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Preliminary Research
Microfinance and Non-Financial Services For Very Poor People:
Digging Deeper to Find Keys to Success
Poverty Outreach Working Group
October 2006
The SEEP Network Poverty Outreach Working Group iii
Acronyms
ARC AmericanRefugeeCommitteeASA ActivistsforSocialAlternativesCFPR/TUP ChallengingtheFrontiersofPovertyReduction/TargetingtheUltraPoorCRS CatholicReliefServicesFFH FreedomFromHungerGDI gender-relateddevelopmentindexGDP grossdomesticproductHDI humandevelopmentindexIGVGD IncomeGenerationforVulnerableGroupsDevelopment(aBRAC[Bangladesh]program)ILO InternationalLaborOrganizationMED microenterprisedevelopmentMFI microfinanceinstitutionNABARD NationalBankforAgricultureandRuralDevelopmentNGO non-governmentalorganizationPPP purchasingpowerparitySEF SmallEnterpriseFoundationSHG self-helpgroupTCP TšhomišanoCreditProgramTUP TrickleUpProgramUSAID U.S.AgencyforInternationalDevelopmentWHO WorldHealthOrganization
The SEEP Network Poverty Outreach Working Group v
Abstract
ThispaperdiscussestheresultsofpreliminaryresearchdonebythePovertyOutreachWorkingGrouptoidentifypromisingapproachesforservingverypoorpeoplewithmicrofinanceandnonfinancialservices.Theworkinggroupidentified10microfi-nanceinstitutions(MFIs)andaskedthemeachtosubmitacasestudydescribinghoweffectivetheirprogramswereinreachingtheirtargetclients,howtheymeasuredtheirclients’povertylevels,andwhether(andhow)theycoulddocumenttheireffective-ness.Fromthesecasestudies,thePOWGhopedtoidentifyandexamineanycommonelementsthatmadetheseMFIprogramssuccessfulandfromthisrecommendareasforfurtherresearch.Asaresult,thePOWGdevelopedanextensivequestionnaire(seeannex),forthenextstageofresearch.
TheupshotofthePOWG’spreliminaryresearchshowsthatservicingverypoorpeopleispossible—perhapsmorepossiblethannowappears—butthatgreatersuccesswillbedependentonunderstandingwhatthecriticalfactorsareandaddressingthemrealisticallyandinwaysthatproduceresultsthatcanbedocumented.
The SEEP Network Poverty Outreach Working Group vii
Table of Contents
Acronyms iii
Abstract v
IntroductionandPurposeofResearch 1
DefinitionandStatusofPoverty 2
RoleofMicrofinanceinServingVeryPoorPeople 2
ChallengesinServingVeryPoorPeople 2
OverviewofExistingPoverty-FocusedMicrofinanceApproaches 3
ToTargetorNottoTarget 5
ProductsandServices 5
Non-financialDevelopmentInterventions 6
OrganizationalFeatures 8
Conclusion 8
Annex:CaseStudyQuestionnaire 11
The SEEP Network Poverty Outreach Working Group �
Introduction and Purpose of Research
In2000,theU.S.CongresspassedtheMicroenterpriseforSelf-RelianceAct,1whichmandatesthatone-halfofallU.S.AgencyforInternationalDevelopment(USAID)microenterprisefundsmustbenefitverypoorpeople.Thelegislationdefinesthe“verypoor”aspeoplelivingonlessthanUS$1/day2orthoseamongthebottom50percentofpeoplelivingbelowaspecificcountry’spovertyline.Thispaperusesthesamedefinitionof“verypoor,”whichessentiallyimpliesextremepoverty.ThelawalsorequiresthatUSAIDdevelopandcertifytoolsforassessingthepovertylevelofmicroenterprisebeneficiariessothattheagencycandeterminewhetherornotitsdevelopmentpartnersareachievingthemandateofassistingverypoorpeople.ThedevelopmentofthesetoolsisbeingcarriedoutbytheIRISCenter(attheUniversityofMaryland)andUSAID.
TheU.S.legislationwasadvancedbypro-poormicrofinanceadvocateswhosoughttransparencyconcerningwhothemicrofi-nanceindustryreallyreaches.Theseadvocates,andcertainmicrofinancepractitioners,viewedthelegislationasnecessarybecausemostmicroenterprisedevelopmentorganizationsdonotreachverypoorpeople,despitemissionstatementsandpromotionalmaterialsthatidentifiedthesepeopleastheirtargetclients.Therealityisthatmanymicrofinanceorganizationshavenoideawhotheyconnectwith.Mostmicrofinanceclientstodayfallinabandaroundthepovertyline,buttheextremepoorarerarelyreached.Itisthuscrucialthatpolicymakers,donors,anddevelopmentpractitionershavereliableinformationaboutthepovertylevelsofthebeneficiariesofdevelopmentservicesinordertosteerinvestmentsandprogramstowardtargetedpopulationseg-mentstheywanttoreach.
AlthoughmanypractitionersandimplementersopposedtheU.S.legislationasrestrictiveandcostly,itsuccessfullybroughttheissueofknowingwhoone’sclientsare,andhowbesttoservethem,totheforefrontofmicrofinancediscussions.Severalorganizationswhichcreatedpovertyassessmenttoolsandconductedclientanalysesoverthelasttwoyearshaverealizedthattheydonotcomeclosetoreachingtheirintendedtargetmarket.Forsome,thisresultedinreexaminingtheirmissionsand,insomecases,realigningtheirmissions.However,tosupportthoseorganizationsthatremaincommittedtoservingverypoorpeople,thePovertyOutreachWorkingGroup(POWG)attheSEEPNetworkhasbeenresearchinghowtoevaluateprogramsthatdoworkwithverypoorpeopleandattemptingtogleangoodpracticestosharewithotherorganizations.
ThispaperdiscussestheresultsofpreliminaryresearchdonebythePOWG.Theworkinggroupidentified10microfinanceinstitutions(MFIs)andaskedthemeachtosubmita10–15pagepaperdescribinghoweffectivetheirprogramswereinreachingtheirtargetclients,howtheymeasuredtheirclients’povertylevels,andwhether(andhow)theycoulddocumenttheireffective-ness.Fromthesecasestudies,thePOWGhopedtoidentifyandexamineanycommonelementsthatmadetheseMFIprogramssuccessfulandfromthisrecommendareasforfurtherresearch.Whattheyfound,however,wasthattheinformationfromtheMFIsdidnotgodeepenoughtoelucidateanycommoningredientstosuccess.Despitethisdisappointment,thecasestudiesdidindicatewhatareasshouldtobeplumbedforanswers.Asaresult,thePOWGwenttoworkanddevelopedanextensiveques-tionnaire(seeannex),drivenbytheinabilityofthe10casestudiestoprovidesufficientinformation.
TheupshotofthePOWG’sexaminationofthese10casestudiesofMFIsengagedinpovertydownreachconfirmedwhymostorganizationsdonotworkwithverypoorpeople:becauseitishardtoactuallyreachthem.However,thecasestudiesdoshowthatservicingverypoorpeopleispossible—perhapsmorepossiblethannowappears—butthatgreatersuccesswillbedependentonunderstandingwhatthecriticalfactorsareandaddressingthemrealisticallyandinwaysthatproduceresultsthatcanbedocumented.
Itmustbeemphasizedthatthein-depthquestionnaireintheannexwasnotusedwiththe10MFIsthatwereexaminedinthispreliminaryresearch.Rather,thisquestionnaireiscentraltothenextstageofthePOWG’sresearch,whereitwillbeusedtoevaluatemoreprograms(includingenterprisedevelopmentapproaches).Thisinitialinvestigationandresultantquestionnairesimplybolstertheneedforgreaterin-depthresearchandprovidedirectionforwhatinformationisneeded.Moreimportantly,theyindicatehowdeeplyresearchmustdigtounearthanswersandreveal(oratleasthelpunderstand)thekeyingredientsrequiredtotrulyreachverypoorpeopleandservicetheirneedssuccessfully.
1.Microenterprise for Self-Reliance and International Anti-Corruption Act of 2000, H.R.1143/PublicLaw106-309,Oct.17,2000.Theactwasamendedin2003and2004.TheAmendmenttotheMicroenterpriseforSelfRelianceandInternationalCorruptionActin2003requiresthat50percentofallUSAIDmicroenterpriseresourcesbenefitverypoorpeople.Thelegislationwasfurtheramendedin2004.SeeMicroenterprise Results and Accountability Act of 2004,HR3818/PublicLaw108-484,December23,2004.
2.EqualtoUS$1.08/dayinpurchasingpowerparity(PPP)at1993prices.
� The SEEP Network Poverty Outreach Working Group
Definition and Status of Poverty
Traditionally,povertyhasbeenconceptualizedintermsofincome,withthepoordefinedasthoselivingbelowagivenincomelevel.Butpovertyhasbeenincreasinglyrecognizedasamultidimensionalphenomenonthatencompassesnotsimplylowincomebutalsolackofassets,skills,resources,opportunities,services,andthepowertoinfluencedecisionsthataffectanindividual’sdailylife.3Povertyalsofrequentlyoverlapsandreinforcesothertypesofsocialexclusion,suchasthosebasedonrace,gender,orethnicity.Thismorecomprehensiveunderstandingofpovertybettercaptureshowthepoorthemselvesdefinetheirsituation.4
Thecomplexandmultidimensionalnatureofpovertymakesitachallengetomeasure.Forthesakeofsimplicity,anincome-basedmeasureofpovertyisusedmostwidely,asitpermitscomparisonsbetweenregionsandcountries.TheWorldBank,forexample,definesextremepovertyasanincomeoflessthanUS$1/day,whichisseenastheminimumamountnecessaryforsur-vival.Tocalculateextremepovertyinanindividualcountry,the$1/daymeasureisconvertedtolocalcurrencyusingthepurchas-ingpowerparity(PPP)exchangerate,basedonrelativepricesofconsumptiongoodsineachcountry.Basedonsuchcalculations,theWorldBankestimatedthat1.2billionpeoplewerelivinginextremepovertyin2003,roughly23.3percentofthepopulationofalllow-andmiddle-incomecountries.5Whilethedefinitionof“verypoor”usedinthispaperisbasedonincome,thepro-gramsandapproachesexploredinthefollowingsectionsaddressmanyaspectsofextremepoverty,notincomelevelsalone.
Role of Microfinance in Serving Very Poor People
Byprovidingsmallloansandsavingsfacilitiestopeoplewhoareexcludedfromcommercialfinancialservices,microfinancehasbecomeastrategyforreducingpoverty.Accesstocreditanddepositservicesisawaytoprovidepoorwomenandmenwithopportunitiestotakeanactiveroleintheirrespectiveeconomiesthroughentrepreneurshipandbuildingincome,bargainingpower,andsocialempowerment.
