Mifos and DreamStart team up on Commitment – And they’re looking for a partner!

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Mifos + DreamStart logos
Join the Mifos Initiative and DreamStart Labs in a new, bold, and momentous initiative. They are collaborating on a joint Campaign Commitment that embodies the spirit of the 100 Million Project with its measurable approach and global outreach for the financial inclusion of the world’s extreme poor.

These two Commitment Makers will begin by providing a sample of savings groups from various countries with software to manage their financial records. Working in the lean startup method of “build-measure-learn,” they will adjust and fine-tune their software to meet the needs of the extreme poor. Not only will the software empower families and communities to become part of the formal financial services system, but more importantly, it will provide crucial data that will improve product design and the lives of the families who receive them.

BECOME PART OF THIS INITIATIVE. Mifos and DreamStart are looking for a partner to roll out this platform. The ideal partner for this project will be a highly motivated, committed organization with a global network of saving groups. The Mifos Initiative and DreamStart Labs hope to welcome this partner by the end of the month and announce this exciting new Commitment at the 18th Microcredit Summit in Abu Dhabi this March 14-17.

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Does anti-poverty work actually … work?

Photo credit: Giorgia Bonaga & Shamimur Rahman

Photo credit: Giorgia Bonaga & Shamimur Rahman

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The following blog post is re-posted with permission. Read the original article on Next Billion, “NexThought Monday – Does Anti-Poverty Work Actually … Work?: Three questions every ‘pro-poor’ group needs to ask themselves.”


>>Authored by Chris Dunford and Carmen Velasco

This month, the United Nations will celebrate achievement of Millennium Development Goal No. 1. The number of people living in extreme poverty has fallen by more than half, from 1.9 billion in 1990 to 836 million in 2015. How did this happen? Is it because of targeted anti-poverty programs, or is it due to broad-based economic growth, especially in China and India? If economic growth is the main cause, as it seems to be, further progress may be doubtful. Economic growth alone is unlikely to reach the residual hundreds of millions still living in extreme poverty.

Nor is it likely that anti-poverty programs, whether public or private, will lift this “bottom billion” from extreme poverty. For example, the U.S. poverty rate hovers around 15 percent of the population, nearly unchanged for decades, despite the hundreds of billions of dollars spent on U.S. anti-poverty programs. For another example, in poorer countries, microfinance was billed as a self-financing solution to deep poverty and became a darling of international development donors in the 1990s and “social investors” in the 2000s. Then smart social scientists tested the claims with sound field research and found little to no impact on poverty.

Is it reasonable, however, to expect anti-poverty programs, by themselves, to lift large numbers of people above an arbitrary poverty line? Given that the poor must overcome many burdens before they can seize whatever economic opportunities are available, perhaps we should ask a different question:

Do anti-poverty programs ease the burdens of poverty?

While the recent research into microfinance shows little to no increase of annual household income, on average, the same studies very often show that the burden of poverty is alleviated by giving microfinance participants access to money when they really need it during the year. Economists call this impact “consumption smoothing.” In plain terms, it means people get enough to eat throughout the year instead of going without adequate food for a day, a week, or even months at a time. If so, this is an impact worth celebrating, is it not?

Even with this more modest and realistic expectation, some anti-poverty programs are effective and some are not. We know this from our collective experience in anti-poverty work, with more than 70 years between us. We know the challenge is to distinguish what works from what does not. It is better to seek out “pro-poor” rather than “effective” anti-poverty work, because there are gradations of effectiveness. All programs have room to improve. “Pro-poor” programs actually strive to improve toward greater effectiveness. Transparency and accountability are not just about separating wheat from chaff; they are about improving.

How can we fully distinguish pro-poor programs from those that are not?

In a volunteer initiative called Truelift, leading thinkers of the “social performance” movement in microfinance (seeking social as well as financial return on investment) have hit upon a truth that applies to all anti-poverty work: Truly pro-poor programs provide the right answer to each of three straightforward questions.

First: Does the program work with people living in poverty?

