In this week's post, we'd like to share an article by Janet Heiesy, director of the Asia Program for Trickle Up. It highlights the “Graduation Model,” a methodology originally developed by microfinance institution BRAC in Bangladesh that is being used to reach the poorest communities around the world in a sustainable way.
This model targets the ultra-poor and consists of the following components:
1) Consumption support: Participants are given a cash stipend or in-kind package on a regular basis to stabilize household consumption.
2) Savings services: Graduation models encourage or require participants to open a savings account. In some cases, withdrawal of savings is only allowed for emergencies.
3) Skills training: Training sessions on hygiene, sanitation, enterprise skill development, financial literacy, business development and social issues are provided to clients.
4) Asset transfer: Assets, usually livestock or other productive assets, are given to participants to invest in a trade business.
The goal of the Graduation Model is to give a person the capacity to receive and repay a microloan that they otherwise would not necessarily have benefited from. For more on graduation projects and case studies, check out "Ultra Poor Graduation Pilots: Spanning the gap between charity and microfinance" by Nathaneal Goldberg, senior policy director for Innovations for Poverty Action.
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