Household Economic Strengthening

A range of strategies to increase the capacity of vulnerable households to address their own basic needs and access essential services such as health and education.

Household Economic Strengthening

A range of strategies to increase the capacity of vulnerable households to address their own basic needs and access essential services such as health and education.

Sector at a Glance

Death and illness among family members and caregivers can have devastating emotional and financial effects on already vulnerable households. In Kenya, malaria alone results in an estimated 9% to 13% loss of annual income to an average household.

Unexpected medical bills, funeral costs, or shocks like drought that leads to crop failure can drive families to rely on the desperate coping measures of cutting back on daily meals, pulling children from school, or selling off land or livestock at fire sale prices. These extreme measures can increase risky behaviors, such as early marriage among girls or transactional sex to help offset a family’s financial burdens, put children at risk of child labor, and cause households to spiral deeper into debt. Consequently, families are made more vulnerable to health issues and a cycle of multigenerational poverty.

Household economic strengthening activities help create the critical financial cushion vulnerable households need to survive disasters. Access to small cash infusions through savings and lending programs, and cash transfers coupled with basic financial education can make the difference between worsening poverty during crises and the ability of households to financially respond to hardships without long-term negative consequences.

More resilient households translate into healthier children. When caregivers have the resources to meet their families’ needs, everyone benefits: Meals increase, children stay in school, and family dynamics improve. When adults are less stressed, they can better meet the emotional and financial needs of the children in their care.

 

Catholic Relief Services implements comprehensive household economic strengthening activities that empower families to address their own basic needs and access essential services, such as health, education, and safe, nutritious food. Households included in evidence-based economic strengthening activities build resilience and learn coping strategies so they can respond better to shocks, avoid the sale of critical assets or removal of children from school, take advantage of investment opportunities, and start businesses. Such households are better able to provide for the needs of the children in their care. Because CRS recognizes that economic vulnerability varies by household, we tailor our intervention packages to a family’s individual needs. More financially stable households can benefit from training in business and marketing skills, whereas families living at or below the poverty line may require a cash infusion in the form of a transfer to stabilize them enough so they can take advantage of opportunities that move them toward relative economic stability and increase their resilience to shocks.

Highlights of our work in Household Economic Strengthening

CRS country programs
Benin
Uganda
Zimbabwe
Kenya
Tanzania
Case studies

Savings and Internal Lending Communities

Photo by Sara A. Fajardo

More than 1.5 million poor people in 43 countries are accessing small loans from each other via groups, rather than from traditional microfinance institutions. These CRS-initiated savings groups, called Savings and Internal Lending Communities, or SILC, pool resources and make small loans available to group members. CRS has found that poor and vulnerable people can save small amounts each week, and by grouping these amounts through savings groups, they can reap big rewards.

Relying solely on accumulated group savings, SILC members can access needed financial services, including loans and savings. The average return on their savings investment is 29%. SILC provides numerous benefits: Farmers can expand their crop production, purchase livestock, improve their homes, or start a small business. When faced with an emergency, they can tap into a low- to no-interest loan through a special social fund set up by each group.

As groups mature, SILC members receive financial education and learn marketing and basic business skills so they can save, invest, and grow their money. SILC not only teaches financial literacy but can become a platform for teaching life skills and a venue for new initiatives, such as improved farming techniques. An independent evaluation in Kenya and Tanzania found SILC to be a cost-effective way to improve vulnerable households’ access to safe, nutritious food.

The social bonds created among SILC members foster trust and confidence within communities, and give them a voice in how the group operates. People living with HIV have gone on to become SILC chairpersons and treasurers. This added authority in their villages has helped reduce the stigma they had experienced. These self-selected and self-governed groups can be tailored to target the needs of specific populations, including caregivers, vulnerable children, and at-risk adolescent girls.

Savings and Internal Lending Communities

More than 1.5 million poor people in 43 countries are accessing small loans from each other via groups, rather than from traditional microfinance institutions. These CRS-initiated savings groups, called Savings and Internal Lending Communities, or SILC, pool resources and make small loans available to group members. CRS has found that poor and vulnerable people can save small amounts each week, and by grouping these amounts through savings groups, they can reap big rewards.

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Financial Coaching From Local Experts: The SILC Private Service Provider Model

Photo by Sara A. Fajardo

Philip Kimutai Kogo is a financial literacy evangelist. As a certified SILC private service provider, or PSP, Philip travels to nearby villages in Eldoret, Kenya, spreading the word about how to use SILC microsavings to jump-start businesses and improve a family’s well-being.

For a small fee, PSPs like Philip teach group members how save, invest, and grow their money. They help get SILC groups started, support them in drafting bylaws, and assist the members in setting up group management processes. Because PSPs understand the local context, they can help SILC group members tailor their goals to the realities of their community. They also work to identify the market and financial skills each SILC group needs to develop.

As groups mature, PSPs introduce new skill sets to fit group interests, such as the CRS package of SMART Skills, a training program to teach farmers critical business, financial, and marketing skills; management of natural resources and groups; and innovation that will help them more effectively engage in the market and earn a profit on their crops. The financial education curriculum can help caregivers identify and plan for periods when they will have additional household expenses like school fees, and show them how to budget to ensure they are meeting their financial obligations and are not forced to sell critical assets or pull children from school.

Philip has expanded his reach by taking on apprentices and leading them through an extensive PSP certification process. The apprentice program organically grows the SILC group participation network to make financial services available on a broader scale. Philip and other PSPs help maintain the health of SILC groups. And, long after the initial CRS program has ended, they guarantee continued support and expansion to interested groups.