AlthoughmostMFIsaimtoreachpoorpeople,ithasbecomeincreasinglyapparentthattheyrarelyserveverypoorpeople.MostMFIsreachthe“upperpoor”inmuchgreaternumbersthanthe“verypoor.”6Theextenttowhichmicrofinanceprogramsareabletoreachthepoorestofthepoorremainsanopendebate.
Certainpractitionersarguethatitisimportanttohavepermanentoperationsbasedonawidergeographicoutreach,withqualityfinancialproductsdeliveredbycompetitive,efficientmicrofinanceinstitutions.Thisapproachtobreadthofoutreachisbasedonalong-termviewofmicrofinanceservicesandthebeliefthat,inmanycases,thereisalimittodepthofoutreach.Thisapproachthusacceptsatrade-offbetweensustainabilityandreachingverypoorpeople.Otherpractitionersarguethatmicrofi-nanceshouldmakereachingverypoorpeopleaprioritybecauseaccesstofinanceisconsideredahumanrightinthefightagainsteconomicexclusion.Thisapproachrequiresnarrowtargetingofverypoorpeople.
Bothbreadthanddepthofservicesareveryimportantforthemicrofinanceindustry.Whathasbecomeapparent,however,isthatverypoorpeopleareunlikelytobeservedbymicrofinanceprogramsunlessprogramsareintentionallydesignedtoreachthem.Inordertodesignproductsandservicesforthistargetmarket,itisimportanttobetterunderstandthefactorsthatcon-tributetothedireconditionsofverypoorpeople.
Challenges in Serving Very Poor People
Thechallengesofreachingverypoorpeoplewithmicroenterprisedevelopmentservicesincludephysicalandeconomicbarriers,self-selection,andself-exclusion,aswellassectorrisksandthedeprivationofextremepovertyitself.
Physical Barriers
Inmanysettings,verypoorpeopleliveinremoteruralareasthathavenoaccesstofinancialservices.ToreachverypoorpeopleinremoteruralareasmeanshighertransactionscostsforMFIs.Suchareasareoftencharacterizedbypoorinfrastructure,relativelylowpopulationdensity,lowlevelsofliteracy,andrelativelyundiversifiedeconomies.Manyruraleconomicactivities,moreover,havelowprofitabilityandarepronetohighrisk.Evenifmicrofinanceprogramsarepresentinruralareas,theyoftenlackwell-trainedprofessionalsandhaveinsufficientsupportfromtheheadoffice.
3.Pan-AmericanHealthOrganization(PAHO)-WorldHealthOrganization(WHO),“ReachingthePoor:WhatWorks?”PAHO-WHO,Washington,DC,2004.
4.WorldBank,World Development Report 2000/2001: Attacking Poverty(NewYork:OxfordUniversityPress,2000); andPAHO-WHO,“ReachingthePoor,”2004.
5.WorldBank,World Development Report: Sustainable Development in a Dynamic Economy(NewYork:OxfordUniversityPress, 2003.)6.RobertHickson,“ReachingExtremePoverty:FinancialServicesforVeryPoorPeople,”OfficeforDevelopmentStudies,UNDevelopmentProgramme,1999.
The SEEP Network Poverty Outreach Working Group �
Economic Barriers
Manymicrofinanceprogramsusegroup-lendingmethodologywhereclientsattendaweeklyormonthlymeetingtoaccesscredit.Thecostoftransportationtothesemeetings,togetherwiththeopportunitycostofattendance(i.e.,lostincomeduetotimeawayfromwork)canpresentabarrierforverypoorpeopletoparticipateinmicrofinanceprograms.Alternatively,manyindividuallendingorsavingsprogramsrequireclientstosaveacertainamountbeforetheycanaccessloans,apracticethatoftenpreventsparticipationbyverypoorpeople.
Self-selection. ItiswellknownthatsolidaritygroupsinGrameen-stylemicrofinanceprogramsandvillagebanksrejectverypoormembersbecausetheymightbeunabletorepaytheirloansandcouldthusjeopardizethecreditworthinessoftheentiregroup.
Self-exclusion. Evenwhenverypoorpeoplearenotactivelyexcludedbyacommunity,theyoftenoptoutofcommunity-relatedprojectsbecausetheyareintimidated,believingthattheservicesofferedbysuchprojectsisnotsuitedtotheirneeds.7
Sector risk. Verypoorpeopleareoftendependentonsubsistencefarmingastheirmainsourceoflivelihood.Giventhehighrisksofagriculturalactivitiesandtheuniquerequirementsoffinancingsuchactivities(paybackofloans,forinstance,canonlytakeplaceaftertheproductionperiod,whichoftenlastsseveralmonths),MFIsusuallyshyawayfromlendingtothissector.
Impact of chronic poverty. Livinginabsolutepovertyforaprolongedtimestronglyaffectspeople’sdignityandhopeforthefuture,aswellastheirabilitytotakeinitiativeandovercomestigma.Moreover,poorhealth(especiallychronicdiseasessuchasmalariaandHIV/AIDS)presentsamajorobstacleforconductingsuccessfulmicroenterpriseactivities.
Overview of Existing Poverty-Focused Microfinance Approaches
Despitethehighrisk,hightransactioncosts,andotherchallengesdescribedabove,anumberofmicrofinanceorganizations,NGOs,andmultilateralagenciesarealreadyspecificallytargetingmicrofinanceservicesatverypoorpeople.Othermicrofinanceprograms,realizingthattheyarenotreachingverypoorpeople,areinterestedinfindingnewapproaches.Todate,therehasnotbeenadequateexplorationoffinancialproductsandlow-costservicedeliverymechanisms thatwouldallowMFIstoserveextremelypoorhouseholdswithoutcompromisingsustainabilityobjectives.8Thispaperhopedtoaddressthisbydocumentingsuc-cessfulexperiencesinreachingverypoorpeopleandrecommendingpromisingapproachesforfurtherexploration.Thefindingsarebasedon10casestudies(seetable1)andinformationreportedbytheimplementingorganizationsthemselves.Theyshouldbeconsideredpreliminarybecausetheyhavenotbeenindependentlyverifiedorevaluatedaccordingtoacommonsetofcriteriarelatedtoimpact,povertyoutreach,andcost.9Whiletheexamplesinthecasestudiesareonlyasmallsampleofpoverty-focusedinitiatives,theyrepresentabroadspectrumofapproachescurrentlybeingemployedbydifferentorganizationsinmicrofinance.
Table1belowgivesasnapshotofkeyfeaturesofselectedmicrofinanceprogramsthatexplicitlytargetverypoorpeople.Descriptionsofclients’povertylevelsinthecasestudiesare,forthemostpart,qualitativeandarenotbasedonactualpovertymeasurementsbymeansofauniversalandreasonablyreliablepovertytool(whetherbasedonincomeorexpenditures),suchasthatcurrentlybeingtestedbyUSAID.Ontheotherhand,severalfactors(e.g.,targetingmethodologyandselectionofcertainvulnerablegroups,suchasbondedlaborers,Dalits,10andpeoplelivingwithHIV/AIDS,forinstance)suggestthatmostoftheseinitiativesdoindeedtargetverypoorpeople.
Theexamplesofsuccessfuldownreachhighlightedintable1includebothMFIsthataimforfinancialsustainability,aswellasmultidisciplinaryorganizationsotherthanMFIs.ThetwoMFIsfeaturedinthispaper,SmallEnterpriseFoundation(SEF)inSouthAfricaandActivistsfor Social Alternatives(ASA)inIndia,useaGrameenmodeltoprovideloanstosolidaritygroupsofpoorandverypoorwomen.
Inordertomoreeffectivelyreachverypoorpeople,SEFestablishedaseparateprogram,the“TšhomišanoCreditProgram”(TCP),designedtoreachpeoplelivinginthebottom30percentbelowthenationalpovertyline.FreedomFromHunger(FFH)usesanothergroup-basedlendingapproach—villagebanking—whichitoffersasanewproductlinetoexistingruralbanksandcreditunions,enablingthemtoreachpoorerclients.Whatsetsthesethreeorganizationsapartfrom“mainstream”microfinanceprovidersisthattheirprogramsoffernon-financialservicesinadditiontofinancialproducts.Theseadditionalservicesincludeeducation,skilltraining,andconfidencebuilding.
Theremainingcasestudiesintable1relatetoorganizationsandprojectsthattypicallyshareabroadermissionofpovertyalleviationandofferservicesthatincludemicrofinanceormicroenterprisedevelopmentamongmanyotheractivities.Sincethese
7.AntonSimanowitz,withAliceWalter,“EnsuringImpact:ReachingthePoorestwhileBuildingFinanciallySelf-sufficientInstitutions,andShowingImprove-mentintheLivesofthePoorestFamilies,”in Pathways Out of Poverty: Innovations in Microfinance for the Poorest Families,ed.SamDaley-Harris(Bloomfield,CT:KumarianPress,2002).
8.Hickson,Reaching Extreme Poverty,1999.9.AtthewritingofthisTechnicalNote,severalSEEPmembershavestartedtodevelopcasestudiesoftheirapproachesforreachingverypoorpeoplebycom-
pletingastandardizedcasestudyquestionnaire.(Seethesurveyquestionnaireintheannexattheendofthisnote.)10.PeoplebornintoIndia’s“untouchable”caste.
� The SEEP Network Poverty Outreach Working Group
organizationsuseanintegratedapproachtopovertyalleviation—microfinanceisjustoneofapackageofservices—theiractivi-tiesarelessboundbytherigidfinancialsustainabilitycriteriathatgovernmostMFIs.BRAC,alarge,multi-faceteddevelopmentorganizationinBangladesh,forexample,operatesitsbroadruralcreditprograminadditiontotwomicroenterpriseprogramsthatspecificallytargetverypoorpeople.Its“IncomeGenerationforVulnerableGroupsDevelopment”(IGVGD)programpro-videsfoodsubsidiesandintensiveskillstrainingtovulnerablewomen,aswellasastandardpackageofmicrocredit,healthcare,andsocialservices.BRAC’smorerecentprogram,“ChallengingtheFrontiersofPovertyReduction/TargetingtheUltraPoor”(CFPR/TUP),abandonsloansaltogetherandoffersenterpriseassetgrantsinsteadtothesametargetgroup.“TrickleUpPro-gram”(TUP),aninternationaldevelopmentorganization,alsoassistsverypoorpeoplewithgrants,inthiscase,tostartorexpandmicroenterpriseactivities.Theorganizationalsooffersbusinesstraining,relyingonlocalpartneragenciestoprovideotherdevel-opmentservices,suchaseducation,healthcare,andsocialempowerment.
