To 'graduate' from poverty, they can borrow to build a business. So why aren't they?

KYEGEGWA, Southwest Uganda — Economist Dean Karlan was perplexed. He'd come to a remote part of Uganda to check on a program he'd helped design to lift people out of extreme poverty. Only things weren't going exactly as expected.

The program applies a method known as the Graduation Approach . Its basic logic: You need money to make money.

Participants are typically given a grant of about $200 plus coaching to build a small business. It might be raising crops or animals, hairstyling, even selling secondhand clothes. Graduation programs have had notable success in some 20 countries. A U.N. report calls them a "promising ladder from poverty."

Karlan is an expert on poverty solutions — founder of the well-regarded Innovation for Poverty Action research group and chief economist fo