This 4 page brief shows how young people are using loans from VESAs to start their own businesses.
GRADuating Families Out of Poverty
GRADuating Families Out of Poverty
GRAD is a five-year USAID-funded project building on the Government of Ethiopia’s Productive Safety Net Program Plus (PSNP) project. PSNP was a previous USAID-funded initiative that demonstrated the potential for safety nets to support extremely vulnerable, food insecure populations. In 2015, USAID's Feed the Future office released a report saying that GRAD is the most cost-effective investment they have in Ethiopia.
Led by CARE and implemented through a partnership of local and international organizations, GRAD seeks to bring change on multiple levels including: economic opportunities, financial services, agricultural extension services, women’s resiliency, nutritional status, and climate change resiliency, while creating a sustainable environment that is collaborative and inclusive for participants, in order to graduate families out of social assistance programs, and create long term food security for communities in Ethiopia.
Using the push-pull approach, activities are designed to gradually increase households' participation in diverse economic activities, while also strengthening and facilitating linkages between GRAD participants and input suppliers, service providers, and local/regional markets. The program also includes activities aimed to build household and community resilience by building income and asset bases. GRAD engages men and women to promote gender equality and create more equitable outcomes. The project is also working with a micro-franchise component to provide a source of income for women and access to consumer goods like soap for poor families.
The project interventions deliberately build on the evidence and success of the PSNP project in the past, while also deliberately correcting its strategic deficiencies and aligning with updated food security policies of the country. The final evaluation shows us some promising results from the program.
What have we achieved so far?
- Poverty dropped: 80% of the families participating in GRAD were able to graduate out of the government-sponsored social safety net program.
- Incomes went up: Families’ income went up by an average of $353 per year—an 84% increase. For families like Admasu Mulu's, incomes went up by nearly $1,000 per year, nearly three times the average.
- Families were more resilient: Families were better able to respond to crisis, even during the extreme El Nino event in 2015-2016. There was a 3.8 fold increase in families using savings to cope with shocks, and a 19% decrease in the number of families who reduced the number of meals they ate in a day as a response to crisis. There was also a 40% drop in the number fo households that suffered weather-related crop loss.
- People ate more, better food: There was a 15% increase in the number of months out of the year where families had enough food, and a 35% increase in dietary diversity.
- Loans supported businesses: families who took loans changed the way they used them. Before, the most common reason to take out a loan was to buy food. Now, they use loans to invest in productive assets and grow their businesses.
- Women got more involved in decision-making: There was a 7 fold increase in women’s involvement in household decision making, and a 10 fold increase in their ability to make livelihood and production decisions.
How did we get there?
- Help families find more coping mechanisms: Families savings went up nearly 12 times, and they doubled the assets that they had. They also increased their productive assets by 20%.
- Connect families to financial opportunities: 77% of GRAD households saved their money in VESAs (the Ethiopian version of a VSLA), and 41% got access to loans from formal institutions with support from Loan Guarantee Funds. The average loan amount went up by 89%, and families shifted their borrowing from loan sharks to VESAs.
- Increase access to training: 52% of participants got agricultural training, and they said that participating in the VESA meant that they were more willing to adopt new techniques and improved seeds.
- Get access to inputs: The project worked with agro-dealers to help 30,000 households access the inputs they needed to improve production.
- Create safe spaces: The evaluation points out that one of the most important actions GRAD took was creating safe space for dialogue between men and women on traditional gender roles.
- Be flexible: The project built in a crisis modifier, which meant that when El Nino hit, they could easily shift their strategies to respond to the new situation. One example is that they distributed seed vouchers in women’s names so that they could access inputs to replant when droughts wiped out the crops.
- Focus on Climate Change Resiliency 84% of households adopted at least two practices associated with climate change adaptation, and 96% have adopted at least one practice including early maturing crop varieties, moisture conserving practices, and drought tolerant crop types and varieties. CARE’s CVCA model is also a key part of PRIME and other resilience projects in Ethiopia.
- Enabling Environment 86% of participants aspire to graduate. The project also works with market actors like agrodealers to make markets accessible for the poorest families.