Local Economic Development (LED)

Local Economic Development (LED)


On the 1st of October 2013, the Studies in Poverty and Inequality Institute (SPII) launched the Social Protection and Local Economic Development: Graduation Pilot Project”. The concept of ‘graduation’ was born out of the achievements of the Bangladesh Rural Advancement Committee (BRAC). Through sequenced interventions, BRAC’s graduation model aims to create pathways for the poorest to move out of extreme poverty. The model focuses on carefully sequenced safety nets, consumption support, livelihood strategies and access to finance. Currently, the term ‘graduation’ has become synonymous with providing on-going support over a specific period of time, with the purpose of moving people from extreme/ultra-poverty.

Currently, there are over 10 ‘graduation’ pilot project being implemented around the world. The “Social Protection and Local Economic Development: Graduation Pilot Project” aims to leverage on the success of the graduation model by adapting it to the South African context. Here SPII aims to build on an internationally lauded South African social welfare (social grants) programme that has over 16 million recipients for the adaptation of the ‘graduation’ model. Conditional cash transfers are seen as providing a better base for the poor than the provision of microcredit systems that are currently being endorsed internationally, as they provide a consistent and predictable source of income and have an excellent record of getting small sums of cash to those in need.

SPII’s pilot project aims through targeted and sequenced interventions that are at an enterprise level for small, micro and survivalist enterprises in households that have a recipient of a Child Support Grant (CSG) to graduate after 24 months from their survivalist nature into resilient enterprises, and their incomes breach the means-tested CSG threshold. The CSG is the selected grant for this project because of its low monetary value, and because it is means-tested, it is an indicator of economic vulnerability. Impact studies conducted on the graduation pilot project also show that in order to sustain the achievements or impact post-graduation programme, access to a long-term social security system is needed, as it will enable participants to sustain a higher income.

The sequenced interventions for the SPII’s ‘Social Protection and Local Economic Development (LED): Graduation Pilot Project’ over the 24-month period includes:

  • Life skills training
  • Basic business management skills training
  • Basic financial literacy training
  • Incentive scheme – savings component
  • 24-month regular mentoring and coaching from enterprise coaches.