Table �. Examples of Microfinance Approaches Serving Very Poor People
Organization/ Project Name
Target GroupTargeting Method
Financial Services Non-financial Services
ARC, West Africa
Three Step IG Program
Very poor refugees and returnees
Vulnerability assessment
Grants followed by loans to solidarity groups
- Business skill development
- Ongoing business support
- Refugee relief services (nutrition, health, education)
ASA, India
Grama Vidiyal Microcredit Program
Poor and very poor women, Dalits
Participatory wealth ranking and housing index
Group-based microcredit (Grameen replication);
savings, pension, and insurance products
- Business development services
- Gender sensitization
- Capacity building
- Advocacy and local governance
BRAC, Bangladesh
�. IGVGD
�. CFPR/TUP
Very poor womenActive targeting based on poverty indicators
�. Individual loans
�. Business asset grants
- Food grain assistance
- Skill training in income generating activities
- Healthcare services
- Social empowerment
FFH, Africa, Asia, Latin America
Village banking
Poor and very poor women
Geographic targetingLinkages with credit unions and rural banks; group-based lending (village banking)
- Education: health, nutrition
- Self-confidence
- Enterprise and financial management
ILO, South Asia
South Asian program against debt bondage
Very poor bonded laborers
Poverty indicators and vulnerability to bondage
Group-based savings and credit
- Social empowerment
- Functional literacy
- Healthcare services
- Skill training in income generating activities
SEF, South Africa
Tšhomišano Credit Program
Very poor womenParticipatory wealth ranking
Group-based microcredit (Grameen replication)
- Business skill development
- Ongoing business support
TUP, Cambodia
W.O.M.E.N.
Very poor people with HIV/AIDS
Active targeting based on poverty indicators
Individual business seed-capital grants; savings match
- Business skill development / learning conversations
- Healthcare services
- Health and sanitation awareness
PACT, OXFAM, FFH, CARE, CRS, NABARD
Asia and Africa
Poor and very poor women
Geographic targeting
Savings-led MF;
Savings and lending self-help groups; bank/MFI credit to SHGs
- Basic literacy
- Business skill development/learning conversations
- Social empowerment
- Gender sensitization
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The“SouthAsianProjectagainstDebtBondage”oftheInternationalLaborOrganization(ILO)andtheAmericanRefugeeCommittee’s(ARC)programsinWestAfricabothtargetuniquelyvulnerablegroups:bondedlaborers(ILO)andrefugeesintheManoRiverbasin(ARC).Theseprogramsalsoemployacombinationoffinancialandnon-financialservicestoliftextremelyvulnerablepeopleoutofpovertythroughmicroentrepreneurialactivities.
Finally,manyorganizationsworldwideincreasinglyendorsesavings(ratherthancredit-ledmicrofinance)andtheformationofsmallcommunitygroupstopromoteself-managedmicrofinanceservicesbythepoorandverypoor,especiallyinruralareas.Intermsofhowmanypeopleeachofthesedistinctapproacheshavereached,savings-ledmicrofinancecomesoutaheadoftheotherapproacheswithoutadoubt.Thesesmallsavingsandlendinggroups,sometimesknownasself-helpgroups(SHGs),alsoserveasan“entrypoint”fornon-financialpovertyalleviationprograms.
To Target or Not to Target
Researchstudieshaveshownthatmostpoorpeoplehavebenefitedfrommicrofinanceprograms,butthatnarrowtargetingisnotnecessarilyaconditionforreachingverypoorpeople.Somelarge-scale,non-targetedschemeshave,infact,provencapableofreachingverypoorpeople.11Nevertheless,mostinitiativesthatsuccessfullyserveverypoorpeopleactivelytargetthissegmentofthepopulation.Ataminimum,suchprogramstendtoconcentratetheirprogramsingeographicareaswherethereisahighincidenceofpoverty.FFH’sintroductionofvillagebankingtoexistingcreditunionsandruralbanks,aswellasmostsavings-ledmicrofinanceinitiatives,reachverypoorpeoplesimplybyworkinginpoorruralareas.Ratherthanexclusivelyreachingverypoorpeople,geographicpovertytargeting,whichisalsoemployedbyASA,tendstoreachbothpoorandverypoorclients.
Otherinitiativesutilizeamoremeticuloustargetingmethod.SEF,forinstance,introducedavisualpoverty-indicatortesttoidentifyverypoorpeople,afteritrealizedthatitsoriginalmicrocreditprogramdidnoteffectivelyincludesuchcustomers.SEFwentontocreateparticipatorywealthranking (PWR),apovertyassessmenttechniquethathascommunitymembershelpiden-tifythepoorestamongthem.BRACwentthroughasimilarevolution.ItsIGVGDprogramfirstusedaratherpassivetargetingmethod,extendingservicestofood-insecurewomenwhowereselectedbylocalelectedrepresentatives.ItsCFPR/TUPprogramlaterusedgeographictargeting,PWR,andsurveystoidentifytheextremepoor.
TheTrickleUpProgramemploysapovertyassessmenttoolintheformofafive-questionsurvey,whichscoresthepovertylevelofpotentialprogramparticipantsaccordingtolocallydeterminedcriteria.Inadditiontousingthistool,itsCambodianpartneragency,W.O.M.E.N,worksexclusivelywithextremelyvulnerablepeoplelivingwithHIV/AIDSintheslumsofPhnomPenh,thecapital.Similarly,ILO(SouthAsia)andARC(WestAfrica)alsoemployactivetargetingtoolstoensurethatthepoorestofthepoorareincludedintheirprograms.
Theactualdegreetowhichverypoorpeoplearereachedbytheseprogramsisstillunknown,inpartbecauseuniversal(oruni-versallyaccepted)povertyassessmenttoolsdonotyetexist.However,thoseorganizationsthathaveconductedtheirowninternalpovertyassessmentsorcommissionedexternaloneshavefoundthatonlyaportionoftheirclientele,oftenlessthan50percent,isverypoor.Reachingverypoorpeopleexclusively,whetherdesirableornot,remainsachallenge.
Products and Services
Whenitcomestoprovidingverypoorpeoplewithrelevantandusefulservices,designingtherightproductisasimportantaswithanyothermarketsegmentforthemicrofinanceindustry.Thecasestudiesshowawidevarietyoffinancialservicesavailabletoverypoorpeople.Insomecases,thesameproductsareofferedtopoorandverypoorclientsalike.Insuchcases,anactivetar-getingstrategyisoftennecessary,asSEFlearnedfromexperience:onlyafteritbeganimplementinganactivetargetingmethoddiditmanagetoreachthepoorestsectionsofthecommunitiesitserved.Especiallywhenclientshavemultipleoptionstochoosefrom,theloansize,typeoffinancialservice,aswellasthedeliverysystemcanallaffecttosomedegreethepovertylevelofthemostlikelyusers.SafeSaveinBangladesh,forinstance,managestoattractextremelypoorhouseholdsbyallowingthemtodepositsmall,variablesumsofcashfrequently,whichisveryrelevanttotheneedsofthispopulation.12
Similarly,mandatorygroupmeetingsmightbeapricethatonlyverypoorpeoplemightfindworthpayingtoaccesssavingsorlendingservices.BothSEFandASAuseasolidaritygrouplendingapproachbasedontheGrameenmodel.Theyarguethatverypoorpeoplecanpaybackloansjustlikethebetter-offmiddlepoor.Insteadofmodifyingtheircoremicrocreditmodelfortheirpoorestclients,bothorganizationsoptedtoprovideverypoorpeoplewithadditionalservicestohelpimprovetheirlivelihoodsaswellastheirabilitytopaybacksmallloans.Infact,allcasestudiesappeartooffer,eachinadifferentdegree,arangeofnon-financialservices(discussedinmoredetailinthenextsection).
11.Hickson,Reaching Extreme Poverty, 1999.12.ImranMatin,StuartRutherford,andMdManiruzzaman, Exploring Client Preferences in Microfinance: Some Observations from SafeSave,CGAPFocusNote,
no.18(Washington,DC:CGAP,2000).
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Othercreditapproachesbuildinrepaymentflexibilityforloansextendedtoverypoorpeople.GrameenBankinBangladesh,forinstance,startedazero-interestcreditprogramforbeggarswithaflexiblerepaymentschedule.Repaymentrateshavenotbeenpublishedyet,butaresaidtobeencouraging.InJuly2005,halfoftheloancapitaldisbursedtoalmost50,000strugglingmembers(asGrameenBankpreferstocalltheminsteadofbeggars)hadalreadybeenpaidback.Almost1,000borrowershadquitbeggingtodevotetheirtimetobusinessinstead.13Takingintoaccountthevulnerabilityandirregularcashflowofpeopleatriskofdebtbondage,ILO’sSocialFinanceUnitstronglypromotessavingsand,inthecasesofloans,advocatesforaflexiblerepaymentmechanismthattakesthevulnerabilityofthistargetgroupinaccount.Repaymentremainsastrictrequirement,butinadditiontosticks,borrowersareofferedcarrotstopaybacktheloanaswell,includingtimelyrepaymentrefunds,repaymentholidays,andtailoredrepaymentschedules.14Evenwithinatargetgroupasvulnerableandpoorasthesefreedlaborers,prelimi-nary(mostlyanecdotal)findingsshowedapositiveimpactonbusinessincomeandmaterializationoflong-termprojects.
Thesavings-ledapproach,promotedinlargescalebyNABARD,CARE,PACT,OXFAM,andothers,stipulatesthatsavingsservicesaremoreimportantforverypoorclientsthancreditfacilities.Intheirmodels,membersofsavingsgroupspooltheirindividualsavingsintoagroupfund,fromwhichindividualmemberscantakeloansataninterestratesetbygroupmembersthemselves.Somesavings-ledmodels,suchastheNABARD-promotedSHG-linkagemodelinIndia,forexample,facilitateaccesstobankloansforstronglyperforminggroupsinordertoexpandtheratherlimitedfundsofsuchgroups.
Finally,organizationslikeARCandTUPofferprogramparticipantsseedcapitalgrants,which,althoughextendedwithcer-tainconditions,donothavetoberepaid.Theoutreachoftheseprogramsislimitedbyavailablefunds,buttherearestrongindi-cationsthatgrantrecipientsareabletobuildproductiveassetsandtoincreasetheirincomethroughexpansionordiversificationofincome-generatingactivities.15Aftertheinitialgrant,ARCprovidesqualifyinggroupsaccesstoloans.TUPdoesnotprovideafollow-upstageitself,butthemajorityofitslocalpartneragenciesfacilitatesavings,whilesomeallowsuccessfulTUPgranteesto“graduate”toaloanprogram.InCambodia,TUPpartneragencyW.O.M.E.Nencouragesregularsavingsafteraninitialgrantbymatchingthesavingsofprogramparticipants(householdslivingwithHIV/AIDS)foroneyear,uptoamaximumofUS$25.
