Overview Graduation strategies aim to increase households’ income, skills, and human capital in order to promote better long-term welfare and poverty reduction. Safety net programs are increasingly introducing graduation components, but the concept of graduation remains a topic under debate. As of yet there is little evidence of longer-term impacts of graduation strategies and some graduation objectives are seen as overly ambitious. This page aims to present the key issues to date, and will provide updates as knowledge improves in this area.
Not all programs have graduation strategies. Of those that do, some consider graduation strategies at a later stage of the project cycle, only after the regular program functions are working well.
Graduation strategies may involve:
Incentive structures: Some programs include incentive structures which may improve beneficiaries’ human capital and, in turn, promote graduation. Incentive structures can be built into program design from the outset or included at a later stage. For example, conditional cash transfers provide incentives for households’ to invest in their children’s human capital through conditionalities that require use of health and education services. Other instruments that use incentive structures for graduation include school feeding, which aims to improve children’s school attendance and learning, and public works, which may aim to build community assets.
Labor activation: An increasingly common strategy involves linking safety nets to other types of interventions that aim to re-insert economically active beneficiaries of transfer programs into the economy. Some of these interventions include employment services, literacy, training, second chance education or life-long learning, and microenterprise development. Argentina’s Head of Household Transition Project shifted from a focus on transfers to linking beneficiaries with employment, through school completion, training and transient employment services. In Bulgaria, the cash transfer is complemented by the From Social Assistance to Employment Program, which provides job placement for the unemployed poor in common good areas and activities leading to enhancement of skills and qualification.
Other social programs: Safety nets can also be linked to other social programs or help beneficiaries enroll in sector specific benefits for which they may be eligible. Some examples include links to housing subsidies, utility allowances, fee waivers for health and education services, extension programs for small farmers, social care services or getting people IDs and basic legal documents. These services may help beneficiaries achieve greater independence by increasing their income and improving their non-monetary welfare and quality of life. In Armenia, for example, all beneficiaries of the cash transfer Family Poverty Benefits Program are eligible for health care fee waivers. Chile Solidario connects its cash transfer beneficiary households to various social assistance programs tailored to meet their specific needs.
Financial inclusion: Another strategy is to provide safety net beneficiaries with financial services such as setting up bank accounts, providing financial literacy, or linking programs to micro-finance services (e.g. savings, microcredit, etc). Providing financially inclusive accounts to low-income recipients of transfers can be done through branchless banking channels such as mobile phones, smartcards or even deposit collectors to gather savings from beneficiaries. Rwanda’s upcoming public works program will open bank accounts for depositing wages to beneficiaries, in order to allow them to save if they wish. In Bangladesh, business training plus microfinance.
Graduation strategies are very context-specific, as they depend on technical and administrative capacity as well as on the possibilities of social and economic progress within the specific country conditions. In many low-income countries, particularly in rural areas, graduation strategies would have to employ a creative mix of approaches to strengthen the livelihoods of people who are receiving transfers because employment opportunities are few, social services may be weak and institutions may have limited coverage.
Achieving graduation in terms of improving the welfare status of beneficiaries is linked to overall improvements in socioeconomic and poverty levels in the country. An important tool for reducing poverty and inequality in some countries has been the effective implementation of comprehensive social protection systems. In Chile, for example, Chile Solidario is part of a network of social protection programs covering different vulnerable groups and their specific vulnerabilities (e.g. extreme poor families, homeless, vulnerable children, etc.).
Graduation strategies may involve high costs. Therefore, they may be considered less of a priority when competing with basic design features such as targeting, payment methods, and information systems.
There is as yet little evidence on the impact of graduation strategies. More research is needed on the characteristics of beneficiaries that graduate from such programs, their pathways during and after the program, and the sustainability of the improvement in their social and economic conditions.