Can the extreme poor be graduated?

A stronger focus on human capital investments of children from those households with a particular focus on skills for future jobs will be key. (Photo: Arne Hoel / World Bank)

Ghana was the first country in sub-Saharan Africa to meet the Millennium Development Goal (MDG1) target of halving extreme poverty by 2015. A share of the population living in poverty decreased from 52% in 1991 to 24% in 2012.  Ghana is eager to lead the way in Africa again, but this time to graduate extreme poor households out of poverty. The current policy debates are around graduating – in about three to four years – some 8.4 % of households living in extreme poverty. But to what occupations?

Fortunately, Ghana has implemented social protection programmes since the mid-1990s. Social protection in Ghana aims to “deliver a well-coordinated, inter-sectoral social protection system enabling people to live in dignity through income support, livelihoods empowerment and improved access to systems of basic services”. It seeks to promote the well-being of Ghanaians through an integrated platform of effective social and financial assistance, social and productive inclusion, social insurance, and access to social services.

The sector has also made some advances in building core operational systems such as implementation of the Ghana National Household Registry (GNHR), which collects data on households with the aim of enabling their selection into a range of targetted programmes. This transparent and objective process includes the introduction of electronic systems (such as e-payments and e-attendance).

The impact evaluation results from some of the flagship social protection programmes including: (i) Labour Intensive Public Works (LIPW) projects; decreased individual unemployment rate in the intervention communities – by 15% under feeder-road and small-earth dam/dugout sub-projects respectively; and 11.5% for communities which benefitted from afforestation sub-projects during the study period; (ii) Cash transfer activities increased school enrolment among secondary school-aged children, reducing grade repetition among both primary and secondary-aged children.

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Ghana’s labour market

Between 2005 and 2012, job-creation in Ghana kept up with the increase in working-age population. However, relative to its economic growth, the Ghanaian economy has created relatively few jobs in recent times. The labour force has grown rapidly – from approximately 6.5 million in 1993 to 11.3 million in 2014 and is expected to continue growing in the coming decades.

The economy needs to create about 300,000 new jobs per year between now and 2020 in order to absorb a growing population. The employment challenge remains, both in terms of quantity and quality of jobs. The current unemployment rate in Ghana is approximately 5-6 percent (Labour Force Survey, 2015), with almost 17 percent among youth.

For the extremely poor households, about 86% are engaged in less productive agriculture or self-employment activities predominantly in rural areas. Access to finance and technical know-how remain a major constraint to starting or expanding household enterprises.

Challenges and solutions

Despite these constraints, stakeholders agree that households living in extreme poverty need to graduate – but to what occupations and how? Can they graduate to an occupation that guarantees better income than previously earned? ‘Productivity’ is a common theme in this debate. Here’s how Ghana can build on existing lessons and experiences:

  • Provide foundational support for productive jobs among the extremely poor
    1. Productivity through wages – Guaranteed employment during lean seasons on a regular basis through Labour Intensive Public Works.
    2. Create Productive Assets – Productive Assets (such as small dams and dugouts) improve agricultural results by providing access to irrigation and preventing environmental degradation.
    3. Agricultural Productivity – Link extremely poor households and beneficiaries of safety net interventions to existing agricultural projects, sector programmes, and services.
    4. Financial Inclusion – Link the poor to Village Savings and Loan Associations (VSLAs).  Ensure that all the extremely poor are enrolled in the national health insurance scheme.
  • Improve the quality and productivity of household enterprises
    1. Productive Inclusion – Improve access to technical skills, start-up grants, improved market linkages to urban centres, as well as coaching in both agriculture and non-farm self-employment. This will be done in partnership with private sector service providers, the National Board for Small Scale Industries, NGOs and other relevant state and non-state actors.
    2. Productive Partnerships – Create links to existing income-generating programmes run by non-state actors (e.g. NGOs, private sector actors).
  • Improve human capital investments for jobs

Promote access to health (specifically the National Health Insurance Scheme) and education to enable human capital improvements for the next generation. Emphasise job-readiness skills: These are critically important for children from extremely poor households who tend to start from a very low base.

  • Improve operational efficiency of the Social Protection System

Given the threat of rising spatial inequality and poverty, improved efficiency and transparency in the use of public investments in reaching the poorest must be considered. This includes efficiency in targetting (by implementing the National Household Registry), payments, grievance redress, management information systems, monitoring and evaluation mechanisms, communications and advocacy, and overall administrative costs.

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It is possible for households living in extreme poverty to graduate, but it requires a multispectral effort. One that guarantees financing and a strong coordination at policy and implementation levels among sector ministries, local government structures, civil society organisations and the private sector. A stronger focus on human capital investments for children from those households with a particular focus on skills for future jobs will be key.

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