Economic Strengthening for the Very Poor (ES4VP)
Protection interventions aim to build lasting self-insurance methods and protect key assets for very poor and still vulnerable households, who are struggling to make ends meet. Additional protection interventions help smooth household consumption and manage household cash flow. This can include linking very poor households to new or existing money management mechanisms, especially savings and financial literacy, as well as to social safety nets. Other examples of interventions to smooth household consumption and cash flow are promotion of household food production (e.g. kitchen gardens), access to savings services, especially through savings groups and employment programs.
A recent publication from the SEEP network , 'The Evidence Based Story of Savings Groups" summarizing results form 7 Randomized Control Trials(RCT) conducted on Savings Groups programs in the last 4 years , shows promising results around the impact of SG's on economic well being as well as on resilience. The results showed increases in savings by members while not negatively impacting household consumption. Group participation also contributed to consumption smoothing over time, with members indicating that they greatly appreciated the availability of credit, especially emergency loans, during times of crisis. Findings from the RCTs suggest some impact on resilience; increased food security among treatment households suggests that shocks may have less catastrophic results for group members. There is evidence that treatment households are more likely to take SG loans to mitigate shocks.
Microsavings include group-based or individual mechanisms. Group-based savings mechanisms include Self-Help Groups (SHGs) or self-selected Savings Groups (SGs), in which members pool savings and provide loans with interest to each other.
These semi-formal groups have demonstrated particular potential as money management mechanisms, although linking very poor households to formal (individual) deposit services has also proven feasible in a variety of contexts. Mechanisms for in-kind savings can also be important. Examples include livestock purchases as a store of value and community-based seed or grain banks.
Strengthening social assets can assist households in risk reduction and loss management strategies in which relationships with other households, other communities, and government agencies play a crucial role.
Once households have accumulated a minimal level of assets to insure themselves in the event of future shock, they may still be managing risk in terms of protecting their consumption levels rather that increasing their income levels. Accessing and employing stronger mechanisms to manage household cash flow and even out their consumption is a necessary prerequisite to engaging in more growth-oriented activities.
Social Safety Nets
Social safety nets protect households against the loss of key assets in the event of a shock through to access to subsidized food and inputs for production. Safety nets can be provided by government agencies, and community groups. Strengthening social networking groups (e.g. solidarity groups, producer associations, collectives, village banks, SHGs, or VSLAs) can help improve access to information for very poor households, or can enable them to pool their resources and manage property as a cooperative.