Peru has created sustainable livelihoods for more than 90,000 families and established more than 2,000 rural businesses using the Graduation Approach. The approach helps families reach a minimum income level in three years by employing five elements: basic income support, skills training, help buying business assets, savings support and lifestyle improvements. Peru’s social program, Haku Winay, is one of about 20 government programs around the world based on the approach, which takes people up through levels of economic independence.
Results & Impact
Over 60% of program participants saw their incomes rise by more than $300 while the value of their assets increased by 30% over the three years. Participants were 14% more likely to save money in a financial institution, while surveys revealed significant improvements in participants’ business and negotiation skills.
Peruvian MInistry of Social Development and Inclusion, FONCODES, Consultative Group to Assist the Poor, Ford Foundation, German Cooperation Agency
Participants first receive payments to help them purchase food and other basic necessities, in order to reduce the pressure of day-to-day survival. This is complemented by a life skills initiative that teaches them how to adopt practices that will improve their quality of life and give them knowledge of banking and financial services. The following three stages are focused on generating a sustainable income for participants: creating a strategy for them to save money, identifying a business venture they can pursue, providing the necessary technical training and delivering them bundles of assets - such as chickens or guinea pigs, coffee bushes or stevia plants. Training in farming techniques, financial services and life skills is delivered through local residents with valuable farming and business knowledge. The program is also administered by citizen-run groups.
Low-income people, rural population
Cost & Value
Haku Winay costs on average $1,100 per family and had reached 90,000 families as of 2015.
Running since 2012
Similar programs have been instituted by governments around the world based on the Graduation Approach. All vary slightly in their implementation of the five components: for example, in Colombia, individual participants receive cash to purchase the assets themselves. Savings requirements have differed between countries.
Peru has created sustainable livelihoods for more than 90,000 families through a social support program based on the Graduation Approach.
The Graduation Approach to poverty alleviation provides poor families with basic income support, skills training, asset purchase assistance, savings support and help to improve their lifestyles over three years.
First launched in 2012, Peru’s version of the approach – Haku Winay (“We are going to grow” in the Quechua language of the Andes) – reached 90,000 families by 2015 and resulted in the establishment of over 2,000 rural businesses. It was created by combining a previous rural support program, “My Productive Farm” with a Consultative Group to Assist the Poor (CGAP) and Ford Foundation Graduation Approach pilot.
The Graduation Approach was first developed in Bangladesh in 2002 and has since been trialled in more than 30 countries around the world. It aims to provide an effective route for the world’s poorest communities to escape poverty through an all-encompassing support strategy delivered in stages over a three-year period. Participants first receive payments to help them purchase food and other basic necessities, in order to reduce the pressure of day-to-day survival. This is complemented by a life skills initiative that teaches them how to adopt practices that will improve their quality of life and give them knowledge of banking and financial services.
The following three stages are focused on generating a sustainable income for participants: creating a strategy for them to save money, identifying a business venture they can pursue, providing the necessary technical training and delivering them bundles of assets – such as chickens or guinea pigs, coffee bushes or stevia plants.
Between 2006 and 2014, CGAP and the Ford Foundation launched pilots in 10 countries to test the Graduation Approach, with highly successful results. In the case of Peru, CGAP and the Ford Foundation partnered with an NGO, PLAN, to run a two-year pilot that reached 800 families and delivered a return on investment of 146%, with the average cost per family being just over $2,600.
Based on the pilot’s success, the Peruvian government modified its farming assistance program to include a greater focus on improving technical skills, knowledge of financial services and families’ lifestyles.
Haku Winay is administered by the Ministry of Social Development and Inclusion (MIDIS), and has been operating nationwide since 2014, following a pilot in 2012. Unlike other graduation approach policies, Haku Winay focuses exclusively on subsistence farmers. Every subsistence farmer between the ages of 18 and 65 is eligible to receive a package of farming materials and tools tailored to their location and market opportunities, for which they will be required to make only a small contribution.
Haku Winay operates in conjunction with Juntos, Peru’s social support system. Haku Winay focuses on Peru’s poorest and most isolated communities, targeting areas where there is a high dependency on the government’s cash transfer system and a significant travelling time from urban centres. Roughly 80% of participants during the program’s first three years received social assistance.
Funds for Haku Winay are provided through a combination of public and private sources. FONCODES, Peru’s Social Development and Compensation Fund, delivers finance, organises technical assistance and bi-monthly project inspections. NGOs provide support and training for specific initiatives within Haku Winay. For instance, the program’s focus on healthy housing has been made possible through the German Cooperation Agency (GIZ), which funded the installation of 20,000 stoves.
As part of its aim to empower citizens and promote a business culture, funds are managed through citizen-run groups, each known as known as an “executing nucleus” (NEs), which oversee asset transfers. These comprise members of participating communities who are elected by their fellow residents and represent around 100 families. Each NE has a representative from government to oversee the group. NEs obtain three quotes for the farming resources required by families and oversee their delivery. NEs are also responsible for hiring instructors and are required to report to government officials on a monthly basis.
NEs are overseen by regional management bodies, known as NECs. Each NEC supervises four executing nuclei and is also comprised of citizens.
Training is delivered through local residents who are selected on the basis of their business knowledge and agricultural insight. Known as Yachachiqs (teachers in Quechua), they form the central day-to-day link between project participants and officials administering it. They receive training in the types of ventures the program supports, related farming techniques as well as key financial and banking information. Teaching materials are delivered from MIDIS and include instruction in the uses of ATMs, bank accounts and other financial products. Training is carried out through two monthly visits to family homes each month by the Yachachiq, and is delivered according to a bespoke development plan agreed with each family.
As well as supporting family businesses, a key feature of Haku Winay is its emphasis on encouraging cooperative businesses. Yachachiqs give advice to groups of four to six residents interested in launching a joint enterprise and help identify potential opportunities. Local Resource Allocation Committees (CLARs) assess pitches and award grants of up to $2,500. CLARs are made up of local government officials, the NEs and FONCODES, although they can sometimes have other distinguished local individuals. Partnerships receive additional marketing advice from a dedicated advisor, who helps connect them to potential markets. FONCODES hope such initiatives will be able to break into international markets for ethically sourced or organic products. By 2015, 2,000 such enterprises had been established, creating jobs for over 7,500 people.
At the end of the three-year program, it is hoped participants will have established a reserve of savings, developed valuable business knowledge, be comfortable using financial services and have sustainable businesses with the potential to grow. Early indications have been positive. Over 60% of program participants saw their incomes rise by more than $300 and average assets increased 30%. Participants were 14% more likely to save money in a financial institution, while surveys revealed significant improvements in participants’ business and negotiation skills.
Similar graduation approach anti-poverty initiatives have been launched around the world. As of 2015, more than 50 programs had been launched in more than 30 countries, although less than half were government led and many were not nationwide.
(Picture credit: Wikipedia/Peruvianterracefarmers)