#tbt: What Happens When You Measure Your Clients’ Poverty Levels

Microfinance clients in the Philippines (December 31, 1997, to December 31, 2012). Check this out in the 2014 Report.

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The 2014 State of the Campaign Report features various actors in the microfinance sector that are taking steps to helping their clients lift themselves out of poverty. In this interview with Julie Peachey (director of social performance management at the Grameen Foundation), learn about how the Progress out of Poverty Index® (PPI®) can help organizations better target the poorest. Peachey provides examples of PPI usage as well as recommendations on how to best make use of the results provided by the tool. Below is a summary of the key points from the interview.

Julie Peachey, Director of Social Performance, Grameen Foundation

Julie Peachey, Director of Social Performance, Grameen Foundation

The Grameen Foundation developed the Progress out of Poverty Index (PPI) because they noticed that microfinance institutions were failing to meet poverty outreach targets, and, worse, there really wasn’t a good way to determine how poor clients actually were.

The PPI is a ten question survey based on a household’s income and expenditures, and it is available for 50 countries. The PPI allows an organization to measure in absolute terms how poor a client’s household is by calculating the likelihood that they are living below one of several poverty lines. Further, the PPI can be used by any organization that has a social mission to serve and reach the poorest.

The PPI can be used for:

  1. Targeting the very poor (those living on less than $1.25 a day) to make sure that they aren’t being excluded.
  2. Product design to make sure that poorer clients aren’t being excluded from the organization’s services based on the way their products are designed.
  3. Tracking progress over time to see if the client is becoming better off and moving out of poverty.

Generally speaking, Grameen Foundation has found that organizations that start using the PPI find that their clients are not as poor as the organizations thought and, as a result, that they aren’t actually reaching the very poor.

For example, at CARD Bank in the Philippines, the Grameen Foundation used the PPI to survey the poverty level of clients receiving a new product in order to determine what CARD needed to do to make the product viable. When they saw the product was not taking off as expected, they lowered the price and then experienced a great increase in clients opening up a new account. They then looked at the PPI score before and after the prices were lowered.

Before the change, approximately 27% of clients who opened an account were below the $2.50 a day line; after the price was lowered, CARD saw an increase in the number of clients opening an account as well as a 7-8% increase in the number of clients opening accounts that were below the $2.50 a day line. The conclusion is that lowering the price of the product made it more feasible to the poorer population.

Organizations are also able to use the PPI to calculate the percentage of very poor households in a given area they are serving. The Grameen Foundation conducted a series of “poverty outreach reports” that looked at “concentration, penetration, and scale, which allows an organization to really look more deeply into what the overall total percentage of poor people that are [being] served ideally to be able to see the progress over time.”

Relevant resources

Accessible and affordable microinsurance with Afua Donkor

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We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in Resilience: The State of the Microcredit Summit Campaign Report, 2014. Afua Boahemaa Donkor, executive director of Star Microinsurance in Ghana, explains how they have developed microinsurance products that are simple and affordable for the poor.

>>Authored by Ana Hecton, former intern, and Sabina Rogers, Communications and Relationships Manager

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You can read a transcript of her interview here.
Read the full report here.

The 2014 State of the Campaign Report features various actors in the microfinance sector that are taking steps to help their clients lift themselves out of poverty. In this interview Afua Boahemaa Donkor, executive director of Star Microinsurance in Ghana, talks to DSK Rao from the Microcredit Summit Campaign about how microinsurance works and how it can benefit the poorest. Ms. Donkor also discusses the challenges in providing coverage for the poorest.

Star Microinsurance in Ghana started in 2008 as a specialized microinsurance subsidiary of the Star Insurance Group. Star Microinsurance works to design microinsurance products, looks for distribution channels, and provides the back office administration of the products.

“Microinsurance is supposed to be suave. When I say that, it means that it has to be simple, accessible, understandable, fundable, and efficient.”

— Afua Boahemaa Donkor

Star Microinsurance aims to make their insurance accessible to all people, those living in the city and those living in remote areas. The microinsurance products that are offered by Star Microinsurance are “made very simple, the premiums are set to be very cheap, affordable, so that the informal person, in the rural sector, can afford to have insurance products.”