Themajorityoftheprogramsexaminedbythispaperdeliverfinancialservicestogroupsratherthanindividuals.SEF,forinstance,utilizesGrameenBank–inspiredsolidaritygroups,whileFFHpromotesvillagebanking.Mostsavings-ledapproachesalsofacilitatesavingsservicesthroughmember-ownedgroups.Finally,ARCinWestAfricaoffersenterprisegrantsandloanstogroupsofvaryingsize,andtheILOprojectinSouthAsiadeliversarangeoffinancialservicestogroupsofbondedlaborers.TrickleUpandBRAC’sIGVGDandCFPR/TUPprogramsontheotherhandoptfordirectservicedeliverytoindividuals.SafeSaveinBangladeshalsotargetsindividualswithflexiblesavingsandloanproducts,basedonthebeliefthatclients,nomatterhowpoortheyare,usuallypreferindividualservice.16Individualservicedeliverymaybemoreappropriate,moreover,forclientswhofinditdifficulttoattendmeetingsorwhosevulnerabilitymakesthemsubjecttotoomuchstressfromgrouppressure.Ontheotherhand,theadvantagesofagroupapproachincludereducedtransactioncosts,aswellasacertaindegreeofsocialpres-surethathelpsmanageandallocatefundseffectively.Thebenefitsofgroupmembership—includingimprovedself-confidenceandnegotiationpower—canalsobeextremelyimportantforthemostvulnerablecommunitymembers.
Non-financial Development Interventions
Fewapproachestoassistingverypoorpeoplerelyonmicrofinanceservicesalone.Inadditiontothefinancialservices,mostpoverty-focusedorganizationsorganize,bythemselvesorthroughstrategicpartnershipwithotherinstitutions,non-financialinterventionstostrengthenthelivelihoodsofverypoorpeople.Almostallsuchorganizationsseemtobelievethatthistargetgrouplackstheexperiencetomanageamicroenterpriseandthereforeoffersometypeofentrepreneurialand/orvocationalskilldevelopmentinadditiontotheircorefinancialservice.BRAC,forinstance,promotescertainincome-generatingactivities,suchaspoultryrearing,andteachesmembersrelevanttechnicalskills.Sinceitpromotescertainbusinessactivitiesonalargescale,theIGVGDprogramalsoestablishesappropriatemarketinglinksforprocessingorsellingproducts.Suchspecializedmarketdevel-opmentservices,however,arerarelyofferedbymostothermicroenterprisedevelopmentprogramsthattargetverypoorpeople.
Morecommonthanmarketdevelopmentservicesistheprovisionofasocialsafetynettoverypoorpeople,suchasfoodgrainsubsidiesandbasichealthcareservicesofferedbyBRAC’sIGVGDprogram.Improvedfoodsecurityisoftenthemostimportantchangeinthelifeofhouseholdsthatmanagetoincreasetheirincomes.Verypoorpeoplealsofrequentlysufferfromchronicpoorhealth.BRAC,ARC,theILObonded-laborproject,andTrickleUppartnerW.O.M.E.N.allprovidehealthcareservices
13.Seehttp://www.grameen-info.org/bank/BeggerProgram.html14.CraigChurchillandIsabelleGuérin,Microfinance-Led Strategies to Eliminate Bonded Labor,independentpaper,November2004.15.JanMaesandMalikaBasu,“BuildingEconomicSelf-Reliance:TrickleUp’sMicroenterpriseSeedCapitalfortheExtremePoorinRuralIndia,”Economic
Self Reliance Review7,no.2(Winter2005).16.StuartRutherford,“HelpingMicklesMakeMuckles:DesigningSuitableSwapsforthePoor,”paperpresentedattheBanker’sInstituteforRuralDevelop-
ment,WorkshoponKick-StartingMicrofinance,Lucknow,India,2004.
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asanimportantpartofthesafetynetsthroughwhichtheyassistthepoorestmembersofacommunity.Whenabreadwinnerbecomessick,verypoorhouseholdsriskarapidlossofassetsbecausetheyfacenewexpensesandmaylosepart(orall)oftheirincome.VillagebankmembersofFreedomfromHunger’s“CreditwithEducation”programsimilarlyreceiveawarenesstrainingandeducationonnutrition,sanitation,andhealthissuesinadditiontocredit.Comparablehealthandnutritioneducationisoftendeliveredviasavingsgroupsandself-helpgroups,assistedbyorganizationsthatpromotesavings-ledmicrofinancemodels.
Socialsafetynets,skilltraining,healthcare,awareness-raising,andempowermentarenotcommoningredientsinminimalistmicrofinance,whichlimitsserviceprovisionstrictlytocreditandotherfinancialproducts.Themorevulnerableandpoorerthetargetgroup,however,themoresuchnon-financialservicesseemtotakeamoreprominentplaceinwhatHicksoncallsacompre-hensiveapproachtopovertyalleviation.17Thisapproachisbasedonthebeliefthat“verypoorhouseholdsareessentiallyincapableofeffectivelymanagingsmallbusinessesandthereforeareunabletousefinancialserviceswithoutfirstparticipatinginawarenessandcapacity-buildingprograms.”18However,notallmicrofinanceinitiativesthattargetverypoorpeopleincludecomprehensivenon-financialservices.SafeSave,forexample,stickstofinancialservicesonly“onthegroundsthatevenextremelypoorclientsareabletomakegooduseofproperlytailoredfinancialserviceswithoutothersupport,andthatprovisionofnon-financialservicesiscostlyandofquestionablebenefit.”19
Theissueofhow,andbywhom,todelivernon-financialservicesisasimportantasthenatureoftheseservices.Tounder-standthevariouspovertyalleviationapproachesthatintegratemicrofinanceintoservicedeliveryforthepoor,itisimportanttounderstandtheinstitutionalframeworkofeachorganizationthatdealsdirectlywithverypoorpeople.SEF,ASA,andBRAC,forexample,arealllocallyestablishedinstitutionswithastrongsocialmission,broadoutreach,solidcapacity,andgoodaccesstodonorfunding.Theseorganizationsarestronglymotivatedtoassistverypoorpeoplewithanappropriateservicepackageandhavethecapacitytodeliverallaspectsofanintegratedpackagebythemselves.FreedomfromHunger’salliancewithlocalfinan-cialinstitutionsresultsinadifferenttaskdivision.FFHpartners(ruralbanksandcreditunions)agreetoaddanewfinancialproduct(villagebanking)andadoptFFH’sCreditwithEducationapproach,whichcombinesfinancialwithnon-financialser-vices.Withoutasocialmissionorthecapacitytoprovidenon-financialservices,thesebanksmustcreateandtrainanewcadreoffieldstaffandadoptnewmanagementsystemstoeffectivelydobusinesswithverypoorwomen.Insomecases,FFHconsultantsprovideassistancewiththis.
Themajorityoforganizationsintheremainingcasesstudiesarerelativelysmall,localnon-governmentalagenciesthatgener-allyuseanintegratedapproachtodevelopmentinsmall-scaleprojects.Typically,theyrelyonpartnershipswithinternationalorganizationsornationaldonors,whoonlyrarelyprovidethemwiththesupportrequiredtoprovideanintegratedpackageoffinancialandsocialservicestotheirmostvulnerabletargetgroups.TUP,forinstance,providesitspartneragency,W.O.M.E.N.,withfundsforseed-capitalgrants,savingsmatches,andoverhead,whileW.O.M.E.N.reliesonanotherdonortofunditshomehealthcareandeducationprograms.Similarly,mostsavings-promotingagenciestendtofocusprimarilyonbuildingsustainablesavingsandloansgroups,whilecountingonlocalpartnerorganizationstodeliveressentialservicesthatverypoorpeopleneedtotakefulladvantageoffinancialprograms.
Allinitiativesexaminedinthestudyindicatethatverypoorpeopleoftenlackconfidencetoengageinmicroenterprisesortocopewiththeresponsibilitiesthatcomewithaloan.Lackofself-confidenceisoftenthereasonwhyverypoorpeopleexcludethemselvesfrommicrofinanceprogramsinthefirstplace.Evenwhenthereisnoloantoberepaid,manypoorpeople,espe-ciallywomen,areofteninitiallyafraidofthenewresponsibilitiesandnewactivitiesthatareexpectedfromthem.Participatingingroupmeetings,leavingone’shousetosellaproduct,negotiatingprices,ormanagingcashflowscanbeveryintimidatingtoanyonewhohasneverrunabusiness.
Confidencebuildingandwomen’sempowermentarethereforehighontheagendaofmicrofinanceprojectsthathaveastrongpovertyfocus.ThestaffoftheTCPprogramatSEF,forexample,empowersandmotivatesthepoorestcommunitymemberstojointheproject,trainsandsupportsthem(manyhavenobusinessexperience)throughoutthebusinesscycle,andfacilitatesgrouplearningratherthan“teaching.”WhenFFHandCRSjointlydeveloped“LearningConversations,”theylikewisesoughttoprovidegroupsaproblem-solvingprocessratherthanready-madesolutions.LearningConversationsaresimple,30-minutegroupdiscussionsaboutastoryoractivitythatresemblesrealissuesfacedbygroupmembers.Suchconversationsenablepeopletoidentifyissuesthemselves,reflectoncausesandconsequences,considersolutions,andcommittoaction.
TheILObonded-laborpreventionprojects,aswellasothermicrofinanceinitiativeswithastrongpovertyfocus,oftenedu-catetheirclientsabouthumanandlaborrights.Self-helpgroupsinIndiatypicallydiscussfamilyplanning,women’srights,anddomesticviolenceandoftentakejointactiontoimprovetheirsituation.InASA,thegroupmeetingsfacilitatediscussionsamongmemberstosharetheirissuesandfindsolutions.Severalorganizationsofferfunctionalliteracyandnumeracyclassesthatenablewomentounderstandandsigntheirownsavingsandloanpassbooks.Forexample,PACT’soriginalWomen’sEmpowermentPrograminNepal(laterimprovedandreplicatedinothercountriesastheWORTHprogram),concentratesonsavingsandlit-eracyasthemostimportantwaystoempowerwomenandhelpthembuildsustainable,self-managedsavingsgroups.
17.Hickson,Reaching Extreme Poverty,1999.18.Ibid.19.Ibid.
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Organizational Features
Involvingverypoorpeopleinmicrofinanceprogramsrequiresvisionaryleadershipandacommitmentofsubstantialresources.Eachoftheinitiativesfeaturedinthispaperresultedfromastrongsocialmissionandawillingnessonthepartofupperman-agementtoinnovate.Whilebuy-infromtopmanagementisessential,thiscommitmentneedstobeaccompaniedbyaninsti-tutionalculturededicatedtoprovidingcontinuedmicrofinanceservicestoverypoorpeople.Inordertoreachverypoorpeopleandprovidethemhigh-qualityfinancialservicesinacost-effectiveway,anorganizationneedsdifferentemployee-performanceincentivesthanthosethatcurrentlyguideloanofficers,forexample.Insteadoffocusingprimarilyonrepaymentrates,incentiveschemesshouldalsotakeoutreachandimpactintoaccount.
