Household Economic Strengthening: Concepts And Principles - 2009 Pepfar Ovc Leadership Forum

“AIDS does not kill suddenly, but it comes and takes a lot of money away with it.” —Microfinance client, Uganda

Household Economic Strengthening Concepts & Principles

Jason Wolfe USAID/EGAT

WHAT IS ECONOMIC STRENGTHENING?

Mitigating economic vulnerability

Ability to cope with shocks • • • •

Death of family member Death of breadwinner / caregiver Chronic illness Care for additional family members

HOUSEHOLD ASSETS

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Source: www.livelihoods.org

HOUSEHOLD ECONOMIC MODEL

Inputs & Expenditures

HOUSEHOLD ACTIVITIES • Production • Consumption • Investment

HOUSEHOLD ASSETS • Human • Physical • Financial

Income & Other Additions Source: M. Chen & E. Dunn, “Household Economic Portfolios”, AIMS, 1996

Credit Providers

Social Networks

STRATEGIES FOR COPING WITH SHOCKS • Risk Reduction: Income Smoothing – Low risk (low return) income generation activities – Diversification of income generation activities – Insurance mechanisms: savings & assets, social ties, credit access

• Loss Management: Consumption Smoothing – Stage 1: Insurance & reversible mechanisms – Stage 2: Disposal of key productive assets – Stage 3: Destitution: charity, household breakup, migration

Source: E. Dunn, N. Kalaitzandonakes, C. Valdiva, “Risks and the Impacts of Microenterprise Services”, AIMS, 1996

MARKET SYSTEMS Global Enabling Environment

Global Retailers

National Enabling Environment

Sector specific providers

Cross-cutting providers

National Retailers Exporters

Wholesalers

Processors/Traders

 End Markets  Enabling Environment  Inter-Firm Cooperation  Supporting Markets  Upgrading

Producers Financial (cross cutting) Input Suppliers

Source: O. Kula, J. Downing, M. Field, “Globalization and the Small Firm”, AMAP, 2006

TYPOLOGY OF INTERVENTION STRATEGIES • Social protection – Cash transfers: conditional and unconditional

• Asset Protection – Savings-led financial services: ROSCAs, ASCAs, child savings accounts – Microinsurance

• Income Growth – Microenterprise / value chain development – Employment / employability

Examples from the Field East Africa Uganda Nigeria Mozambique

PRINCIPLES 1. Be clear about objectives and target population 2. Take a cross-sectoral approach and ensure open dialogue throughout the program 3. Base program design on sound market analysis 4. Seek household change in small, riskable steps 5. Develop interventions for sustainability and scalability 6. Avoid mixing the direct provision of OVC services and the facilitation of economic strengthening strategies 7. Identify robust indicators to effectively track performance, outcomes, and impact 8. Do no harm to the private sector

Discussion What works? What doesn’t? What could work better? What would help you the most?

ADDITIONAL RESOURCES • www.microlinks.org – Principles of Economic Strengthening for Vulnerable Children: www.microlinks.org/ESprinciples – Financial Services: www.microlinks.org/fs – Value Chains: www.microlinks.org/valuechains – Youth Livelihoods: www.microlinks.org/youth – Breakfast Seminars: www.microlinks.org/breakfast – Speaker’s Corners: www.microlinks.org/speakerscorner – Notes from the Field: www.microlinks.org/notes

• www.povertyfrontiers.org • www.cyesnetwork.org • Microenterprise & HIV: hamed.seepnetwork.org

Muito Obrigado! Jason Wolfe, Enterprise Development Advisor USAID Microenterprise Development office [email protected] | [email protected]