Star Microinsurance collaborates with rural banks, MFIs, and post offices where the product is located. The rural banks and post offices are spread all throughout Ghana, therefore being highly accessible to all people no matter their location.

The challenges that face microinsurance

When talking about microinsurance and selling it to those living in poverty, Ms. Donkor says that it is hard for people to grasp the concept that they are paying for a possibility that may or may not occur. For those living in extreme poverty, possibilities of the future or what could happen is not a high priority. The demand is for what they need right here, right now. Thus, trying to sell microinsurance to people whose concern is focused solely on getting through that day is very difficult. In fact, “insurance in general is a very difficult thing to sell whether to an educated person or an uneducated person because it is an intangible good we are selling.”

What we know of the impact of microinsurance

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A systematic review of the impact of microinsurance (2013) produced by the ILO’s Microinsurance Innovation Facility. Source: http://www.impactinsurance.org/emerging-insights/ei76

New Report on Integrated Health and Microfinance in India Shows the Way Forward


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Ian Radcliffe Discusses “Using Technology to Make Savings Accessible for People in Poverty”

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SOCR 2014_front-cover_EN_270x348

Read the report today!

The 2014 State of the Campaign Report features various actors in the microfinance sector that are taking steps towards helping their clients lift themselves out of poverty.

In this interview with Ian Radcliffe, director of World Savings Banks Institute, talks to DSK Rao from the Microcredit Summit Campaign about how the poor can benefit from technology. Ian also talks about how MFIs can benefit from advances in technology to serve the needs of poor people living in remote areas. Below is a summary of the key points from the interview. 

World Savings Bank Institute (WSBI)The World Savings Bank Institute (WSBI) is a trade association that represents the interests of savings and retail banks in 90 countries around the world. The types of member banks range from very large banks, such as Wells Fargo, to very small banks in rural areas in developing countries. WSBI focuses on institutional relations, business platform, and training and consultancy.

The poor have been saving for decades if not centuries. They’ve been doing it through local savings cooperatives, and savings clubs, and things like that. In fact, the poor are, in some ways, probably more sophisticated in financial dealings than people from wealthier countries because they’re forced to by their need. They’re quite creative and I think this has really come out with some of the diaries works that has been done in many countries.
— Ian Radcliffe

Using technology to promote savings among the poor:

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Ian Radcliffe speaking at the 2013 Summit.

Member banks of WSBI in developing countries have been gravitating more towards using technology, simply because it is becoming more accessible and part of the global trend. With more research and technology available, WSBI’s member banks have been able to find that countries that are truly living in poverty with people living below a $1 a day can only afford to put in about 60 cents a month in terms of bank charges. This means that to be able to afford banking services, people living in poverty need low prices. Through technology is how banks are able to get the outreach beyond urban areas but also into rural areas in a way that is feasible.

The WSBI has done studies to see how populations cluster and where people gather. For example, in East Africa there are dense populations in Kampala and other urban cities, but in Southwest Africa populations become more loosely spread in rural areas. WSBI conducted research to see how far people are actually willing to walk to deposit money. In their research WSBI found that the maximum distance that people will walk is about 2 km. They found that there were not many agents in the 2km radius that people are able to get to easily. However, their research also found that when people started to receive money through mobile phones people were willing to walk more to receive that money. Therefore, in Kenya, because of the way people cluster there, mobile networks are able to reach about 85% of the population, including those living in remote areas, compared to without mobile networks banking services only reached 60% of the population.

Check out the “Going Digital” infographic to see this concept visualized.

Register for the 17th Microcredit Summit today!

Join us in Mexico for the 17th Microcredit Summit this September 3-5 where savings will take an important place in the agenda.

The future of technology and mobile phones:

Radcliffe believes that we are just at the beginning of the next stage of mobile banking. First, he pictures mobile banking going to scale. He says that the sector is still in the process of raising awareness that one can actually price aggressively low to make it affordable and feasible for poor people and one can actually make more revenue by doing so.  Mobile technology is giving the sector the opportunity to go to scale and have a strong outreach. Radcliffe foresees having a central bank in the urban areas which then partners with MFIs in the more rural areas which then has their networks with agents and mobile networks, forming a sort of ecosystem. This will allow the sector to have a better and stronger outreach.