Straightforward indeed! But how do you know a person living in poverty when you see one? More important: How does a program know them, recruit them, include them and keep others who are not poor from co-opting what the program offers?

Too many anti-poverty programs cannot answer this question. Regardless of legitimate reasons, these programs are flying blind in their poverty outreach and, therefore, their potential to impact poverty. “Blind” programs may be “wasting” precious resources on the “wrong” people — even though much good may be done. Such programs are not entitled to the “pro-poor” label — they need a different justification. Or, they can get serious about knowing the poverty status of the people they work with.

Second: Does the program design and adapt its services specifically for people living in poverty?

The staff of a pro-poor program changes and adapts the services and products they offer — intentionally and systematically, always listening carefully to people living in poverty and being clear about the benefits the program seeks to provide them. It is basic good business practice — know your customers, listen to them, design for them, satisfy them.

The Réseau des Caisses Populaires in Burkina Faso (RCPB) discovered while providing savings and credit services to groups of rural women that they wanted information about how to prevent and treat malaria, a disease that kills children and robs adults of far too many productive work days. At left, an RCPB animatrice (field agent) shows a women’s group how to understand the symbols on a take-home card that shows illiterate people how malaria is prevented and treated. (Image credit: Karl Grobl for Freedom from Hunger)

Third: Does the program track the progress of the people using its services?

It is not enough to reach out to people living in poverty and to design and adapt services to suit their needs and constraints. We must have some evidence that our work is helping them move in the right direction, even if not all the way to the intended destination. This is not just to show that our work is worthy of the money spent, but also to know how to improve our work. We need “real time” information about change in clients’ lives.

We operate programs in a world where sophisticated research into cause and effect is rare and likely to remain so. Logic, experience and some evidence indicates that programs providing the “right” answer to each of the three Truelift questions are likely to show positive impacts on people living in poverty, if and when sophisticated impact research is done.

It is not too difficult for managers, donors, investors, regulators and business leaders to ask these three questions and know when they get good answers. We can know a pro-poor program when we see one — and act to support it.

Truelift_RGBChris Dunford and Carmen Velasco are co-chairs of the Truelift Steering Committee.


Read the full article on Next Billion.

Learn more about Truelift.

#tbt: Clients Continue Movement above the US$1 a day Threshold

The study found that, on net, 1.8 million microcredit client households, including 9.43 million household members, crossed the $1.25 a day poverty threshold between 1990 and 2008.

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We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2011. We commissioned a study to estimate the net number of microcredit client households in Bangladesh that crossed the US$1.25 a day threshold between 1990 and 2008. You can download a copy of the study from our Resource Library as well.


Authored by Sajjad Zohir, the director of the Economic Research Group; he is based in Bangladesh.

The Microcredit Summit Campaign is committed to using microfinance to powerfully contribute to the end of poverty. Its decade-long focus on client poverty measurement and progress out of poverty underscores this commitment. To this end, the Campaign continues to track progress towards its second goal to ensure that, from a starting point in 1990, 100 million of the world’s poorest families move from below US$1 a day adjusted for purchasing power parity (PPP) to above US$1 a day adjusted for PPP by 2015.

Evidence from Bangladesh

Findings from a nationwide study in Bangladesh commissioned by the Campaign shows promising results. The study, undertaken by the Bangladesh-based Economic Research Group, was administered between February and August 2009. Researchers surveyed a nationally representative sample of 4,000 Bangladeshi microcredit clients and estimated the net number of households in Bangladesh that crossed the US$1.25 a day threshold between 1990 and 2008.[1]

The study found that, on net, 1.8 million microcredit client households, including 9.43 million household members, crossed the $1.25 a day poverty threshold between 1990 and 2008. A second key issue raised in the report, seen in Figure 1 below, was that in some years a large percentage of clients left poverty, whereas, in years coinciding with the 1998 floods and the food crisis of 2008, many households, including some who where non-poor when they joined the microcredit program, slide below the $1.25 threshold.