Inadditiontomonitoringfinancialperformance,severalmicrofinanceorganizationswithasocialmissionhavebeguntomonitortheirsocialperformanceaswell.Socialperformancemanagementformicrofinanceorganizationsthatseektoserveverypoorpeopleincludesmonitoringpovertyoutreach,impact,andcost-effectiveness.SEFinSouthAfricaandASAinIndiabothhavemanagementinformationsystems(MIS)thattrackfinancialandsocialimpact,includingclientpoverty,food,hous-ing,andeducationlevels.Theinformationobtainedfromtheirmonitoringsystemsisthenused,amongotherpurposes,tomakeoperationaladjustmentsandimprovefinancialproductsforverypoorpeople.20BothASAandSEFreportthat,atonetime,theirimpactmonitoringsystemsalertedthemtothefactthattheywerenotreachingverypoorpeopletotheextentintendedandcon-sequentlyadjustedtheirprograms.
Finally,whilefinancialsustainabilitymightnotalwaysbeattainable,severalexampleshavealreadydemonstratedthatreach-ingverypoorpeoplewithmicrofinanceservicesdoesnotprecludeanapproachfrombecomingfinanciallyself-sufficient.IncaseofASAandSEFforexample,cross-subsidizationthroughhigherprofitsfromlendingtoalesspoormarketsegmentenablesoutreachtoalessprofitable,verypoormarketsegment.Otherorganizations,notablyBRAC,TUP,andARC,cannotachievefinancialsustainabilitybecausetheyrelytovaryingdegreesongrantsorassettransfers.But,theseorganizationsareincreasinglyexpectedtojustifytheirhighercostsbydemonstratingdeeperpovertyoutreachand/orhigherimpactonthelivesofthosetheyserve.Justlikefinanciallyself-sustainableinstitutions,they,too,willneedtocontinuouslyimprovetheircost-efficiencythroughtechnologicalinnovationsandimproveddeliverymethods.
Conclusion
Thecasestudiesexaminedinthispaperaretestimonytothefactthatverypoorpeoplecanbereachedsuccessfully,ifmicrofinanceprovidersmakeadeliberateattempttotargetthemandofferservicesthatsuittheirdistinctiveneeds.Thedegreetowhichtheseapproacheshavebeensuccessfulinassistingverypoorpeopletomoveoutofpovertyisunclearbecausethemajorityofthesecasestudiesstilllackconvincingimpactresults.Moreover,thereisnoagreementontherolethatmicroenterprisedevelopmentshouldplayinassistingverypoorpeople.Shoulditofferprotection(focusonexpendituresmoothing,assetprotection,andriskmanage-ment)orhaveapromotionalfunction(focusonincomegeneration,assetbuilding,andcreatingviablemicroenterprises)?
Similarly,thepovertylevelsofthetargetgroupsdescribedinthesecasestudiesareoftenunknown,especiallyaccordingtouniversallycomparableindicators,suchasthoseinthepovertytoolscurrentlybeingdevelopedbyUSAID.Moreover,outreachandcost-efficiencydataarealsounavailableatpresentforamajorityofthefeaturedapproaches.Inordertoevaluatethevarietyofmicroenterprisedevelopmentservicestargetingverypoorpeople,toextractgoodpractices,andtomakerecommendationsforfutureresearchintoinnovativeapproaches,itisimperativethatpromisingcasestudiesareanalyzedinmoredepthandthatdataonoutreach(depthandbreadth),impact,andcostareverifiedinthefield.
Theannexinthisnotedetailsanextensivecase-studyquestionnairethatisbeingusedforstage2ofthePovertyOut-reachWorkingGroup’sresearchandexaminationoftheelementsinvolvedineffectiveprogramsthatserveverypoorpeople.Inadditiontothecasestudiesoutlinedinthispaper,moreprogramsarebeingevaluated,includingenterprisedevelopmentapproaches.21Itishopedthatthestage2researchandthisquestionnairewithitsmuchdeeperlevelsofevaluationandinvestiga-tionwillproducesufficientinformationtoproduce“hard”datathatcanelucidatekeyfactorsforreachingandprovidingservicessuccessfullytotheextremepoor.
Despitethecurrentshortageof“hard”data,somecommonelementsarebeginningtoemerge.First,mostmicrofinanceprac-titionersseemtoagreethatfinancialservicesarenotsufficient—infact,alonetheyareoftencounterproductive—toliftverypoorpeopleoutofpoverty.However,thereislessagreementonwhatkindsofcomplementaryservicesshouldbeofferedtothistargetgroupinadditiontofinancialservices.Second,inordertosuccessfullyserveverypoorpeople,theyneedtobeexplicitlytargetedinmostcasesandassistedwithproductsandservicesspecificallytailoredtotheirneeds.Marketresearch,therefore,needsto
20.SEF-SouthAfrica,“SummarySheet,”CaseStudyonSocialPerformance,Imp-Act, InstituteofDevelopmentStudies,UniversityofSussex,Brighton,UK,2005.
21.ForadescriptionofthePovertyOutreachWorkingGroup’sstage2research,contactthefacilitatorofthePOWGattheSEEPNetwork,LauraFooseatlfoose@alternative-credit.com.
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understandtheneedsofmicrofinanceclientsandrelatetheirneedstotheirdifferentpovertylevels.Amajorityofpractitionersseemtoagreethatsavingsservicesrespondbettertotheneedsofverypoorpeople,andthatcredit,ifoffered,shouldbemadeflexibleenoughtotakeintoaccountthehighervulnerabilityofverypoorpeople.Butmoreevidenceisneededonhoweffectivesuchpro-poorfinancialservicesare,notonlyatreachingverypoorpeople,butalsoatrespondingtotheirneeds.Thirdly,almostallcasesstudiesmentionthatbuildingconfidenceandsocialcapitalamongverypoorpeopleisasimportantasprovidingaccesstofinancialcapitaltotakeadvantageofenterpriseandmarketopportunities.Finally,providingeffectiveandsustainablemicroenter-prisedevelopmentservicestoverypoorpeopleisnotaneasychallenge.Itishard,butitispossible.Itrequirespersistence,vision-aryleadership,andastrongcommitmentacrosstheentireorganizationthroughstaffincentives,performancemeasurement,andawillingnesstochangeandadapt.Andunderstandingthosefactorsthathaveledtosuccesselsewherecanonlyhelpbringsuccess.
Resources
Churchill,Craig,andIsabelleGuérin.“Microfinance-LedStrategiestoEliminateBondedLabor.”Independentpaper,November2004.http://www.ilo.org/public/english/employment/finance/download/churchguer.pdf.AccessedSeptember18,2006.
Hickson,Robert.“ReachingExtremePoverty:FinancialServicesforVeryPoorPeople.”OfficeforDevelopmentStudies,UNDevelopmentProgramme,1999.http://www.undp.org/ods/areas/area-3/area-mm/title.html.AccessedSeptember18,2006.
Maes,Jan,andMalikaBasu.2005.“BuildingEconomicSelf-Reliance:TrickleUp’sMicroenterpriseSeedCapitalfortheExtremePoorinRuralIndia,”Economic Self Reliance Review7,no.2(Winter).
Matin,Imran,StuartRutherford,andMdManiruzzaman.2000. Exploring Client Preferences in Microfinance: Some Observations from SafeSave.CGAPFocusNote,no.18.Washington,DC:CGAP.http://www.cgap.org/portal/binary/com.epicentric.con-tentmanagement.servlet.ContentDeliveryServlet/Documents/FocusNote_18.pdf.AccessedSeptember18,2006.
Microenterprise for Self-Reliance and International Anti-Corruption Act of 2000. H.R.1143/PublicLaw106-309,Oct.17,2000.http://www.microlinks.org/ev02.php?ID=7750_201&ID2=DO_TOPIC.AccessedSeptember18,2006.
Microenterprise Results and Accountability Act of 2004.HR3818/PublicLaw108-484,December23,2004.http://www.micro-links.org/ev02.php?ID=7749_201&ID2=DO_TOPIC.AccessedSeptember2006.
Pan-AmericanHealthOrganization(PAHO)-WorldHealthOrganization(WHO).2004.“ReachingthePoor:WhatWorks?”PAHO-WHO,Washington,DC.http://www.paho.org/English/HDP/HDD/wb-poor-proj.PDF#search=%22World%20Health%20Organization%20Reaching%20the%20Poor.%20%22.
Rutherford,Stuart.“HelpingMicklesMakeMuckles:DesigningSuitableSwapsforthePoor.”PaperpresentedattheBanker’sInstituteforRuralDevelopment“WorkshoponKick-StartingMicrofinance,”Lucknow,India,2004.
SEF-SouthAfrica.2005.“SummarySheet.”CaseStudyonSocialPerformance.Imp-Act, InstituteofDevelopmentStudies,Uni-versityofSussex,Brighton,UK,2005.http://www.ids.ac.uk/impact/africa/pdf/SEF_English.pdf.AccessedSeptember18,2006
Simanowitz,Anton,withAliceWalter.2002.“EnsuringImpact:ReachingthePoorestwhileBuildingFinanciallySelf-sufficientInstitutions,andShowingImprovementintheLivesofthePoorestFamilies.”InPathways Out of Poverty: Innovations in Micro-finance for the Poorest Families,ed.SamDaley-Harris.Bloomfield,CT:KumarianPress.
WorldBank.2000.World Development Report 2000/2001: Attacking Poverty. NewYork:OxfordUniversityPress.
———.2003.World Development Report 2003: Sustainable Development in a Dynamic Economy.NewYork:OxfordUniversityPress.
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Annex Case Study Questionnaire
1. Context
1.1. Country Socio-economic and Poverty DataTable �.�. Country Statistics
For large countries, if a program is implemented only in a given state or province, then data (if available)at state/province level should be provided as well.
