Using a market based approach to build the livelihoods of poor households
For seven years, Najiri has received bi-monthly cash transfers from the Hunger Safety Net Programme (HSNP), a Kenyan government program in Northern Kenya. They’ve helped feed her children and even put two of them in school. But what if the government was suddenly unable to continue the programme? Najiri, her children and other HSNP recipients would suffer.
HSNP works in Turkana, Marsabit, Mandera and Wajir counties to reduce extreme hunger and vulnerability and impact studies show it provides a consumption safety net. However, the majority of beneficiaries withdraw their full payment in cash, primarily using it to buy food. There is some evidence the cash transfers are used to start a small business or generate income but this is often unsustainable, especially if there are shocks such as drought or a health emergency.
Despite the achievements of HSNP, and other social protection programmes, cash transfers are an unsustainable and insufficient solution for those in extreme poverty. One problem is that they don’t address engagement with markets. Lack of market development and value chain linkages, poor infrastructure and recurrent droughts are the biggest development impediments. Therefore, a multi-sectoral focus in programme development must be taken.
To help, FSD Kenya supported the development of savings groups (SGs). SG’s have had success in Northern Kenya, especially with the commitment and discipline of the members. Najiri is part of two of these savings groups and members dutifully save without defaulting. But as member needs increase, the savings aren’t enough to meet the lending requirements, limiting growth.
One innovative solution helping people like Najiri become more self-reliant is the graduation model developed by BRAC, the world’s largest development organisation. Through its work with the poor in Bangladesh, BRAC realised that using social protection, livelihood development or financial inclusion alone were insufficient.
Instead, the BRAC graduation model integrates all three to create an approach that helps with immediate consumption while taking into account people’s long-term needs. The model offers cash stipends, savings, skills training, and asset transfer with constant coaching and mentoring while addressing the barriers that prevent the poor from engaging with their market economies. The model has proven to have positive livelihood outcomes on the very poor around the world.
FSD Kenya adopted the graduation model but with a different kind of delivery: how would a market development approach work with the BRAC model? We hope that the adaptability of market-based approaches will both reduce long-term costs and address the challenge of scaling.
Stay tuned for part B, discussing the unique market-based approach of FSD Kenya’s graduation project.
 Banerjee, A., Duflo, E., Goldberg, N., et al. (May 15, 2015). A multifaceted program causes lasting progress for the very poor: Evidence from six countries. Science Vol. 348 (6236). New York: American Association for the Advancement of Science.