Q: Who are the ultra poor? How many ultra poor are there?
Ultra poor or the poorest of the poor are those people that are at the bottom of the socio-economic ladder. They earn less than $1.25* a day. On average, these people eat 1.5 meals per day, can’t afford essential services like education and healthcare, and have an income that is both low and intermittent. According to World Bank estimates, there are over 1.4 billion ultra poor people, or 1 out of 5 people in the world today.
*$1.25 Parity Purchasing Power in 1990 is the World Bank benchmark for ultra poor. This is approximately $2.50 in USA purchasing power in 2010.
Q: Are there particular regions that have high concentrations of the ultra poor?
Although the ultra poor are spread across the world, South/Southeast Asia and Sub-Saharan Africa account for over 60% of the ultra poor worldwide.
Q: Why aren’t the ultra poor served by other developmental initiatives like microfinance?
Many poverty alleviating interventions including microfinance exclude the ultra poor from their programs. For microfinance, the general perception is that the ultra poor have too many challenges and are therefore not going to be able to reliably make their loan payments. Given their life circumstances, a conventional micro-loan may not even be the best first step for these people. There are many NGOs that have specific initiatives for the ultra poor for services such as education, water, healthcare, etc. In many cases, these organizations are able to temporarily reduce the suffering of the ultra poor but unfortunately contribute little to alleviate their state of poverty.
Q: What are the distinguishing characteristics of the ultra poor?
Even though the ultra poor are not a homogeneous group and they look different in different countries and contexts, most of them face similar challenges. They often eat meals that are low on nutrients, live in structures that are not permanent, have minimal income-generation skills, cobble together an income through odd jobs, and are illiterate.
Q: What is the ultra poor’s most critical need?
The biggest challenge that ultra poor face is the lack of a stable income. A low and intermittent income makes it difficult for these people to plan their lives. Access to stable income helps these people plan their expenses and access services like education, healthcare, and financial services.
Q: What special expertise is needed for organizations working with the ultra poor?
For any practitioner working with the ultra poor, it is critical to acknowledge that this is a special segment and needs interventions that are beyond mainstream poverty alleviation programs such as microfinance. Most ultra poor need interventions across multiple areas including livelihoods, healthcare, and financial literacy. This increases the complexity of a program including staff skills, staff training and the overall cost per beneficiary.
Conventional Approaches to Helping Ultra Poor
Q: Currently, what are the most effective programs serving the ultra poor?
The most well regarded program working with the ultra poor is the Bangladesh Rural Advancement Committee’s (BRAC) “Targeting the Ultra Poor” (TUP) program. BRAC’s program is also referred to as the “Graduation Model” and the 24 month intervention has been replicated by various organizations in different countries. BRAC’s program comprises interventions in food security, skills training, financial literacy, healthcare and providing an income-generating asset. The BRAC program emphasizes client stability through free services and support for the first 18 months and shifts to focus on increased income-generation in the final 6 months.
Q: Why can’t government safety net programs address the problem of ultra poverty?
Despite government legislation promising basic social protection to all citizens, most ultra poor are not able to access most government safety net programs in places like India. From our experience working with this segment, a large number of the ultra poor don’t have government recognized identification cards. This makes it near-impossible to access government welfare schemes. To date, private charities have attempted to step in, but have been limited in their impact due to limited donor resources. Also, there are genuine questions about the role and feasibility of safety net programs to address anything other than temporary setback situations. Addressing ultra poverty requires long-term solutions of economic development which are generally beyond the reach of conventional safety net programs.
Q: How many people have been lifted out of ultra poverty through these types of programs?
Through safety net programs and other similar interventions, an estimated one million people worldwide have “graduated” beyond ultra poverty. Most of these ultra poor are part of the BRAC program in Bangladesh or that of BRAC replicators in other countries.
Q: We hear of many organizations that serve “the poorest”.
Then why have so few of the ultra poor been served? A typical BRAC model costs between $350 and $600 per beneficiary based on the intervention and the geography. Given such a high relative cost per beneficiary (vs. other interventions), most organizations don’t address this population with these proven programs. Additionally, the BRAC model requires a relatively sophisticated set of skills and resources to be effective which limits the number of organizations who can successfully implement the model. There is a critical need to find and scale-up additional innovative programs that would empower more organizations to more effectively and efficiently serve the ultra poor.
Unitus Labs Approach to Ultra Poor
Q: What are Unitus Labs’ goals in approaching ultra poor programs?
Unitus Labs wanted to improve on the BRAC model to find ways to make it more cost effective and to explore ways to make the model more self-sustaining. Unitus Labs also wanted to validate and refine the model for deployment in a more diverse set of populations including urban and rural poor and people with culturally diverse backgrounds. Additionally, Unitus Labs wanted to identify the key interventions necessary for this segment and to reduce the complexity of the program. Finally, the team was keen on tracking efficient real time program impact by tracking social indicators on a regular basis. All of this was intended to identify better approaches to providing opportunity for large-scale ultra poor populations to become self-reliant.
Q: Why is self-reliance an important goal for effective ultra poor programs?
Most poverty intervention programs involve one-time handouts to beneficiaries to provide a short-term benefit to the recipient. Once the handout is consumed, the beneficiary is back to his/her original state. For any program to have a long-term impact on the lives of the ultra poor, it must systematically bring them to a state of self-reliance. Therefore, effective programs must have a very clear design and implementation which maximizes the potential for self-reliance and not dependence.
Q: Why is cost-effectiveness critical for ultra poor programs?
Given the high cost per beneficiary of most ultra poor programs, it is difficult to scale them and thus serve large groups of people. These programs are heavily dependent on subsidies and thus need donor funding to continue to operate. The only way to reach the over 1.4 billion ultra poor people across the world in a reasonable timeframe is by developing ultimately self-sustaining models that are efficient, cost effective and widely replicable.