common Problems Effective Solution(s)

• Projects do not know their performance and only measure what donors require.

• Implement a results measurement system with baselines and regular monitoring.

• Same activities are provided to all target households, even though needs and capabilities vary.

• Tailor interventions to households.

• Households that improve their economic situation stop receiving services and subsequently relapse.

• Work to develop household resilience. • Link graduates to new services to ensure

incentive for graduation.

Take-Home Tips for Effective ES Interventions!

Provision

Food Transfers

Cash Transfers

Asset Transfers

Labor Schemes

Objective: Recover assets and stabilize household consumption (food, healthcare, shelter, clothing, etc.)

Provision – Food transfers

Can avoid sale of productive assets. Allows income to be used for other purposesMay improve nutritional status, enabling productive activities.

Hording foodSale of food itemsIntra-household utilizationMarket impact (both locally and non-locally sourced) Administration and handling costs

Pote

ntial

Ben

efits

Potential Concerns

Provision – Cash transfers

• Unconditional or conditional transfers

Potential benefits: • Can support consumption and investment• Low administration fees (if ongoing)

Potential concerns:• Unconditional transfers may be misused• Cash safety• Difficult to monitor spending• Lump sums may be overwhelming for beneficiaries• Few suppliers who accept vouchers

Provision – Cash Transfers: Conditional and Unconditional

Can support consumption and investmentLow administration fees (if ongoing)

Unconditional transfers may be misusedCash safetyDifficult to monitor spendingLump sums may be overwhelming for beneficiariesFew suppliers who accept vouchers

Pote

ntial

Ben

efits

Potential Concerns

Provision – Physical asset transfers

Common asset transfers: • Livestock and poultry • Seeds / seedlings• Tools / machines

Typically requires a holistic look at the sectors related to the assets

Can generate income

Significant training or prior experience is needed

Pote

ntial

Ben

efits

Potential Concerns

Exercise:

Discuss which provision strategy you would use in each of the following scenarios: 1. Marginal, remote area is hit poor weather for consecutive years

and agricultural households have little to eat. They are selling off agricultural equipment and livestock. There is limited availability of nutritious food in local markets for them to purchase.

2. Households in urban areas have plenty of food options but no income to purchase it owing to the sickness or death of their primary wage earner.

Protection

Financial safety nets (savings, microinsurance)

Social safety nets (social capital, supporting institutions)

Financial literacy

Extending legal services (protecting assets and inheritances)

Objectives: Build lasting self-insurance methods and protect key assets; Smooth household consumption and manage household cash flow.

Protection – Financial safety nets

Financial safety nets help households smooth consumption to purchase goods and services, such as food and healthcare.

Examples of financial safety nets include:• Savings• Microinsurance

By accessing savings or insurance households are better able to protect their productive assets following a shock and therefore maintain current and future earning potential.

Protection – Savings Groups

• Savings enable the poor to self-ensure• Cash based savings provide liquid assets to smooth consumption.• Savings groups are informal where small amounts can be saved

and lent to members

Protection – Savings Groups

Increases capital available for smoothing consumptionInterest paid on savings provides a return on investment Improves social capital; collective bargaining and marketingGroup managed; they determine savings and lending rates

Requires income stream to ensure that households have money to saveRetro-fitting savings and loans to existing groups may be problematic

Pote

ntial

Ben

efits

Potential Concerns

Protection – Microinsurance

• The vulnerable self-insure, which means they assume all the risk of a shock.

• Microinsurance spreads the risk of a shock between the vulnerable and less vulnerable.

Lessons learned: • Preferred practice is to link to a formal insurance provider, who

can spread the risk and reduce the cost of premiums.

Protection – Microinsurance

Provides access to finance for healthcare provisionIncreases income for healthcare providers

Difficulty affording the premium

Pote

ntial

Ben

efits

Potential Concerns

Protection – Strengthening Social Safety Nets

• Support increased access to existing social safety net programs that people can fall back on in times of need.

