Household Economic Strengthening: Concepts and Principles - 2009 PEPFAR OVC Leadership Forum

Household Economic StrengtheningConcepts & Principles

Jason WolfeUSAID/EGAT

“AIDS does not kill suddenly, but it comesand takes a lot of money away with it.”

—Microfinance client, Uganda

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

HumanSo

cial

NaturalPhysical

FinancialSource: www.livelihoods.org

HOUSEHOLD ECONOMIC MODEL

HOUSEHOLDASSETS• Human• Physical• Financial

HOUSEHOLD ACTIVITIES• Production• Consumption• Investment

Credit Providers

Social Networks

Inputs &Expenditures

Income &Other Additions

Source: M. Chen & E. Dunn,“Household EconomicPortfolios”, AIMS, 1996

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 MicroenterpriseServices”, AIMS, 1996

MARKET SYSTEMS

Global Enabling Environment

National Enabling Environment

Financial (crosscutting)

Input Suppliers

Sector specificproviders

Cross-cuttingproviders

Producers

WholesalersExporters

NationalRetailers

Processors/Traders

GlobalRetailers

End Markets Enabling

Environment Inter-Firm

Cooperation Supporting

Markets Upgrading

Source: O. Kula, J. Downing, M. Field, “Globalizationand 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 AfricaUgandaNigeria

Mozambique

PRINCIPLES

1. Be clear about objectives and target population2. Take a cross-sectoral approach and ensure open

dialogue throughout the program3. Base program design on sound market analysis4. Seek household change in small, riskable steps5. Develop interventions for sustainability and scalability6. Avoid mixing the direct provision of OVC services and

the facilitation of economic strengthening strategies7. Identify robust indicators to effectively track

performance, outcomes, and impact8. 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 AdvisorUSAID Microenterprise Development [email protected] | [email protected]