1.1.1. National currencyAmount Year
1.1.2. Population (millions)1.1.3. Population density per square kilometre1.1.4. Percentage urban / rural population1.1.5. Inflation 1.1.5. Nominal exchange rate (current, X currency per US $1)1.1.6. PPP exchange rate1.1.7. HDI value1.1.8. HDI ranking1.1.9. GDP/capita (PPP US$)1.1.10. Local currency equivalent of $1/day international poverty line1.1.11. Population below national poverty line (%) †1.1.12. Population living below $1/day (%)1.1.13. Population living below $2/day (%)1.1.14. Population living below $2/day (%)1.1.15. Population growth rate1.1.16. Life expectancy1.1.17. HIV prevalence (% ages 15–49)1.1.18. Malaria cases (per 100,000 people)1.1.19. Population undernourished1.1.20. Children underweight
1.1.21. Adult literacy Male
Female
1.1.22. Net primary enrolment ratio Male
Female
1.1.23. Net secondary enrolment ratioMale
Female
1.1.24. Physicians per 100,000 people1.1.25. Health expenditures per capita1.1.26. Gender-related development index (GDI) rank1.1.27. Gender-related development index (GDI) value
† Explain how the national poverty line is defined
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1.2. Local Context—Target Area
1.2.1. Briefly Describe Local Socioeconomic Conditions1.2.1.1. Geographic reference of location and size of population
Listthearea(province,state,district,etc.)wheretheprogramisoperatingandwhetherthisareaispredominantlyrural,peri-urban,orurban(ormixed),thesizeofthepopulationinthatarea,andifpossibleprovideamapofthecountrywhichhighlightsthetargetarea.Trytobeasdetailedaspossibleindescribingthegeographicaltargetarea:forinstance,ifwithinagivenprovince,onlycertaindistrictsaretargeted,makesuretomentionwhichonesandhowtheydifferfromothers(remoteness,populationdensity,etc.).Overallpovertydataofthegeographicaltargetareaaretobedescribedin1.3.1.
1.2.1.2. Local population characteristicsDescribeforpopulationingeneral(notjusttargetgroup)withinthetargetarea,andexplainasappropriatehowthis
isdifferentfromthecountry-widecontext.TargetgroupcharacteristicsaretobedescribedinSection3.1.2.1.2.1. Ethnic groups
Listthemainethnicgroupswithinthetargetarea,andmentionifsignificantlydifferentfromcountry’soveralleth-niccomposition.1.2.1.2.2. Most important economic activities
Whatarethemaineconomicactivitiesofpeoplelivinginthetargetarea?Ispopulationwithintargetareamainlyin-volvedinagriculture,animalhusbandry,fishing,industry,trade,services?Bemorespecificasneeded:forinstance,whattypeofindustries,services?Istheresignificantmigrationforworktootherareas?Whattypesofeconomicactivitiesaretypicalforthisareawhencomparedtonationallevel?(Ifagriculturaleconomy,moredetailscanbegivenunder1.2.1.4.)1.2.1.2.3. Cultural and religious background
1.2.1.3. Natural resources, economic activities, markets, unemploymentWhatarethemostimportantnaturalresourcesinthetargetarea?Whattype/sizeofmarketsareavailableandwhere
aretheylocated?1.2.1.4. For rural areas only
Mostimportantcropsandlivestockactivities,watersupply(irrigation,rainfed),seasonsandnumberofharvests,landavailability,ownershippatternsandcontracts.(Alsoindicateextentofsubsistencefarmingversuscommercialfarm-ing—cashcrops.)
1.2.1.5. Occurrence of droughts, floods, natural disasters or conflicts
1.2.2. Describe Government Policies Aimed at Very Poor People1.2.2.1. Social protection schemes by the government
Thesecanincludebasichealthcareand/orhealthinsurance,pensionschemes,assistancetopeoplewithdisabilities,theelderly,etc.
1.2.2.2. Policies aimed to integrate very poor people(suchasanti-discriminationandaffirmativeactionlaws)
1.2.2.3. Property and land rightsArethesethesameforwomenanddisadvantagedsocialclasses?Isthereaninheritancelawthatprovidessamerights
towomenandchildren?Isthelaweffective?1.2.2.4. Local government and non-governmental development programs
Withinthegeographicaltargetarea,whattypeofdevelopmentprogramsarerunbylocalgovernments?WhicharethemaininternationalandlocalNGOplayersandwhattypeofactivitiesdotheysupport?
1.2.2.5. Other
1.2.3. Brief Profile of Microfinance Environment1.2.3.1. List microfinance institutions and other financial institutions/services accessible by the poor
(MFIsotherthansubjectofcasestudy).Providenumberofclients,ifpossible.1.2.3.2. Describe dominant microfinance models and services
Examplesareindividualorgrouploans(suchassolidaritylending,self-helpgrouplendingandvillagebanking),sav-ings(voluntary/mandatory).Traditional(informal)microfinancemodelscanalsobelistediftheyarecommon.
1.2.3.3. Demand versus supply of microfinance servicesWhatindicationsexistondemandforfinancialservices?Howmanyclientsarecurrentlyreachedbymicrofinance
and/orfinancialinstitutionsingeneral?
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1.2.3.4. Depth of microfinance outreachHowpoorarethemajorityofmicrofinancecustomers?Towhatextentareverypoorpeoplereached?
1.2.3.5. Existing MF/MED initiatives aimed at very poor people(otherthancasestudy).
1.2.4. Poverty1.2.4.1. Existing poverty data and geographic areas of the country where extreme poverty is most concentrated
Includebothurbanandruralareaswhereextremepovertydominatesmost.Includemapand/ortablewithavailablepovertydata(fromnationalcensus,WorldBankorUNsurveys,participatorypovertyassessments,etc.)
1.2.4.2. Does the target area fall within these extreme poor regions?TowhatextentdoestheMFOtargettheseregions?Showonsamemaportable,ifpossible.WhatfactorshasMFO
consideredtodecideonitsgeographicaltargetarea?Whatareplansforfutureintermsofgeographicexpansion?1.2.4.3. If known, what is the proportion of population in the target area living below $1/day and/or within bottom 50% of people living below the national poverty line?
Howdoesthiscomparetothecountryoverallandtoitspoorestregions?Includemaportable,ifavailable.1.2.4.4. Main determinants of poverty
Whichfactorsarestronglyindicativeoflevelofpovertywithintargetareaorcountryasawhole?Examplesinclude:householdsize,genderand/orageofheadofhousehold,amountoflandoranimalsowned,educationlevel,remoteness,etc.
2. Organizational Framework
2.1. International Organization
2.1.1. Name and Type of the Organization (International NGO, Multilateral Agency, Foundation, Other)
2.1.2. Organizational Background2.1.2.1. Mission and vision2.1.2.2. Brief history2.1.2.3. Type of support: Funding, capacity building, direct service provider, other
2.1.3. Development Intervention Approach2.1.3.1. Primary target group and development focus
Whoistheinternationalorganization’smaintargetpopulation(categoryofpeople:thepoor,women,elderly,children,peoplewithdisabilities,refugees,etc.;geographiccoverage:rural/urban,regionsoftheworld).Whatisthein-ternationalorganization’sprimarydevelopmentfocus?Health,education,agriculture,humanrights,economicdevelop-ment,microfinance…)
2.1.3.2. Specialized in MF/MED or multisectoralDoestheinternationalorganizationemployanexclusiveMF/MEDapproachordoesitprovidenon-financialser-
vicesaswell?2.1.3.3. MF/MED model
Withoutprovidingdetails(tobeprovidedinlatersection)explainthemainfeaturesoftheMF/MEDmodel:whichservice(credit,savings,insurance,enterprisedevelopment,etc.),individualorgroupbasis,name(forexample:solidaritylending,villagebanking,self-helpgroups,creditunion,cooperatives…)
2.1.3.4. Other sectors
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2.2. Local OrganizationTable �.�. Institutional Background
Issues Observations2.2.1.1. Name of the organization or institution2.2.1.2. Geographic area of operation 2.2.1.3. Legal structure 2.2.1.4. Registration status 2.2.1.5. Regulation status 2.2.1.6. Date established2.2.1.7. Specialized (MF/MED) or multisectoral2.2.1.8. Start of MF/MED activities2.2.1.9. Core business (credit, savings, etc.)2.2.1.10. Business model2.2.1.11. Target market— MF/MED2.2.1.12. Number of clients/participants— MF/MED2.2.1.13. Number of staff
2.2.2. Organizational Development2.2.2.1. Mission and vision2.2.2.2. Brief history2.2.2.3. Objectives2.2.2.4. Organizational culture, leadership, innovation
Howstrongisvisionandmissionamongstaff?Howmotivatedandloyalisstafftotheorganization?Isleadershiptop-downorbottom-up?Isinnovationencouraged?How?Towhatextentcontributeanyofthesetoreachingverypoorpeoplewithappropriateservices?
2.2.2.5. Organizational structure, roles and responsibilities (diagram may be helpful)Istheorganizationcentralizedordecentralized?Describemaindivisionsoftheorganization.
2.2.2.6. General qualifications and profile of field staffWhatisjobtitleoftypicalfieldstaffmember(withdirectclientcontact)?Whatisjobdescription?Whatareedu-
cationalandworkexperiencerequirementsforfieldstaff?Ispriorexperienceworkingwithverypoorpeoplerequired?Whatisgender,ethnic,linguisticandsocio-economicbackground(comparedtoclients)?
2.2.2.7. Training/sensitization (of staff, managers, board) on mission and poverty outreachHowisstafftrainedandsensitizedwithrespecttoreachingverypoorpeople?
Istrainingmandatory?Whoreceivestraining?Board?Management?Fieldstaff?Howwasthetrainingdevelopedandwhoarethetrainers?Istherefollow-uptraining?
2.2.2.8. Incentives for poverty outreachWhataremonetaryincentivestoreach/serveverypoorclients?Whatnon-monetaryincentivesexist?Isthereten-
sionbetweenfinancialandsocialjobperformance?Howisthistensionmitigated?2.2.2.9. Governance
Howistheorganizationgoverned?WhositsontheBoard?WhatarethemainresponsibilitiesoftheBoard?Ifap-plicable,whoarethemainshareholdersoftheorganization?Istheorganizationtransparentaboutitsgoalsandperfor-mancewithstaff,donors,andclients?
2.2.3. MF and MED ServicesThissectionismeanttoprovideabriefoverviewofMFandMEDservicesoverall,notjustthosetargetedatvery
poorpeople.Iftheorganizationprovidescustomizedservices/productstargetedtoverypoorpeopleand/orifittargetsverypoorpeopleexclusively,thenthesewillbedescribedinSection5.
2.2.3.1. MF model and products/servicesForloans,includerangeofproducts,averageandminimum/maximumloansize,savingsrequirement,andtypical
loanterms(interestrateandmethod,loanduration).Fordepositservices,includeaveragesavings,savingscollectionmechanism,withdrawalpolicies,etc.
2.2.3.2. Description of main target group (if not very poor people)Whatisthetotalnumberofclients,byservice(loans/savings),ifknown?Whatispovertylevel,gender,socialstatus,
professionalactivitiesandbusinesstypes,ethnicity,etc.ofmostclients?
