“AIDS does not kill suddenly, but it comes

and takes a lot of money away with it.”

—Microfinance client, Uganda

Household Economic Strengthening

Concepts & Principles

Jason Wolfe
USAID/EGAT
WHAT IS ECONOMIC STRENGTHENING?

Mitigating economic vulnerability

Ability to cope with shocks

• Death of family member

• Death of breadwinner / caregiver
• Chronic illness
• Care for additional family members
HOUSEHOLD ASSETS

Ph
ys ral
ica tu
l Na
Fina

ial
Soc
ncia
l

Human

Source: www.livelihoods.org
HOUSEHOLD ECONOMIC MODEL

Credit
Inputs & Providers
Expenditures

HOUSEHOLD HOUSEHOLD
ACTIVITIES ASSETS
• Production • Human
• Consumption • Physical
• Investment • Financial

Income &
Other Additions Social
Source: M. Chen & E. Dunn, Networks
“Household Economic
Portfolios”, AIMS, 1996
STRATEGIES FOR COPING WITH SHOCKS

• Risk Reduction: Income Smoothing

– Low risk (low return) income generation activities
– Diversification of income generation activities
– Insurance mechanisms: savings & assets, social ties, credit access
• Loss Management: Consumption Smoothing
– Stage 1: Insurance & reversible mechanisms
– Stage 2: Disposal of key productive assets
– Stage 3: Destitution: charity, household breakup, migration

Source: E. Dunn, N. Kalaitzandonakes, C. Valdiva,

“Risks and the Impacts of Microenterprise
Services”, AIMS, 1996
MARKET SYSTEMS

Global Enabling Environment Global  End Markets

Retailers
 Enabling
National Enabling Environment
National
Environment
Retailers
 Inter-Firm
Sector specific Exporters
Cooperation
providers Wholesalers
 Supporting
Markets
Cross-cutting Processors/Traders
providers  Upgrading
Producers
Financial (cross
cutting)
Input Suppliers

Source: O. Kula, J. Downing, M. Field, “Globalization

and the Small Firm”, AMAP, 2006
TYPOLOGY OF INTERVENTION STRATEGIES

• Social protection
– Cash transfers: conditional and unconditional
• Asset Protection
– Savings-led financial services:
ROSCAs, ASCAs, child savings accounts
– Microinsurance
• Income Growth
– Microenterprise / value chain development
– Employment / employability
Examples from the Field

East Africa
Uganda
Nigeria
Mozambique
PRINCIPLES

1. Be clear about objectives and target population

2. Take a cross-sectoral approach and ensure open
dialogue throughout the program
3. Base program design on sound market analysis
4. Seek household change in small, riskable steps
5. Develop interventions for sustainability and scalability
6. Avoid mixing the direct provision of OVC services and
the facilitation of economic strengthening strategies
7. Identify robust indicators to effectively track
performance, outcomes, and impact
8. Do no harm to the private sector
 Discussion

What works?
What doesn’t?
What could work better?
What would help you the most?
ADDITIONAL RESOURCES

• www.microlinks.org
– Principles of Economic Strengthening for Vulnerable
Children: www.microlinks.org/ESprinciples
– Financial Services: www.microlinks.org/fs
– Value Chains: www.microlinks.org/valuechains
– Youth Livelihoods: www.microlinks.org/youth
– Breakfast Seminars: www.microlinks.org/breakfast
– Speaker’s Corners: www.microlinks.org/speakerscorner
– Notes from the Field: www.microlinks.org/notes
• www.povertyfrontiers.org
• www.cyesnetwork.org
• Microenterprise & HIV: hamed.seepnetwork.org
Muito Obrigado!

Jason Wolfe, Enterprise Development Advisor

USAID Microenterprise Development office
jwolfe@usaid.gov | jmwolfe@gmail.com