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How Microfinance Can Contribute to the End of Extreme Poverty

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The State of the Microcredit Summit Campaign Reportreleased annually by the Microcredit Summit Campaign, highlights the latest data on the progress towards reaching more than 175 million of the poorest families with microfinance. This week the Gateway interviews director Larry Reed regarding findings from the recently released 2014 report, Resilience. 

The following interview was published today on the Gateway. Thank you to the Portal de Microfinanzas for translating this interview into Spanish.

Gateway: The theme for this year’s Report is Resilience. Where did that theme come from?

Larry Reed: I visited the Phillippines in January to see how the microfinance community was coping with the mass destruction caused by Typhoon Yolanda which struck last October. Only 75 days after the typhoon hit, I attended a CARD Center meeting in Tacloban and found the people there rebuilding their homes and businesses, re-stocking their store inventories, selling to and buying from their neighbors, and sharing what little they have with those still in need. The people of Tacloban have shown amazing resilience in the face of unimaginable losses. I was amazed by the energy and hopefulness of people who had lost almost everything in the storm, and the role played by MFIs like CARD to provide food, medicine, insurance payments, and other financial services immediately after the storm. During the Center meeting, the CARD staff discussed a “calamity loan” they were offering to help clients rebuild and start over. The women asked lots of questions about the loan and its terms, finally deciding that it could be helpful. They only requested one change. “We think you should call it a rebuilding loan rather than a calamity loan,” they told the accounts officer. “We don’t want to be treated like victims.” With the help of NGOs, MFIs, and their community, they have found the strength to get back on their feet and start over.

Gateway: The Microcredit Summit Campaign collects data every year for the number of microfinance borrowers worldwide and the number of those that are among the poorest in their countries. Last year, the numbers showed a decrease for the first time, largely due to millions of loans written off in Andhra Pradesh, India. What did the numbers show this year?


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LR: Overall, the numbers show a rebound almost equal to the amount of the losses of clients last year, with total clients worldwide reaching 204 million. On the other hand, the total number of poorest clients (those living on less than $1.25 a day) continued to fall, from 124 million to 116 million.

Gateway: Interesting. Does that mean that microfinance is moving away from serving those living in extreme poverty?

LR: That’s what we wondered when we first looked at the numbers too. We followed up with a number of MFIs to learn more about these reductions. We found that most of the decline can be explained by MFIs making increased use in recent years of poverty measurement tools like the Progress out of Poverty Index™ (PPI™) or the Poverty Assessment Tool (PAT) in which they often found that they were overestimating their poverty outreach.


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In the long run, we believe that increased use of these tools will lead to more people in extreme poverty being reached with products and services that better meet their needs. We’ve already seen this start to happen in the Philippines, where 10 of the largest MFIs began using the PPI at the same time. The graph below shows a decline in numbers of the poorest being reached in 2011, as the reports from the PPI showed they were reaching fewer of the poorest than they had previously estimated. This led these MFIs to begin looking at what prevented people living in extreme poverty from becoming clients and to developing policies, systems, and services that could include the poorest. As a result, the numbers of poorest clients started going up again in 2012.

Gateway: Through the Microcredit Summit Campaign, the industry set a goal of helping 100 million families move themselves out of extreme poverty. With these numbers, do you think it will be possible to reach that goal?

LR: We can reach that goal but only if we expand the use of the products, services, and partnerships that reach those in extreme poverty and that facilitate their movement out of poverty. In the report we highlight some of these strategies, including:

  • Providing health education, financing, and products through the existing channels for delivering microfinance.
  • Building agricultural value chains that reach small scale producers in rural areas.
  • Using digital cash and banking agents to deliver financial services at much lower costs.
  • Combining conditional cash transfers with ultra-poor graduation programs to provide pathways out of poverty for massive numbers of people.