• Safety nets can be provided by government agencies, CBOs, and other community groups.

Examples of social safety nets include several previously mentioned provision activities:• Transfers, cash and in-kind transfers such as school supplies and

uniforms• Food-based programs such as supplementary feeding programs

and food stamps, vouchers, and coupons• Fee waivers and exemptions for health care, schooling

Protection - Extend legal protection

• Facilitating access to legal services helps protect control and access to protective assets.

Work with legal service providers to:• Help enforce inheritance laws• Protect asset ownership (e.g. land, housing)

Protection – Financial literacy

• The vulnerable often have inconsistent and variable income streams

• Financial literacy can be provided by external parties or directly by the NGO

Enables better management of household cash flows, understanding profit and loss, and effective use of financial goods and services.

Training must be of adequate quality and duration to be effective

Pote

ntial

Ben

efits

Potential Concerns

Promotion

Objectives: Smooth household income and promote asset growth; Expand household income and consumption

Linkages to formal credit and savings

Enterprise development / value chain development

Workforce development (vocational and skills training)

Promotion – Formal savings and credit

• Microfinance is the delivery of appropriate financial products and services for the poor. It includes, savings, insurance and credit.

Can support the development of viable livelihoods

Risks creating asset loss and indebtedness

Pote

ntial

Ben

efits

Potential Concerns

Formal savings and credit, continued

Lessons learned: • Ongoing access to finance is critical. Borrowers will generally

want rising amounts and easy access. • It is very difficult for NGOs to manage microfinance. Partnering

with specialized agencies is advisable. • Borrowers will often assume NGOs are providing loans as grants.

Working with a formal credit provider increases the chances that loans will be repaid.

• Vulnerable households are often not attractive to lenders. • Borrowers who are late on payments you provide often will not

attend your other activities (such as trainings)

Rather than providing finance, consider:• Providing loan fund and operating costs to the MFI• Creating a loan guarantee fund to share the risk• Revenue sharing with MFI and CSO

Promotion – Enterprise development

• Enterprise development includes linkages of microenterprises to business development services and technical services

• Examples: - Identifying products, pricing, mapping- Marketing - Business registration and legal support

Can support the growth of new businesses

New services are not always economically viable

Pote

ntial

Ben

efits

Potential Concerns

Examples of promotion – Value chain development

• Value chain development addresses the constraints that prevent pro-poor growth of an industry

• Example interventions: - Supporting linkages of firms to markets - Supporting improved technical capacity

Can create large-scale and sustainable benefits

Can be costly Requires significant technical expertise

Pote

ntial

Ben

efits

Potential Concerns

Examples of promotion – Workforce development

• Most prefer employment to entrepreneurship.• Access to employment can offer reliable livelihoods.

Workforce development interventions could include: • Apprenticeships and internships• Vocational skills training• Workforce readiness; preparing resumes, appropriate attire, tools

and resources, skills training

Lessons learned: • Ensure there are job opportunities before training • Link trainees to employers from the beginning • Ensure the quality of the training

Quiz!

Linkages with NACS

• NACS: Nutritional Assessment, Counseling and Support

• What is the potential integration with ES activities?

Next Steps and LIFT Support

• [Tailor this slide to explain LIFT’s vision for working with the set of partners attending the training or in the country in which the training is being conducted].

Additional Resources

• MicroLinks (www.microlinks.org) • CGAP (www.cgap.org) • CYES Network (www.cyesnetwork.org)• SEEP Network (http://www.seepnetwork.org) • Savings Revolution (www.savings-revolution.org)

Follow-Up Training

• LIFT offers the following training: • Longer, specific ES training (e.g. savings groups, value

chain development) • M&E for ES

• Selecting participants for follow-up training: • Specialist in economic strengthening • Will be responsible for implementing ES activities • Motivated to learn

Thank you!

[Insert contact information for trainers]

Jacky BassTechnical Directorjbass@fhi360.org

www.theliftproject.org