Financial Coaching From Local Experts: The SILC Private Service Provider Model

Philip Kimutai Kogo is a financial literacy evangelist. As a certified SILC private service provider, or PSP, Philip travels to nearby villages in Eldoret, Kenya, spreading the word about how to use SILC microsavings to jump-start businesses and improve a family’s well-being.

Read more

Cash Transfers to Keep Zimbabwean Kids in School

Photos by Debbie DeVoe

For even the most resilient families in eastern Zimbabwe, living on as little as $1.25 a day puts a strain on them as they cut corners on meals, health expenses, and education. But, thanks to the Manicaland Cash Transfer pilot program in that province, children are now 80% more likely to attend school regularly. An infusion of cash in the form of a transfer is an effective way of helping the most vulnerable households.

More than 4,200 families have received a basic package of 55 pounds of fertilizer and 22 pounds of corn seeds. Two-thirds of the group also was given cash transfers that ranged from $18 to $30, depending on family size. As a condition to receiving the cash, one-third of the group was required to take basic steps to ensure school attendance, regularly monitor the health of and vaccinations for their children younger than age 5 years, participate in parenting classes, and register their children for birth certificates.

All participating families saw an increase in food availability, thanks to the fertilizer, seeds, and training they were provided. The households that received cash transfers, though, saw a huge spike in school attendance—regardless of whether it was a condition for receiving the money— a clear sign that families want to invest in education but often lack the resources to do so. When birth registration and health monitoring were conditions for receiving cash transfers, these vital steps in ensuring the health and legal benefits of citizenship increased markedly in families.

Cash transfers can have a marked effect on the overall well-being of families. Several families participating in the pilot program stretched their money by investing in hens for both sale and consumption, and used the proceeds to invest in household repairs.

Cash Transfers to Keep Zimbabwean Kids in School

For even the most resilient families in eastern Zimbabwe, living on as little as $1.25 a day puts a strain on them as they cut corners on meals, health expenses, and education. But, thanks to the Manicaland Cash Transfer pilot program in that province, children are now 80% more likely to attend school regularly. An infusion of cash in the form of a transfer is an effective way of helping the most vulnerable households.

Read more

A Sustainable Means of Earning a Living for Female Farmers in Uganda

Photo by Ric Francis

Education is power, but for many vulnerable adolescent girls, access to continued education is an insurmountable obstacle. In such cases, vocational and technical training can hold the key to providing economic security and new career opportunities.

For more than 1,500 out-of-school young women in Uganda, education and opportunity have come in the form of the humble passion fruit. The CRS-sponsored Girls Agro-Investment project, called GAIN, shows young women how farming can improve their lives. Many GAIN participants are their family’s main income earners, but have limited income sources. During the project, they draft a personal development plan; develop financial and business expertise; learn entrepreneurship, farming techniques, and critical decision-making skills; and build confidence.

GAIN works with KadAfrica, a local passion fruit enterprise, to establish an agreed-on price for the fruit by both buyer and seller. Working farmland donated by the Catholic Church, GAIN participants use their passion fruit earnings to pay for household expenses, farm supplies, medical bills, and schools fees, and to start small businesses. They calculate their profits after sale and save some in their weekly savings groups. To expand passion fruit production, family and community members are encouraged to avail small plots of land to GAIN participants.

CRS works with vulnerable farming households worldwide to identify productive and promising value chains in which they can work collectively to market their goods. Understanding market demand and being able to offer valuable crops in large quantities help farmers get a higher return on their investment and give them more bargaining power when setting prices.

Economic empowerment coupled with broadened life, business, and savings skills provides GAIN participants with increased control over their futures. The profits they earn through farming enhance their overall life quality by helping them meet their family’s needs and reducing their economic vulnerability.

A Sustainable Means of Earning a Living for Female Farmers in Uganda

Education is power, but for many vulnerable adolescent girls, access to continued education is an insurmountable obstacle. In such cases, vocational and technical training can hold the key to providing economic security and new career opportunities.

Read more

Health Micro-insurance: A Financial Cushion in Benin

Unplanned health expenses and shocks can devastate vulnerable households. Illness means loss of income and unplanned expenditures, often forcing families to sell critical assets such as cropland and livestock. In 2012, CRS Benin, in collaboration with NSIA Assurances developed a health micro insurance product (HMI) designed to cover the primary healthcare expenses. This product includes a term life insurance rider to cover expenses in case of death or permanent disability. The HMI product is delivered through SILC groups clients, a form of community managed savings and lending for group members. The HMI product covers 70% of health related costs at participating health facilities, including products sold at their pharmacies.

A 2012 study showed that the product decreased healthcare expenditures for SILC members, increased their access to healthcare, decreased health-related stress, improved treatment adherence, and increased SILC group solidarity. Building on the HMI product, CRS Benin has a low cost ICT4D solution, using local expertise, to create an electronic registration system using a mobile solution to report and invoice reimbursement from the insurance company.

CRS is committed to helping vulnerable households like those in Benin find long-term sustainable solutions to healthcare access and improved overall nutrition. .

Health Micro-insurance: A Financial Cushion in Benin

Unplanned health expenses and shocks can devastate vulnerable households. Illness means loss of income and unplanned expenditures, often forcing families to sell critical assets such as cropland and livestock. In 2012, CRS Benin, in collaboration with NSIA Assurances developed a health micro insurance product (HMI) designed to cover the primary healthcare expenses.

Read more