United States Agency for International Development (USAID) and US charity CARE have launched a new project in Ethiopia to improve financial services and help rural households graduate from the Productive Safety Net Program (PSNP), the community development program started by the Ethiopian Government. According to a press release on the Ethiopian news and information portal nazret.com, the PSNP PLUS project is being implemented by a consortium of national and international non-government organizations (NGOs). CARE will be responsible for the overall consortium management and implementation of the program, in collaboration with Catholic Relief Service (CRS), the official international humanitarian agency of the U.S. Catholic community, the Relief Society of Tigray (REST), an Ethiopian non-governmental development organization and Save the Children UK (SC-UK), the charity organization focusing on children. Technical assistance for PSNP PLUS from a microfinance perspective will be provided by CARE, the Feinstein International Center of Tufts University will assist with impact assessment and The Netherlands’ based development organization SNV will provide value chain development assistance.
The first PSNP project was initiated by the Ethiopian Government in 2005 with the intent to provide food and financial resources to the chronically food-insecure and vulnerable population in Ethiopia. Aimed at helping the poor stabilize their income and assets, the PSNP supports rural transformation and prevents asset depletion, in addition to encouraging household level production and investment. As per currently available information, the PSNP program has provided food and financial resources to a total of 7.4 million Ethiopians. As per 2006 World Bank data, the beneficiaries of the PSNP are identified households in 262 food-insecure administrative divisions in eight regions in Ethiopia. Some of the identified regions include Tigray, Amhara, Oromiya, Southern Nations and Nationalities People Region, Afar and Somali.
The new program, ‘PSNP PLUS’ will be a nationwide, three year development project assisting Ethiopian microfinance institutions (MFIs) to develop products and services which will increase financial assets, financial literacy and business skills of PSNP beneficiaries in addition to promoting savings. More specifically, PSNP PLUS will be assisting beneficiaries of the PSNP program adopt market-driven approaches to diversify their livelihoods and build assets. The PSNP PLUS project will target four agricultural products to increase the income levels of Ethiopian farmers namely honey, haricot beans, livestock fattening, and cereal production. The PSNP PLUS project in association with Ethiopian MFIs aims to help more than 212,000 Ethiopians in four regions, namely Amhara, Oromiya, Tigray and parts of the rural Dire Dawa Administration. No further information on the specifics of the program is currently available.
While the PSNP projects, which are focused toward food aid distribution and community level public works, have made Ethiopians more resilient to food shortages, they have not been effective in helping the poor to permanently graduate from the safety net program. On the other hand, the PSNP PLUS project which links the poor to microfinance services and functioning markets, aims to reduce the dependence of poor households on the PSNP program. Thus, according to USAID Mission Director, Glenn Anders, PSNP PLUS is a ‘perfect complement’ to the safety net program led by the Ethiopian Government. Mr. Anders was also quoted as saying that the support provided by PSNP PLUS would aid Ethiopia ‘lift’ its vulnerable people from a ‘life of poverty’.
USAID was formed in 1961 as a part of the Foreign Assistance Act and is the principal United States agency to extend assistance to countries recovering from disaster, trying to escape poverty and engaging in democratic reforms. USAID is an independent federal government agency that receives overall foreign policy guidance from the secretary of state. In 2007, USAID had a foreign assistance budget of USD 24.7 billion and provided USD 193 million in funding for microenterprise development through 184 new and existing grants, cooperative agreements and contracts in 61 countries.
CARE International is a global NGO with poverty reduction programs aimed at developing women’s economic capabilities. Founded in 1945 and originally established as a means to send supplies to post-war Europe, it has evolved into a large-scale humanitarian organization. It works in 71 countries around the world and in 2007 reported assets of USD 351.5 million.
By Bharathi Ram, Research Assistant
Additional Resources:
Nazret.com: USAID and CARE Launch PSNP PLUS
CARE: Home, CARE’s Work
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