Helping those in Extreme Poverty using "Targeting Ultra-Poor" Program

There is about a billion people who earn less than $1.25 a day, and these individuals are said to be living in extreme poverty. The absolute number of people in extreme poverty has been falling over the past 20 years, and there is a pledge to eliminate extreme poverty by 2030. This is a very ambitious task, and so far, there hasn't been any silver bullet that has been shown to eliminate poverty. Bringing people out of extreme poverty can be especially difficult because this group, even if they are out of poverty, are the most vulnerable to fall back into extreme poverty if some adverse economic shock afflicts them. Besides, programs and methods that have been proven effective in reducing extreme poverty in one area may fail to work in another region of the world.

One method that has been shown to be effective is the Targeting Ultra Poor program pioneered by BRAC, an development organization founded in Bangladesh. This program transfers an asset to a family in extreme poverty, and then provides them with training and cash support for the next 1.5 to 2 years. The cash transfer and training from the NGO gives the family support, while the family uses the asset for income generation. If the family is hit by an adverse economic shock in the early stage of the program, the cash support ensures that the family do not have to sell their asset to counteract the shock. After about two years, the family has sufficient financial resources to graduate from extreme poverty, and also reduce the probability of falling back into extreme poverty.

This project was originally implemented in the northern districts of Bangladesh, a region that is prone to extreme poverty. Analysis showed that the program not only increased cash income of those in extreme poverty, but also improved the overall well-being of the families. After it was shown to be successful in graduating most of the participants out of extreme poverty in the northern districts of Bangladesh, the program was replicated in other parts of the world. A recent article in the Economist magazine shows that it showed favorable results in other parts of the world too, like Ethiopia, Ghana, Honduras and India. The program, though labor-intensive, is cost effective.

Such an intervention can be safely assumed to be successful in reducing extreme poverty by a large extent. Development partners, and governments should think about adopting this program, besides microfinance, to help the extreme poor.