Presentation on theme: "An Introduction to Household Economic Strengthening."— Presentation transcript:
An Introduction to Household Economic Strengthening
The LIFT II Project Funded by USAID Global Health Bureau’s Office of HIV/AIDS Five-year project, through July 2018 Three core partners (FHI360, CARE and World Vision) and numerous resource organizations Offers: Support for linkages between Nutrition Assessment, Counseling and Support (NACS) and economic strengthening, livelihoods, and food security ES/L/FS services Strengthened community services that provide ES/L/FS support as a component of a continuum of care for families. Access to tools and resources 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 FONKOZE in Haiti: By offering a continuum of provision, protection and promotion services, FONKOZE provides integrated programming to move people along the economic strengthening pathway outfonkoze/whoweare/how works.html outfonkoze/whoweare/how works.html
Understanding Your Beneficiary Who is the target population? What do they need to do to build capability? What assistance is needed to build capability? Challenges: - human - natural - physical - financial - social Interventions: - social protection - asset protection - income growth What are the challenges? What are the interests & capabilities? Capabilities & Interests: - Education - Skills - Employability Action required: - persevere - organize - build Vulnerability: - high - moderate - low
Poverty Tax Challenge “Poverty Tax” causes the poorest to pay the most to meet their basic & essential needs – Understanding delivery and cost of basic services – Opportunity to reduce the cost of basic services – Opportunity to reduce the cost of inputs for income generating activities
Group Discussion: Households and ES Break into groups 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/poverty taxes they face 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 CopingSevere 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
HIGH HOUSEHOLD VULNERABILITY LOW HOUSEHOLD LIVELIHOOD & FOOD SECURITY HIGH 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 ProblemsEffective 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 ProblemsEffective 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.
Provision – Food transfers Can avoid sale of productive assets. Allows income to be used for other purposes May improve nutritional status, enabling productive activities. Hording food Sale of food items Intra-household utilization Market impact (both locally and non-locally sourced) Administration and handling costs Potential Benefits 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 investment Low administration fees (if ongoing) Unconditional transfers may be misused Cash safety Difficult to monitor spending Lump sums may be overwhelming for beneficiaries Few suppliers who accept vouchers Potential Benefits 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 Potential Benefits 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 consumption Interest paid on savings provides a return on investment Improves social capital; collective bargaining and marketing Group managed; they determine savings and lending rates Requires income stream to ensure that households have money to save Retro-fitting savings and loans to existing groups may be problematic Potential Benefits Potential Concerns
Protection – Burial Societies & Stokvels The vulnerable self-insure, which means they assume all the risk of a shock. Informal ‘insurance’ mechanism spreads the risk of a shock between the vulnerable and less vulnerable. Lessons learned: Important aspect is the social network which burial societies and stokvels are built. For example burial societies often assist addressing numerous shocks to the household, not just in time of death. Provide an excellent structure to disseminate information, products or services.
Protection – Burial Societies & Stokvels Provide numerous services to cope with shocks via social networks Important risk reduction strategy Informal management of funds Potential Benefits 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 Potential Benefits 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 Potential Benefits 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 Potential Benefits 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 Potential Benefits 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
Take-Home Tips for Effective ES Interventions! X Y Z
Focus on capabilities not income-level Space for the resourceful and innovative Group vs. individuals interventions Training has to be tailored to recipients’ capabilities
Take-Home Tips for Effective ES Interventions! Program design must take into account differing levels of poverty Subsidies should be ‘SMART’ and have a clear, finite, facilitative application The way you enter is the way you exit Continually link activities to further capability building opportunities
Next Steps and LIFT Support Continue to be a resource to USAID/Lesotho and PEPFAR implementing partners on ES/L/FS activities and linkages between NACS and ES/L/FS activities. Continue to work with MSH, ASSIST (URC) FANTA-3 (FHI 360) to tailor potential linkages between Nutrition Assessment, Counseling and Support and ES activities to the Lesotho context.