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Looking Ahead: The Future of Economic Strengthening

by on Jan 6, 2015  |  posted in Youth  |  0 Comments

This blog post originally appeared on Microlinks.

We are pleased to share it here with the SEEP community.

  youth and loom Promising Practices

In 2008, USAID defined Economic Strengthening (ES) as, “The portfolio of strategies and interventions that supply, protect, and/or grow physical, natural, financial, human, and social assets aimed at improving vulnerable households cope with the exogenous shocks they face and improve their economic resilience to future shocks.” That is a tall order, however we are seeing an increasing demand for holistic programming to respond to the needs of Orphans and Vulnerable Children. A growing body of evidence points to risky behavior by orphans and vulnerable children seeking to meet immediate livelihood needs, such as accepting “gifts” from older males in return for sexual favors and migration.

Here we can begin to understand what the problem is. We know there is a call for an innovative “portfolio of strategies and interventions” aimed at improving vulnerable households cope with shocks. But what are they? What evidence is there to prove that ES models and approaches even work? Well, the jury is still out, however we will explore a few areas that have seen promising practices for OVCs and where these ES trends may take programming in the future.

Organizations like Catholic Relief Services (CRS), have begun integrating savings-led microfinance programs, otherwise known as savings groups (SGs), directly into OVC programming which can increase resilience to shocks and asset building. A 2010 assessment of their programming in Zimbabwe and Rwanda showed that participation in SGs enabled participants to stay in school, improve nutrition, improve their money management skills, and increase their confidence, self-esteem and sense of empowerment.[1]

We have also begun to see programming that provides incentives for OVC caregivers to “invest in economic assets that will support their [Orphans and Vulnerable Children] current and future wellbeing.” Further evidence has pointed to positive outcomes from caregiver participation in SGs. Orphans and vulnerable children can be affected by these outcomes directly or indirectly: directly, when caregivers use savings and credit to benefit a child’s nutrition, health, education and living conditions; and indirectly through strengthened social ties leading to assistance with childcare from other SG members and asset accumulation.

Well-designed and implemented loans and market linkages targeted at older youth (aged 18+)can also improve their long-term economic security.  Loans have yet to be “proven” as a scalable means of increasing income generation for vulnerable children, but they can be effective when coupled with training and responsible client selection processes. Ideally, such loan disbursement should avoid distorting the market; linking individuals or groups to existing institutions is more sustainable than short-term financing through a project or NGO. Like skills training, research found that the effectiveness of Income Generating Activities (IGAs) are largely based on the quality of market research and the skills training in place. Identifying entrepreneurial individuals and maximizing support to the households and communities increases long-term success of entrepreneurship initiatives, creating ownership and ensuring that children or other household members can take over if adult caregivers become sick or die.

 Figure 1: MEDA's Client-centric Skills Training

Figure 1:  MEDA's Client-centric Skills Training Skills training is also considered an essential intervention for ES, but is most effective when training is directly linked to income earning opportunities. Researchers have documented cases in which participants sold tools and equipment provided after training as revenue from these sales were more valuable than attempting to earn income from the skill. MEDA’s EFACE (Ethiopians Fighting Against Child Exploitation) project offers skills training on weaving techniques to young weavers in the textile industry; while offering comprehensive financial capabilities training on financial education, business and life skills. These three areas were selected based on youth needs to better understand financial services available to them, and for business practices and life skills that will equip them on their journey to adulthood[2].

Cash transfer programs targeted directly to orphans and vulnerable children and their caregivers have gained attention because of their impact on the educational, health and nutrition outcomes of children. Research has shown that cash transfers can reduce sexual risk-taking behaviors among youth, particularly girls.  We have seen programming in South Africa where cash transfer programs are channeled through bank accounts further promoting financial inclusion and building OVC financial capabilities.

Future Directions for Economic Strengthening Programming

Additional research, testing and sharing of learning is required. There is emerging evidence that coupling of skills trainings, savings-led microfinance services (i.e. Savings Groups), promotion of entrepreneurial initiatives and cash transfer programs can aid orphans and vulnerable children and their households in absorbing the frequent social and economic shocks that arrive in their lives. Though ES programming for orphans and vulnerable children is still relatively nascent, we can anticipate that future programming will likely focus on the above discussed core strategies and better innovations to address the needs of increasing vulnerable populations. Promising practices, like those being carried out by IRC, CRS, MEDA and others will be closely watched, documented and discussed.

What are the future directions on holistic ES programming that you see?  
  [1] CRS’ Rwanda program added SGs to an existing package of services for OVCs aged 13 to 18 who were child household heads. These services included education, health care, psychosocial support, nutrition training, vocational training and business skills training. OVCs benefitted from the program through acquiring skills to improve business and manage money, pay into the national health insurance, purchase animals and land plots, buy clothes and school materials for themselves and siblings

[2] Over 100 youth went through the Building Skills for Life training and were linked to the Ethiopian Bureau of Women, Youth and Children Affairs and the Medium and Small Enterprises offices who in turn has a program for the youth to receive their working tools and production workspaces in a government availed location. This linkage facilitated by EFACE means that the trained youth have tools and workspaces for their production activities – and they will either sell the products themselves or sell them to a store/weaver/retailer, etc.

Additionally, the project piloted an agricultural rural sales agent model. The E-FACE project targets rural youth (age 14-17) for a youth economic development intervention with the intention of providing youth with access to safe and reliable work. Under this intervention, youth sales agents received Building Skills training and agri-kits, which includes a scale, a back-pack, calculator, note-book, and other relevant materials to sell agricultural supplies. The youth were trained on technical and entrepreneurial subjects relating to business development and provided with start-up kits to transition them from exploitative labor to productive work as entrepreneurs. A recent program assessment of this intervention found that youth have developed entrepreneurial skills and were engaging in diverse business activities.
MEDA: MEDA develops targeted solutions that support youth in accessing appropriate financial services, securing safe and meaningful employment and becoming entrepreneurs. Through successful partnerships, MEDA assists in developing market-led products and services for the youth market. Examples of our successful youth economic development programming include:
  • YouthInvest in Morocco funded by The MasterCard Foundation, which promotes social and economic asset building of youth and institutional strengthening for selected youth serving organizations and financial institutions;
  • EFACE in Ethiopia, is in partnership with World Vision and Mission for Community Development Programme and funded by the United States Department of Labor (USDoL).MEDA supports decent, safe work for young textile employees and facilitates entrepreneurial rural youth in accessing opportunities as agricultural and textile sales agents.
  • Afghan Secure Futures, in Kabul, which improved apprenticeships for over 1000 boys in the construction sector by strengthening the small businesses in which they worked.
To date, MEDA has worked through 22 partners to impact over 570,000 youth in the MENA, sub-Saharan African, and south-east Asian regions.

Nicki Post: MEDA’s Senior Consultant/Project Manager for their Youth Economic Opportunities team, oversees and provides technical support to MEDA projects focusing on youth financial inclusion, economic development and strengthening in the Middle East, North and West Africa. Prior to her work at MEDA, Nicki was with Freedom from Hunger as a Technical Advisor, designing, developing and implementing financial education and savings group methodologies throughout West Africa and Southeast Asia. Nicki’s work at the International Monetary Fund and United States Peace Corps award her an array of training and technical assistance experiences as well as overseas experience. She holds an M.S. from New York University in International Economics and Development and a BA from the University of Denver in International Studies.  

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