OVC Support Toolkit  >  Economic strengthening 

Economic Responses

This section looks at specific responses which can be used to improve the economic situation of orphans and other vulnerable children, their households and families. Other sections look in more detail at skills and vocational training, financial services for the very poor, agriculture and specific examples of projects.

The key points about responses to strengthen the economic situation of orphans and other vulnerable children are:

1. It is important to be clear of the purpose of any activity before it is started. This means that the right tool can be used.

2. Some projects seek to strengthen household resources. This may be done in preparation for or after a crisis. Financial services aimed at the very poor can be extremely useful in these situations.

3. Other projects seek to provide relief to households at times of crisis. Financial services aimed at the very poor are not appropriate in this situation. Community 'safety nets' are needed. These can be established in a variety of ways including community fundraising, mobilisation of savings and joint agricultural activities .

4. Providing financial services to the very poor requires special skills. It also requires a business-like approach. For these reasons, AIDS NGOs are often not able to run these services effectively. Partnerships with specialist microfinance institutions are more likely to be effective.

Why are Economic Strengthening Activities Needed?

It may seem obvious that such activities are needed because of the extreme poverty faced by many orphans and other vulnerable children, their families and their communities. However, there are several reasons why such activities are needed. It is important to be clear about the purpose of a particular activity so that appropriate tools can be used. Reasons include:

• To strengthen the economic resources of a household. This may be needed after a crisis or to prepare for a crisis that might occur. This is called 'emergency preparedness'. Financial services aimed at the very poor can be extremely helpful in these situations.
• To provide relief to the most vulnerable households at times of crisis. Financial services are not appropriate in this situation. This is because these families are focused only on survival needs. They would not be able to use a loan, for example, for business services. Community 'safety nets' are needed.
• To assist communities to create funds which can be used as 'safety nets' for individuals at times of crisis. NGOs often try to establish group-run income generating activities for this purpose. These rarely succeed. More effective approaches are community fundraising and group saving schemes. Communal agriculture activities may work, particularly where these have existed traditionally.

AIDS NGOs and Financial Services for the Very Poor

It has proved very difficult for AIDS NGOs to run financial services for the very poor . Reasons for this include:

• AIDS NGOs are mostly involved in social projects. These have very different aims and approaches from projects which provide financial services, which are based on business principles.
• The confusion which occurs if organisations give money or goods to people as grants and then try to introduce loans.
• The different skills which are required for social projects and financial services.
• Group-based income generating activities favoured by AIDS NGOs are rarely effective.

AIDS NGOs do have a useful role in activities which strengthen the economic situation of orphans and other vulnerable children. This may include supporting community savings schemes, providing training and encouraging activities which build community solidarity as this is essential if community safety nets' are to work effectively. However, AIDS NGOs that wish to introduce financial services for the poor may wish to do this in partnership with an organisation with expertise in this area.

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