Figure 1: Percentage of Client Households, on Net, Crossing the US$1.25 Threshold in Bangladesh

Figure 1: Percentage of Client Households, on Net, Crossing the US$1.25 Threshold in Bangladesh
Data showed that among those taking their first microcredit loan between 1990 and 2008, the following poorest client households crossed the US$1.25 threshold:

1990-1993 8.94%
1994-1997 19.83%
1998-2002 0.33%
2003-2008 1.84%

It is important to note that the findings in this report were significantly influenced by the period in which the data was collected. In 1998 Bangladesh suffered from what are often described as the most severe floods ever to hit the country. In 2008, a food crisis coupled with political instability in Bangladesh and the global economic crisis led to a general slack in economic activities. All these factors may have led to the depletion of assets that are commonly chosen as proxies to measure poverty status among the very poor in Bangladesh. This in turn may have led to under-estimation of the number of microcredit client households that may have otherwise crossed the threshold.


Footnote

[1] This study made no attempt to establish causality between microcredit and poverty alleviation. Instead, it simply estimates the change in status of microcredit client households between 1990 and 2008, when compared with their status during the time of the first loan received by any member of the household.


Related reading

Post-MDG 1: Focusing the lens on those still in extreme poverty

Millennium Development Goals: 2015 Progress Chart
Published articles to date: Introduction | MDG 1 | MDG 2 | MDG 3 | MDG 4

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The United Nations recently issued The Millennium Development Goals Report 2015, the latest assessment of progress towards the eight MDGs. In short, they have had mixed results. This article is part of a blog series reflecting on the MDGs and the U.N. report. These are produced in partnership with our colleagues at RESULTS (our parent organization).


>>Authored by Sabina Rogers and Maeve McHugh with support from Anushree Shiroor from RESULTS UK

MDG 1: Eradicate extreme poverty and hunger

graph_MDG1

From The Millennium Development Goals Report, 2015

The overall number of people living in poverty in developing countries fell by more than half since 1990. The rate dropped to 14 percent in 2015 and the absolute number to 836 million people. There has also been significant progress made towards curbing hunger worldwide.

Target 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day

Looking at the regional distribution of data, poverty reduction was concentrated in eastern and southern Asia thanks to immense poverty reduction measures in China and India. Progress is less apparent in other regions. In sub-Saharan Africa, 40 percent of the population still live in extreme poverty, and in western Asia, extreme poverty is actually expected to increase between 2011 and 2015.

The mix of progress and failure provides some guidance to the Sustainable Development Goals (SDGs). Namely, they must continue the campaign around eradicating extreme poverty while also confronting challenges that hinder progress in the regions that have seen marginal improvement.

While the world met its goal of halving the proportion of people living in extreme poverty, we must now look with a narrower lens at those remaining in extreme poverty. We must ask what changes must be made to the policies that did not succeed.

Full and productive employment

Target 1.B: Achieve full and productive employment and decent work for all, including women and young people

From The Millennium Development Goals Report, 2015

From The Millennium Development Goals Report, 2015

This target faced various challenges. First, the global labor force grew, and continues to grow, faster than employment opportunities. The global working-age population that is employed actually declined 2 percent between 1991 and 2015. (The 2008-09 global economic crisis certainly didn’t help.)

Youth (15-24 years) are especially affected by unemployment, with three times as many unemployed than adults. Young women are especially affected by unemployment and have few employment opportunities. They face unequal access to work as well as unequal pay, inadequate social protection, and unsatisfactory access to assets. These factors all contribute to women’s overall greater vulnerability of living in poverty.

Additionally, the situation is precarious for both those living just above the $1.25 a day line and those working in vulnerable employment conditions (i.e., unpaid family workers and own-account workers). Half of the developing regions’ workforce live on less than $4 a day, necessitating improvements in social protection programs and policies that see beyond extreme poverty. We need to take into account what comes after.

Halving hunger

Target 1.C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger

From The Millennium Development Goals Report, 2015

From The Millennium Development Goals Report, 2015

Progress has alternated between slow and rapid declines in the proportion of undernourished people since 1990. Current estimates indicate that approximately 795 million people are undernourished globally, and for the developing regions, the proportion of undernourished people is projected to drop to 12.9 percent, or 780 million, in 2014-2016.