The SEEP Network Poverty Outreach Working Group ��
2.2.3.3. Selection and/or eligibility criteriaWhatareselectioncriteria?Whatmethodisusedtoverifyeligibility?
2.2.3.4. Use of poverty assessment toolIspovertyofgeneralclientsassessed?Bywhatmethod?
2.2.4. Resources and External AssistanceBriefoverviewoftheorganization’sbalancesheet.Whatisthevalueoftotalassetsandhowarethesecoveredbyex-
ternalloans,equity,donorgrants,clientsavings?Whoaretheprincipaldonors,lenders,equityholders?Doestheorgani-zationgenerateincome?Howmuch?Whatarethefinancialefficiencyandoperationalefficiencyratios?Portfolioatrisk?
2.2.5. Relationships (Networks, Partnerships, Member Organizations)
3. Description of “Very Poor” Target GroupFocustotheextentpossibleonstatisticsforthe“verypoor”grouponly.Ifthesedatadon’texist,clarifyforeachcategory
whetherthedataisforoverallclientgrouporforverypoorclientsonly.Ifclientdataarenotavailableforcertaincategories,availablenationaldatacanbeused.
3.1. Individual and Household Conditions
3.1.1. Gender
3.1.2. Age
3.1.3. Disability and chronic disease
3.1.4. Culture or religion
3.1.5. Ethnicity
3.1.6. Membership in Socioeconomic Groups(suchascasteandclass)
3.1.7. Household Type, Composition, Marital Status
3.1.8. LiteracyIfclientsaremixedgender,providebygenderifknown.
3.1.9. EducationIfclientsaremixedgender,providebygenderifknown.
3.2. Socioeconomic Conditions
3.2.1. Refugee or IDP status
3.2.2. Economic Conditions3.2.2.1. Underemployment
Forthosewhorelyonworkingforothers(laborers,etc.),howmanydaysonaveragecantheyfindwork?Whatarethemainincomeand/orsubsistencesourcesofverypoorclients?
3.2.2.3. Land ownershipDoverypoorclientsownlandorleaseland?Ifso,howmuchonaverage?Towhichdegreedoesowncultivation
meetannualhouseholdsubsistenceneeds?3.2.2.4. Asset ownership
Whataretypicalassets(productiveand/orhousehold)ownedbyverypoorpeople?3.2.2.5. Income level
Providedailywagelevelsforlabor(male/female)ifavailable.Aredataavailableonhouseholdincomederivedfrommicroenterpriseactivities?
�� The SEEP Network Poverty Outreach Working Group
3.2.3. Geographic Conditions3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density3.2.3.2. Access to markets3.2.3.3. Access to banks3.2.3.4. Access to doctors and clinics3.2.3.5. Proneness to natural disasters
Onlytobecompletedintherarecasewhereverypoorpeople/targetgroupexperiencesdifferentnaturalcalamitiesfromtherestofthepopulation,becausetheyliveindistinctareaswheretheyaremorepronetodrought,flooding,etc.
3.2.4. Major Vulnerabilities and Risks Encountered by Target GroupWhataremostcommonvulnerabilitiesexperiencedbyverypoorpeople?Howdotheycopewiththemtraditionally
(beforebecomingclients)?
4. Poverty Targeting and Assessment
4.1. Poverty Measurement Practices
4.1.1. Poverty Data CollectionArepoverty-relatedindicatorsarecollectedonclients?
4.1.1.1. Which poverty indicators are collected?Listpovertyindicatorscollected.Areindicatorsuniversalordependentonotherfactors,suchasregionaldifferences
orcommunityfeedbackandparticipation?4.1.1.2. What poverty assessment tool is used?
Whatisthenameofthepovertytool?Arethedatacollectedthroughastandardsurvey?Interviewand/orobserva-tion?Throughaparticipatoryprocess?Other?Includeanyrelevantfeaturesofpovertytool.
4.1.1.3. When and how often are poverty data collected? At“baseline”?Beforeorafteradmittingclients?Anyrepeatmeasurementsduringprogramenrollment,groupmem-
bershiporsubsequentloancycles?4.1.1.4. Which clients are measured?
Allincomingclients?Onlyasample?Arenon-clientsmeasuredtoo?
4.1.2. Use of Poverty DataHowarepovertydatausedbytheorganization?
4.1.2.1. What, if any, are poverty categories distinguished by poverty data?Forexample,categoriessuchasnon-poor,middle-poor,poor,verypoor,etc.
4.1.2.2. How are each of these categories defined? Ifpovertydataarequantitative,dopovertycategoriesfallwithincertainscoreintervals?Ifso,explain.Doestheorga-
nizationhavequalitativedefinitionsforcertainpovertycategories?4.1.2.3. How are poverty data used by organization?
4.1.2.3.1. For client monitoring? Explainprocedureanddecisionfactors.
4.1.2.3.2. For client screening? Explainprocedureanddecisionfactors.
4.1.2.3.3. For client targeting? Moredetailstobeprovidedunder“4.3.PovertyTargeting”
4.1.2.3.4. For impact monitoring/assessment? Alsousedforproductdevelopment?
4.1.2.3.5. For other uses? Suchasfundraising,PR,etc.
4.2. Available Poverty Data
4.2.1. Poverty Distribution Results by Internal Poverty Data Collection Method(Assumingthattheorganizationcollectsroutinepovertydataonclients,aswouldbedescribedin4.1.1.)Provide
resultsintermsofclientproportionsforeachofthepovertycategoriesdefinedbytheorganizationin4.1.2.2.
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4.2.2. Poverty Data from a Recent Poverty and/or Impact Assessment StudyIfavailable,provideresultsintermsofclientproportionsbypovertycategoriesasdefinedinthestudy.Whoper-
formedthestudy?When?Whichtargetarea?Howbigwasthesample?
4.2.3. Poverty Data Obtained through Use of USAID Certified Poverty ToolThiswillbeconductedbyexternalconsultanttrainedinuseofUSAIDcertifiedpovertytools,oncethesebecome
available.Thesetoolsmightnotbeavailablesoonincertaincountries.4.2.3.1. Which USAID certified poverty tool was used?
Whichpovertycriterionwasused:$1adayorbottom50%belowpovertyline?4.2.3.2. Provide details on poverty assessment exercise
Timeconducted,samplesizeandselection4.2.3.3. Poverty results
Proportionofverypoorclientsversuspoorclients
4.2.4. Interpretation of Poverty Data4.2.4.1. Comparison between internal and USAID poverty tool data4.2.4.2. Organization’s own interpretation of poverty outreach
Ispovertyoutreachsatisfactory?Whatexplainspovertyoutreachresults?Isorganizationplanningtomaintainorimprovepovertyoutreach?Why?How?
4.3. Poverty Targeting
4.3.1. Does the Organization Use a Poverty Targeting Tool?Isthepovertyassessmenttooldescribedaboveusedaspovertytargetingtool?Whatothertoolsareused?(forin-
stance,geographictargeting,providingproductsorusingproceduresthatonlyattractverypoorclients)
4.3.2. What Is the Client Poverty Target Level?Definedbyonecut-offlevel?Ifso,whichone?Oraretheredifferenttargetsfordifferentcategoriesofpoverty?
Explain.
4.3.3. Staff Use of Poverty Targeting4.3.3.1. Training/sensitization (of staff, managers, board) related to poverty outreach
Howisstafftrainedinpovertytargeting?4.3.3.2. Staff incentive schemes
Whataremonetaryincentivesforpovertytargeting?Providedetailsonhowpovertytargetsarerelatedtomonetaryincentives.Whatnon-monetaryincentivesexist?Whatotherjobperformancegoalsisstaffheldaccountablefor(otherthanpovertyoutreach)?
4.3.4. Issues with Poverty TargetingIforganizationisusingapovertytargetingtool,whatissueshasitencounteredbyusingthetool?
5. Products and ServicesThissectionexploresthevariousproductsandservicesofferedtoverypoorclients.However,sincecertainorganizationsdo
notjusttargetverypoorclientsandsinceproducts/servicesthesearenotnecessarilydifferentforverypoorclientsthanforlesspoorclients,makesuretoclarify whether products/services are specifically targeted towards very poor clients, or whether they are on offer for a wider range of clients.Ontheotherhand,iftheorganizationprovidescustomizedproducts,services,and/orassistancetoverypoorclients,itmightbehelpfultobrieflycomparewithwhatlesspoorclientsarebeingoffered.
�� The SEEP Network Poverty Outreach Working Group
5.1. Financial Products
Table �.�. Microfinance Product Details
Product Features and Policies5.1.1. Microcredit
5.1.1.1. Individual or group product5.1.1.2. Loan terms (maturity, interest rate, interest type, flexibility)5.1.1.3. Loan source5.1.1.4. Loan use5.1.1.5. Loan size (first loan, average loan, maximum loan size)5.1.1.6. Meeting requirement and frequency5.1.1.7. Mandatory savings requirement and amount5.1.1.8. Collateral requirement5.1.1.9. Other eligibility requirements5.1.1.10. Loan default policy5.1.1.11. Repayment flexibility5.1.1.12. Other
5.1.2. Microsavings5.1.2.1. Individual or group5.1.2.2. Savings type5.1.2.3. Deposit/collection location5.1.2.4. Deposit frequency, amounts, flexibility5.1.2.5. Meeting requirement and frequency5.1.2.6. Savings terms (interest rate, minimum deposit, etc.)5.1.2.7. Withdrawal and savings use policies5.1.2.8. Record keeping and accounting5.1.2.9. Investment of deposits5.1.2.10. Other
5.1.3. Microinsurance5.1.3.1. Microinsurance type 5.1.3.2. Group or individual product5.1.3.3. Term5.1.3.4. Eligibility requirements5.1.3.5. Renewal requirements5.1.3.6. Rejection rate5.1.3.7. Voluntary or compulsory5.1.3.8. Product coverage (benefits)5.1.3.9. Key exclusions5.1.3.10. Pricing—premiums5.1.3.11. Pricing—co-payments and deductibles5.1.3.12. Pricing—other fees
5.1.4. Microgrants5.1.4.1. Individual or group product5.1.4.2. Amount (and number of grants)5.1.4.3. Eligibility requirements5.1.4.4. Grant use and other conditions5.1.4.5. Savings requirement or matched savings arrangement5.1.4.6. Straight grant, no interest or partial repayment5.1.4.7. Other
Provide any further narrative and details relating to microfinance products that were not captured in the table above.
