Unleashing creativity and the confidence to dream

When a new school year approaches in Paraguay, Gladys Romero’s sewing workshop hums with activity. She usually works flat out to meet the demand for uniforms and her three daughters and husband also pitch in. When schools near their home in Capiíbary reopen after the summer break, the girls go to class dressed in uniforms they helped to make. 

“My dream has always been to own a tailoring business and clothing store and to put my daughters through school,” Romero said. By 2020, she had been able to add a sewing workshop and small store in the house, lay a new floor and keep her daughters in school, thanks to the flourishing enterprise. 

Romero took part in a pilot program that provided 28,000 families in Colombia, Honduras, Mexico and Paraguay a chance to “graduate” out of extreme poverty and build resilience to shocks. For example, the COVID-19 pandemic slowed economic activity everywhere and these families, like so many others, faced financial hardship that stretched their resources to meet their basic needs. However, with the training that families like Romero’s received in financial education, their ability to save had increased, and so had their resilience to deal with critical moments such as the pandemic. 

Originally developed by the international non-governmental organization BRAC, in Bangladesh, the graduation approach has been replicated in more than 40 countries. These anti-poverty efforts have often been successful, and showed potential for scaling up. With about 25% of the population — 172 million — living in poverty across Latin America, there was an urgent need to expand the reach of the graduation approach. 

Fundación Capital, a social enterprise that works with governments and the private sector to eliminate poverty and build decent livelihoods, adapted the original concept in important ways. Working alongside partner governments, it proposed the integration of the graduation approach into large public sector social programs, fine-tuning each scheme in line with a country’s needs and priorities. 

With support from IDRC and the Ford Foundation, Fundación Capital worked with national governments to roll out its adapted graduation model, document its impact and test innovations that could support scaling it up.  Today, more than half a million people in seven Latin American and African countries have benefited from country-specific graduation programs. 

The original graduation model involved distributing physical assets to support the launch of a small business. By contrast, the Fundación Capital version gives participants up to $500 in cash and the freedom to decide how to spend it. “You have to trust people,” says Tatiana Rincón, president, Livelihoods, Gender and Social Protection at Fundación Capital. “Instead of giving them assets, give them cash. It’s easier and cheaper, and you empower them and build trust.” 

Romero used the seed money to buy her first sewing machine and later reinvested profits into machines with specialized functions for sewing straight lines, seams and hems. 

Fundación Capital also developed a fun and educational app, called AppTitude, that is narrated by a cartoon parrot who provides clear explanations and a cartoon character named Maria, who asks smart questions. The tool is customizable and uses short videos and other accessible content to teach basic financial literacy and lessons on running a small business. 

Local people with entrepreneurial experience were engaged as mentors to offer technical and interpersonal support. They brought participants a tablet loaded with the app and coached them through the lessons during visits every two weeks. Guided by their coach, participants found the app easy to use and understand. “Once I started using [the app], I wanted to learn more,” Romero said. “The part I enjoyed most was learning how to manage my business and customers.”

The 2018 evaluations carried out in partnership with the Universidad de los Andes  found that participants’ earnings grew in every country (by 15% in Paraguay and 64% in Mexico), along with their savings, assets and perceptions of well-being. The program not only boosts incomes, Rincón said, but also builds confidence and changes outlooks. 

“People living in extreme poverty are usually surviving one day at a time: ‘What are we going to eat? Can I pay the rent?’ Families forget to dream as they focus on their short-term, daily needs,” she said. “But in the graduation program, families not only began to dream again, their mindsets also started to change. And their financial decisions reflect this change in mentality toward long-term thinking and sustainability.” 

One such dreamer is Modesta Flor, who created new opportunities for herself and her family in the town of Carayaó, where she and her husband live with their eight children. Flor used her seed money to buy medicinal herbs, along with small plastic bags and cardboard for packaging, to sell the packets in the local market. 

But this was just a stepping stone toward her goal of starting a home-based bakery. She used earnings from the herb sales to take baking lessons. She also started fulfilling small baking orders at home in the afternoon and selling her cakes in the market on Saturdays. With her plate becoming so full, her husband took over the herb business. 

Basic government safety nets transferring cash to families ensure a minimum level of well-being and prevent a slide into deeper poverty, Rincón said, but they rarely allow families to escape extreme poverty altogether. “Our goal is not to end the cash transfers, but to add graduation programs to the mix — I’m a huge advocate of both,” she said. “In this way, we can break the intergenerational transmission of poverty. When women have access to economic opportunities, they become more resilient and able to weather crises. If they don’t receive the government stipend in time, they can still provide for their families.” 

Women make up 80% of graduation program participants because they are among the poorest of the poor, Rincón said. She marvels at the resourcefulness and creativity that is unleashed when people are given a chance. 

Although the programs created employment opportunities and improved women’s access to income, they did not necessarily change the restrictive attitudes, beliefs and practices about gender roles that undermine equality. For example, barriers such as the disproportionate responsibility for unpaid care and domestic work that falls on women can inhibit their economic empowerment. Unequal power relations between men and women, including intimate partner violence, can also diminish women’s control over resources. These social norms can lead graduation programs to have unintended negative effects when women’s burgeoning income-earning work puts more pressure on them in addition to the unpaid work they do and when it rocks existing power relations in households.  

Thanks to IDRC-supported research on these issues, graduation programs — including the one in Paraguay — provide training for participants on gender equality and incentives to form savings groups that offer mutual support for members, among other innovations. 

Fundación Capital developed Igualdapp, an interactive tablet-based application, that takes users through stories, insights and activities designed for them to understand the unequal distribution of domestic and care-giving tasks, the importance of sexual and reproductive health rights and signs of violence against women and children. The research findings have shown that the app, launched in 2020, contributed to shifts in gender norms, particularly in attitudes toward the sharing of domestic and unpaid care responsibilities. 

By addressing restrictive social norms and unequal power relations between men and women, graduation programs can promote truly sustainable transformations for women, men and communities at large. 

These important anti-poverty efforts can not only support women’s economic empowerment but also address other barriers that stand in their path. The ultimate goal is to further improve the graduation approach so that it can be a strong force for shared prosperity as it is scaled up to reach millions of the world’s poorest people. 

Anti-poverty programs can also champion gender equality

Watch a 2020 video interview with Tatiana Rincón