The vast majority of undernourished people live in developing regions. They experience various risks of food insecurity, namely natural disasters, volatile commodity prices, rising food and energy costs, and periods of economic stagnation, among other difficulties.

Addressing child health, specifically, is an important challenge to tackle in order to end hunger. While the proportion of underweight children under the age of five has been halved, the absolute numbers are still high at 90 million. Furthermore, sub-Saharan Africa and Southern Asia are home to nearly 90 percent of all underweight children.

Looking Forward

SDG 1The world has made immense progress in improving the lives of millions of people since 1990. While MDG 1 can be called a qualified success, the targets must remain a linchpin in the post-2015 agenda. Sustainable Development Goal (SDG) 1 is to “End poverty in all its forms everywhere.” However, the SDGs, which are to be approved at the U.N. General Assembly next month, need to address the shortfalls in reaching the MDGs within regions and the individual factors that combine to cause people to slide back into poverty.

SDG 2SDG 2 proposes to “End hunger, achieve food security and improved nutrition and promote sustainable agriculture.” While the MDGs considered only one aspect of undernutrition in children (i.e., underweight), we now have a better understanding of other forms. We know that stunting, wasting, micronutrient deficiencies, as well as overweight and obesity are all important factors to track. These indicators in the SDGs are more reliable than “underweight” alone in predicting growth, development, and well-being of children.

The World Health Assembly (WHA) has also set targets to reduce multiple forms of malnutrition by 2025. If we want the world to commit resources and take action to meet these targets, indicators must be built into the proposed SDGs to track these multiple forms of malnutrition the WHA is seeking to address.

However, early signs point to the inclusion of merely one or two undernutrition indicators as was the case with the MDGs. This will lead to a very limited body of data with which to understand progress in achieving SDG 2 and an inadequate basis on which to measure and predict children’s growth, development, and well-being. Indicators on reducing stunting, wasting, anemia, and overweight that come under SDG 2 as well as promotion of exclusive breastfeeding during the first six months of infancy within SDG 3 will give a much more accurate picture of actions being taken, and progress made.

Looking beyond 2015 and the MDGs, it is clear that microfinance has a role to play in supporting achievement of the SDGs. It can be a tool to generate sustainable growth and ultimately create self-sufficiency for poor and vulnerable households.

When proper targeting is employed…

When integrated with important non-financial services like health…

When coupled with government programs like conditional cash transfers…

When the business model measures “success” in terms of their client’s well-being…

When these measures are taken, then microfinance institutions can work directly with individuals living in the very conditions the SDGs are aiming to address. Those living in extreme poverty or fighting hunger can use microfinance as a tool to mitigate the risks they face and seize opportunities to build lasting and positive change in their lives.

#tbt: Lobbying the World Bank, Part II

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“We measure what we value and we value what we measure. It is clear that donor agencies value strong financial performance because they require their clients to measure their financial performance precisely. Except for USAID, other donors still do not demonstrate a similar value on measuring the poverty level of entering clients.”
Read the entire 2004 State of the Campaign Report.

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We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2004. The RESULTS International Conference is this weekend (July 18-21), and grassroots activists from the U.S. and around the world will be in D.C. to lobby the USAID Administrator and World Bank Directors. In reviewing advocacy fights in the early 2000s, we remember our campaign to push the World Bank to mandate the use of poverty measurement tools by their partners.


In this introduction to the State of the Microcredit Summit Campaign Report, rather than presenting a neat, uncontested picture of the field of microcredit seen solely from the Campaign’s perspective, we think it useful to listen to the challenges and opposition to what the Campaign and these parliamentarians have championed, coming as it does from some of the most influential institutions in development. In the pages that follow, we invite you to listen in on debates that contrast the views of the World Bank and CGAP with those of industry leaders like BRAC founder Fazle Abed, Grameen Bank founder Muhammad Yunus, and the Microcredit Summit Campaign. What follows are excerpts from the World Bank and CGAP’s responses to the 700 parliamentarians, along with reactions from the Microcredit Summit Campaign.