Through Campaign Commitments, we are building a broad coalition to advance the movement within the financial inclusion and microfinance sectors to help bring and end to extreme poverty. Since October 2013, 27 organizations, including 14 MFIs, have launched a Commitment. These Commitments will help to foster gender equality, disseminate new research on what works best for those in extreme poverty, increase access to both financial and non-financial services for a variety of client groups, and launch or grow programs providing financial education. We look forward to reaching a total of 50 Campaign Commitments by the Summit this September. LOGO_SUMMIT_English_vertical

Gateway: What can we expect to see at this year’s Summit, taking place in Mexico from September 3-5?

LR: The agenda for the 17th Microcredit Summit will be driven by the theme Generation Next: Innovations in Microfinance, which is premised on the idea that the next generation could be the first to grow up without knowing extreme poverty. We can help make this happen by providing a range of tools and services to help people living in poverty address vulnerabilities, build resilience, develop capabilities, and take advantage of opportunities. The plenaries are being designed to touch on tangible ways to end extreme poverty. These plenaries include “The Next Generation of Leaders,” “Making Markets Safe for the Vulnerable,” “Ending Extreme Poverty,” Building Pathways out of Poverty,” and “Reaching the Excluded.” Speakers will include Muhammad Yunus, Glynis Rankin, Mariella Greco, Yves Moury, Mercedes de Canalda, and Shameran Abed. Participants have designed many of the workshops, which helps us ensure that they address issues practitioners are facing in the field. The Summit will highlight the innovative work of financial inclusion and microfinace to reach those living in extreme poverty and facilitate their movement out of poverty.

Join the discussion and make global partnerships by attending the 17th Microcredit Summit! Register today for the 17th Microcredit Summit in Merida, Mexico, this September 3-5! Find out what’s on the agenda:

  1. Field visits on September 1st and 2nd (pre-Summit)
  2. PRONAFIM’s 13th National Microfinance Conference on September 3rd (pre-Summit)
  3. Plenary sessions and workshops on September 3rd to 5th
  4. Summit Trainings on September 6th (post-Summit)

Be social with us on Facebook and Twitter (@MicroCredSummit) using the hashtag #17MCSummit.

Microcredit Summit Campaign and Mexico’s Ministry of Economy Sign Agreement to Co-host the 17th Microcredit Summit; Registration Now Open


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Lea en español (traducido por Google) *** Lisez en français (traduit par Google) Registration is now open for the 17th Microcredit Summit, a microfinance conference being held in Mexico this September 3-5. Leaders from the Microcredit Summit Campaign and the … Continue reading

UN’s Food and Agriculture Organization announces a Campaign Commitment


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The Microcredit Summit Campaign welcomes the Food and Agriculture Organization (FAO), the UN specialized agency for agricultural development, as the newest Campaign Commitment member, joining a global coalition of organizations committed to specific, measurable, and time-bound actions to advance the Campaign’s goal of helping 100 million families lift themselves out of poverty. Their Commitment to disseminate research that enables inclusive agricultural investments to their 143 countries will ensure more inclusive agricultural investments. Read the full Press Release.

The United Nations specialized agency for agricultural development, the Food and Agriculture Organization (FAO) aims to achieve food security for all and to provide high-quality food so that all people may live active and healthy lives. FAO strives to eradicate food insecurity and malnutrition, eliminate poverty by working towards economic and social progress, and promote the sustainable use of natural resources. The Microcredit Summit Campaign is proud to announce its newest Commitment: FAO to disseminate research that enables inclusive agricultural investments.
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Empowering women through the Gender Performance Indicators


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The Microcredit Summit Campaign welcomes Women’s World Banking as the newest Campaign Commitment member, joining a global coalition to help 100 million families lift themselves out of poverty. Their Commitment will ensure that their member microfinance institutions are practicing gender-inclusive policies to facilitate low-income women’s economic empowerment. Read the full Press Release.

WWB_Horizontal_RGBWomen’s World Banking works to improve the lives of low-income women by providing credit, savings, and insurance products to their clients. Women’s World Banking works with microfinance institutions around the world to design services specifically geared towards women. The Microcredit Summit Campaign is proud to announce its newest Commitment: Women’s World Banking to roll out their new Gender Performance Indicators to all of its network members by the end of 2015.

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