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5.2. Microenterprise Development Services
Table �.�. MED Service Details
Service Types and Features5.2.1. Training
5.2.1.1. Financial literacy5.2.1.2. Business planning and management5.2.1.3. Marketing5.2.1.4. Recordkeeping and bookkeeping5.2.1.5. Skill development5.2.1.6. Technical assistance5.2.1.7. Training method5.2.1.8. Other?5.2.1.9. Costs to client
5.2.2. Business Consultancy and Advisory Services5.2.2.1. Individual or group sessions5.2.2.2. Frequency5.2.2.3. Topics5.2.2.4. Confidence Building5.2.2.5. Other5.2.2.6. Costs to client
5.2.3. Market Linkages5.2.3.1. Input supply5.2.3.2. Marketing Assistance5.2.3.3. Market Information5.2.3.4. Producer organizations5.2.3.5. Business linkage promotion5.2.3.6. Quality Control5.2.3.7. Other5.2.3.8. Costs to client
5.2.4. Other5.2.4.1. Employment generation5.2.4.2. Technology development
Provide any further narrative and details relating to microenterprise development services that were not captured in the table above.
�0 The SEEP Network Poverty Outreach Working Group
5.3. Non-financial ServicesIn the table below, list services under each of the non-financial categories that are offered to very poor clients of the organization. Mention whether the organization itself provides these services or a partner organization (such as NGO, government, etc.)
Table �.�. Non-financial Services Details
Service Types and Features5.3.1. Nutrition
5.3.2. Health and Sanitation
5.3.3. Education
5.3.4. Social Capital Development
5.3.5. Other
Provide any further narrative and details relating to non-financial services that were not captured in the table above.
5.3.6. Empowerment and Confidence BuildingWhattypeofactivitiesandprogramshelpbuildconfidenceofclients?Towhatextentareclientsinvolvedindecisionrelatedtoproductandservicedesign,loantermsanduse,loanap-
proval,etc.Towhatextentdoclientshavemorenegotiatingpowerinfinancialandbusinesstransactions?Whichchallengesremain?
5.4. Design and Product Development
5.4.1. Program Rationale/ Theory of Change?Howaretheprogram’sservicesandproducts(andotheroutputs)envisionedtocreatechanges?
5.4.1.1. Main issues and challenges of very poor clients which the organization seeks to addressWhatdidtheorganizationlearnaboutclientbehaviorthatledtotheservicesandproductsaimedatverypoor
people?
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5.4.1.2. Intended outcomes and impactsWhataretheintended(short-term)outcomesatclient,household,microenterpriseandcommunitylevel?What
typesofimpactareexpectedinthelongterm?5.4.1.3. How are products and inputs designed to achieve those intended impacts?
5.4.2. Concept Development 5.4.2.1. Client survey demand/needs assessmentClient survey demand/needs assessment
Didtheorganizationconductclientsurveys,needsassessmentorotherresearchrelatedtoissuesfacedbyverypoorpeople?(ifnotspecificallybyverypoorpeople,wasanysuchresearchconductedonpoorclientsingeneral?)Whattypesoftoolswereused?Whatwerethemainfindings?
5.4.2.2. Competition analysisCompetition analysisHastheorganizationanalyzeditscompetitors?Ifso,howhasthisaffecteditsnicheintermsofproducts/servicesand
costsespeciallywithafocusonverypoorclients?Areotherorganizationsworkingwithsametypeofclients?Whatistheirapproach?
5.4.2.3. Self-assessmentDoestheorganizationconductself-assessments?Ifso,howaretheyconducted?Whoisinvolved?Whathavebeen
lessonslearnedfromsuchexercises?
5.4.3. Product/Service Design 5.4.3.1. Product/service design process/service design process
Explainhowtheorganizationdecidedtoprovideproducts/servicestoverypoorclients,howtheseweredesigned?5.4.3.2. New versus modified products/services for very poor clients
Wasanewproduct/servicespecificallytailoredtotheneedsofverypoorclientsorwasanexistingproduct/servicetweakedtomeettheirneeds?Whatwerethecosttrade-offs?
5.4.3.2. Risk assessment and product designRisk assessment and product designWhattypesofriskswereidentifiedforworkingwithverypoorclients?Howdidthisaffectproduct/servicedesign?
5.4.3.1. Prototype development and testingPrototype development and testingHowprototypeswereeventuallydeveloped?Didtheorganizationrelyoninternalorexpertise?Whowasinvolvedin
development?Whattypeofinitialfeedbackwassolicitedbeforepilottesting?
5.4.4. Pilot TestingWhichclients(andhowmany)wereinvolvedinpilottestingofnewproducts/servicesforverypoorclients?What
lessonswerelearnedduringpilottesting?Whatproductmodificationsweremade?
5.4.5. Rollout Howdidtherolloutofthenewproductgo?Wereanynewissuesencountered?Modificationswithintheorganiza-
tionneeded?
5.4.5. Product/Service Review and Assessment Howhastheorganizationobtainedfeedbackonitsnewservices/products?Whoisinvolvedincollectingthisinfor-
mation?
5.4.6. The Product Development Cost 5.4.6.1. Total cost
Anyinformationavailableonthetotalcostofdevelopinganewproductorservice?5.4.6.2. How were they funded?
Whichfinancialresourcesmakenewproductdevelopmentpossible?5.4.6.3. Outsourcing during the development process
Didorganizationoutsourcetheproductdevelopmentprocess?Ifso,towhom?Why?
5.4.7. Feedback LoopWhataretheorganization’ssystemsofinformationflowandfeedback?Whattypeofessentialclientinformationis
usedtobetterunderstandtheirneedsandultimatelyguidedecisionmakingforproductdevelopment?
�� The SEEP Network Poverty Outreach Working Group
5.5. Implementation Process
5.5.1. ProcessProvideashortstep-by-stepdescriptionoftheprocess(andtimeline)fromtargetinganewareaorgroupandselect-
ing/recruitingclientstoprovidingproducts/servicesandpotentiallygraduatingverypoorclientstonewservices.
5.5.2. LogisticsWhatareimportantlogisticalconsiderationsinreachingandassistingverypoorpeople?Issuescanincludemobil-
ity/distance,selection,training,monitoring/counseling,moneytransfer,etc.
5.5.3. Information SystemHowaredataobtained,processed,analyzedandused?Whokeepswhattypeofrecords(andinwhatform)?Details
ontypeofdatacanbefurtherexplainedin6.1.1.
6. Results
6.1. Method of Measuring Results
6.1.1. Type of DataWhatinformationdoesmanagementusetotrackresults(effectiveness),performance(efficiency),clientfeedbackand
impact?
6.1.2. Data Analysis and UseHowarethedataanalyzed?Howoften?Howarethedatausedforday-to-dayoperations,forstrategicplanning?
6.2. Impact
Reviewofexistingevidenceonoutcomesandimpact.Comparewith5.4.1.2.IntendedOutcomesandImpact.
6.2.1. Poverty ImpactProvideanyevidencefrominternalmonitoringorimpactassessmentsaswellasfromthird-partyimpactstudies
relatedtothemovementoutofpovertyofverypoorclients,bothaccordingtoeconomicandnon-economicpovertyindicators.Ifimpactdatacannotbedisaggregatedbetweenpoorandverypoor,provideoveralldataandclearlyidentifypovertyrange.Ifpossible,alsoprovideindicationsofhowlongclientshavebeeninprogrambeforeimpactisnoted.
6.2.2. Client Satisfaction and FeedbackWhathavebeenclientsatisfactionlevelswithservicesprovided?Whatsuggestionsaremadetochangeproducts/ser-
vices?
6.3. Cost Effectiveness and Sustainability
6.3.1. Scale and Replicability6.3.1.1. Strategy for scale?
Whatistheorganization’sstrategyforincreasingscale?Howmanyverypoorclientsdoestheorganizationwanttoreach(andwhen)?Whatisplannedproportionofverypoorclientsoftotalclients?Whatactionsandresourcesareneededtoachievethis?
6.3.1.2. Replicability of program or serviceHowreplicableisthisprogramorserviceunderotherconditions(otherpartsofthecountry,othercountries,and
othercultural/geographic/socioeconomicconditions?Whatareessentialfactorsforreplication?
6.3.2. Financial and Operational Self-Sufficiency (if applicable)Provideinformationonfollowingratios,ifapplicable.Indicatewhetherratiosrelatetoentireclientpopulationorto
verypoorclientsonly.Explainifothermeasuresareused(fornon-creditprogramsespecially).6.3.2.1. Financial expense ratio6.3.2.1. Operational expense ratio6.3.2.1. Cost per client
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6.3.2.1. Clients per staff member6.3.2.1. Average loan balance per borrower6.3.2.1. Average savings balance per saver6.3.2.1. Portfolio at risk6.3.2.1. Tailoring of product/service
Ifproducts/servicesweretailoredspecificallytotheneedsofverypoorclients,howdidthisaffectcostandefficiency?6.3.2.1. Other?
6.3.3. Cost-Effectiveness of Non-financial Services?Distinguishdifferenttypesofnon-financialservicesandindicatecostandcostrecovery.
6.3.4. Strategies to Cover/Reduce Costs?Whymeasuresweretakentoreducecostsandtomakeproducts/servicesfinanciallysustainable.Examplesarede-
liverymechanisms,technologicalinnovation,scale,cross-subsidization,privateorpublicpartnerships,etc.Distinguishbetweenfinancialandnon-financialservices.Ifnofullcostrecovery,whatisthestrategyforfuturesustainability?
Note
Aspecialthankstothefollowingpeopleandorganizationswhovolunteeredtheirtimetocontributetothisdocumentandthecontributingcasestudies:ChrisDunfordandBobbiGray,FreedomFromHunger;GaamaaHishigsuren,IDEAS;SarahWard,AmericanRefugeeCommittee;CraigChurchill,ILO;Adam Sorensen, The Small Enterprise Foundation; Carrie Keju,AdamSorensen,TheSmallEnterpriseFoundation;CarrieKeju,PACT;LaurenHendricks,CARE;JayBanjade,SavetheChildren.
Principal Authors
JanMaes,IndependentConsultant,FriendofSEEPLauraFoose,AlternativeCreditTechnologies
Contributing Author
GaamaaHishigsuren,IDEAS(InstituteforDevelopment,Evaluation,Assistance,andSolutions)
Editor
KristinHunter
Contact
Foradditionalinformationortoorderadditionalcopies,contactTheSEEPNetwork.1825ConnecticutAvenue,NWWashington,DC20009-5721USATel:202.884.8808Fax:202.884.8479E-mail:seep@seepnetwork.orgwww.seepnetwork.org
About SEEP
SEEPisaninternationalnetworkofover70organizationscommittedtoreducingpovertythroughmicrofinanceandenterprisedevelopment.SEEPmembersareactiveinover140countriesandreachover25millionmicroentrepreneursandtheirfami-lies.SEEPpromotesprofessionalstandardsofpracticeinmicrofinanceandenterprisedevelopment,conductscapacitybuildingactivitiesforitsmembersandotherpractitioners,createsanddisseminatespublicationsforapplicationinthefield,andservesasacenterforcollaborationonabroadrangeofsector-relatedissues.
–DanadeKanter,ExecutiveDirector
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