In his response to 188 British Parliamentarians, World Bank President James Wolfensohn wrote, “I very much agree with your observation that microfinance has a demonstrated, powerful impact in improving the livelihood of the poor, and a crucial role in reducing poverty. Access to financial services for the poor is a critical condition for the attainment of the Millennium Development Goals.”…This show of support is important, but the words must be followed by more effective action.

Wolfensohn asked officials from the World Bank and the Consultative Group to Assist the Poor (CGAP), to jointly address the detailed issues raised in the parliamentarians’ letter…

Continuing from Part I

WB/CGAP: We of course agree that conventional microfinance does not automatically push itself deeper to reach poorer clients. In fact, many MFls do move away from poorer clients to those who are better-off, under the assumption that better-off clients pose lower risks and the larger loans they would be taking would increase institutional profitability and sustainability. We believe, therefore, that there needs to be a sustained effort at trying to reach poorer people. This needs to come from understanding client needs and developing products and services that are useful to them. It needs to come from developing better targeting tools and identifying, encouraging and funding innovations that enable sustainable financial services to the very poor. It needs to come from greater transparency so that information is made available on whether institutions are actually reaching very poor clients. What is required is a set of incentives that promote such activities and ongoing demonstration [that] financial services to the very poor is a feasible and sustainable business.

Download the full 2011 State of the Campaign Report in our Resource Library

Download the full 2011 State of the Campaign Report in our Resource Library

MCS: What greater incentive is there for promoting outreach to those below $1 a day than for an MFI to know that the World Bank and other donors want them to use a cost-effective poverty measurement tool? Wouldn’t this give us “greater transparency so that information is made available on whether institutions are actually reaching very poor clients?”

Advocacy efforts to ensure that donor efforts in microfinance reached the very poor began in 1986. There has never been a greater move to ensure that the very poor are reached than has occurred since the U.S. legislation became law in 2003. This change took 17 years and a Congressional mandate. With the Millennium Development Goals due in just 11 years, another decade of soft incentives is insufficient. Freedom from Hunger’s Chris Dunford argues that we measure what we value and that we value what we measure. It is clear that donor agencies value strong financial performance because they require their clients to measure their financial performance precisely. Except for USAID, other donors still do not demonstrate a similar value on measuring the poverty level of entering clients.

WB/CGAP: Many of the poorest people with no sources of income require grants, employment and other services, rather than microcredit. Donor support for developing models that “graduate” them from welfare-type safety net programs to where they have sufficient incomes to productively use financial services, is far more important than credit per se. Credit is, after all, debt, and under certain circumstances it can make the extremely poor more vulnerable, not less vulnerable.

MCS: “Donor support for developing models that ‘graduate’ them from welfare-type safety net programs to where they have sufficient incomes to productively use financial services” is important, but which donors are leading in this area and how extensive is that leadership? The impression is given that very poor families should not access microfinance but instead choose the services they need as if these services are readily available. This is a false choice for the very poor when 29,000 of the children of the poorest die each day from mostly preventable malnutrition and disease, when 104 million of their primary-school aged children are not in school, and when the services they desperately need are not likely to be available today or in the near future.

World Bank and CGAP officials say that “Credit is, after all, debt, and under certain circumstances it can make the extremely poor more vulnerable, not less vulnerable,” but it is the debt that they have taken on from unscrupulous moneylenders that mires hundreds of millions in a life of grinding poverty. As Karen L. McGuinness of Princeton University wrote in a letter for The New York Times, “The reality in most poor countries is that the poorest are already saddled with incredible debt at usurious rates from local moneylenders. This is the fundamental predicament that microfinance institutions have effectively addressed for nearly three decades now.”

WB/CGAP: We fully agree that there is a need for cost effective poverty measurement tools. Much greater transparency is required on whom financial institutions are reaching. CGAP has been very active in developing tools to encourage a deepening of microfinance outreach. It has developed a “Client Poverty Assessment Tool” and a “Poverty Audit of Microfinance Institutions’ Pro- Poor Services” for donors to determine whether their funded institutions do indeed try hard and succeed in working with the very poor. Recently, CGAP has also been working with financial institutions to assist them to develop their own simple and cost-effective poverty assessment tools.

