Some outcomes of the Financial Graduation Programming Knowledge-sharing and Learning Event 17 October 2017 at IFAD

by Jonathan Agwe 

Background: The Outreach Project - Expanding and scaling-up innovative financial inclusion and graduation strategies and tools in Africa has been successfully piloted. ‘The ‘Outreach Project’ (in short) was a two-year pilot implemented through a south-south-and-triangular collaboration (SSTC) in knowledge, technology and skills transfer between Latin America and the Caribbean (LAC), East and Southern Africa (ESA) and West and Cenetral Africa (WCA) from August 2015 – September 2017 in three Sub-Saharan African (SSA) countries – The Gambia, Mozambique and Tanzania. The pilot implemented by Fundación Capital - FundaK (www.fundacióncapital.org) is now being scaled-up. It was funded by IFAD through a PTA small grant, which leveraged 250 per cent co-funding from other partners, including the Skoll Foundation, UN Foundation, The Gates Foundation, Swift Foundation, Irish Aid, Amplifiers and the governments of the three participating countries.

Participating to target the Last Mile at the bottom of the income pyramid: Thirty-two participants attended the event – some in person at IFAD HQ and others remotely via video or telephone from international locations including Kenya, Mozambique and USA. At the knowledge sharing and learning event, FundaK – the recipient of the PTA small grant co-presented with FAO, the Tanzania Social Action Fund (TASAF), BRAC-USA and two IFAD Country Offices (Tanzania and Mozambique). The general focus of the event was on how to best deploy pro-poor digital financial services (DFSs) as part of the graduation programming in financial inclusion for effective livelihood improvement activities (aka, productive safety nets).

This picture shows The Last Mile – i.e., the ultra-poor for whom the “push” and the “pull” mechanisms in the financial system are yet to be very effective. This lack of effective push and pull mechanisms necessitates targeted and specialized interventions to ‘graduate’ the ultra-poor into economic citizenship.

Highlights, giveaways and echoes from the event are diverse and varied: The graduation programming package for livelihood enhancement comprises of a combination of conditional cash transfers (CCTs), consumption support, coaching/mentoring especially in income generation, savings mobilization, linkages to the formal financial system, linkages to pro-poor value chains with remunerative prices. 
  • IFAD has at least 12 on-going projects with financial graduation programming interventions (Afghanistan, Azerbaijan, Cambodia, China, India, Kenya, Mexico, Pakistan, Peru, Rwanda, Tanzania and Uruguay). One financial graduation programming intervention has just recently been approved by the Executive Board (EB) for Burundi and one for Mozambique is on schedule for approval in December 2017. The FundaK piloted successes in ESA are being scaled-up through IFAD-supported operations, including but not limited to Tanzania’s Marketing Infrastructure, Value Addition and Rural Finance Support Programme (MIVARF) and TASAF; and Mozambique’s Artisanal Fisheries Promotion Project (PROPESCA) and the Rural Enterprise Financing Project (REFP). Observation: Lessons on graduation programming are now trickling in from within IFAD’s current portfolio.
  • BRAC implements the world’s largest successfully scaled Graduation model targeting households in ‘ultra’ poverty. BRAC has “graduated” some 1.7 million+ households from extreme poverty since 2002. The longest running Graduation RCT was on BRAC’s programme, showing a continued climb out of extreme poverty seven years later. Six international RCTs prove Graduation works internationally. At the intersection with social protection, BRAC says, graduation plays a vital role by shifting focus from ‘graduation out of a social protection programme’ to ‘graduation into a social protection system’. Observation: Graduation programming is a feasible business proposition for reducing perpetual ultra-poverty. 
  • FAO challenges the dependence on CCTs in graduation programming by asking the question – is there need to place conditions on cash transfer to obtain desirable outcomes? FAO posits that there should be flexibility for households to manage their expenditures. Observation: Unconditional cash transfers (as well) lead to significant social and productive impacts on beneficiary households. 
  • TASAF on deepening digital financial inclusion (digital financial services – DFSs) for Tanzania cash transfer beneficiaries says, they are “in the process of digitizing its payment system under which the Productive Social Safety Net (PSSN) beneficiaries will be empowered to receive their cash transfer payments direct into their mobile or bank accounts”. The establishing this ePayment system is demand-driven and is designed according to the needs of the beneficiaries. A testimonial from one beneficiary says, “I was very happy to receive money via my mobile phone, my daughter was very sick I didn’t have money at that time. I thank God for TASAF. I went very fast to Mr Mushi [Mobile money agent] within 3 minutes I had cash in my hands”.
    Observation: In spite of these successes, challenges still exist that hamper the uptake of DFSs to scale for the economically active poor and more so, for the ultra-poor. These challenges which should be surmounted with time and appropriate investments include: low functional literacy levels of beneficiaries to quickly grasp the digital technologies, absence of most financial service providers (FSPs) and interested mobile network operators (MNOs) and/or weak network signals in the rural districts. 
Watch this video on including graduation programming for a transformative social protection intervention for graduating The Last Mile into Economic Citizenship.

For all presentations at the event and more on financial graduation programming at IFAD, please, contact Jonathan Agwe, Senior Technical Specialist.

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