MCS: While the work of CGAP is appreciated, it has not created the breakthrough in thinking and action that the new U.S. law has forged. Developing new tools can still be a far cry from ensuring their use. Even though CGAP’s Poverty Measurement Tool has been available for at least four years, not more than a handful of CGAP’s 29 members have ever used it. The slow pace of voluntary implementation is insufficient for ensuring the change necessary for cutting absolute poverty in half by 2015.

WB/CGAP: We are aware of the microfinance legislation passed in 2002 by the U.S. Congress. In fact, at the urging of its bilateral and multilateral donor members, CGAP launched a discussion on its website on whether the approach promoted by such legislation could be more broadly applicable to other donor agencies. A very active discussion followed and the result was that many senior members of the microfinance community were opposed to the extension of such mandates in other donor agencies. (The discussion submissions can be found on the internet under US Poverty Mandate Discussion at www.microfinancegateway.org.)

MCS: It is true that many senior members of the microfinance community were opposed. In fact, the first four statements posted were from CGAP Executive Committee members, all of whom were opposed to adoption of the new mandate by other aid agencies. On the other hand, the mandate had the support of Fazle Abed, Chairman of BRAC, Shafiqal Haque Choudhury, Managing Director of ASA, Muhammad Yunus, Managing Director of Grameen Bank, Chris Dunford, President of Freedom from Hunger, Anton Simanowitz, Director of ImpAct, Didier Thys, CEO of The MIX, Alex Counts, President of Grameen Foundation U.S.A., and other key players. These are the opinions from leaders of some of the largest and most successful poverty-focused microfinance institutions in the world.

Relevant reading

#tbt: A New Law and New Hope

#Tbt_5

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We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2004. The RESULTS International Conference is only three weeks away (July 18-21), and grassroots activists from the U.S. and around the world will be in D.C. to lobby the USAID Administrator and World Bank Directors. Therefore, in the weeks leading up to that great event, we’ll review advocacy successes and struggles in the early 2000s wherein we achieved breakthroughs in poverty measurement in order to target the extreme poor and other concessions from USAID and the World Bank.


The revolution in reaching the very poor is most evident in a new U.S. law and the resistance to it by some leaders in international development. The law, which was enacted in June 2003, calls for the U.S. Agency for International Development (USAID) to develop and certify two or more cost-effective poverty measurement tools that measure $1 a day poverty. The new tools are to replace loan size, which is currently used and has proven to be inadequate for poverty measurement. As Freedom from Hunger President Chris Dunford remarked, “The average loan size for entering clients tells you more about the institution making the loan than it does about the poverty level of the person receiving it.”

Download the full 2011 State of the Campaign Report in our Resource Library

Download the full 2004 State of the Campaign Report in our Resource Library

After the newly mandated tools are certified, institutions receiving microenterprise funds from USAID will be required to use one of them and report the number of entering clients who start below $1 a day. The law is an effort to bring accountability and transparency to the long-standing Congressional commitment to have at least half of USAID microenterprise funds benefit very poor clients. This new law, particularly if it is adopted by other aid-giving countries and institutions, would have a great impact on the Microcredit Summit’s commitment to reaching the very poor and provide tremendous support to the MDG focused on halving the number of families living below $1 a day by 2015.

While the new law demonstrates the revolution that is taking place in microfinance, efforts to expand the revolution have been met with resistance. This resistance comes from major development institutions that have been asked to adopt policies similar to the new U.S. law — The World Bank, the regional development banks, and the United Nations Development Program (UNDP).

In November 2003 more than 700 parliamentarians from the United States, the United Kingdom, Canada, Japan, Australia, India, and Mexico wrote to the heads of the World Bank, the Asian, African, and Inter-American Development Banks, and UNDP. The parliamentarians lauded the institutions’ commitment to achieving the Millennium Development Goals (MDGs) which they said are “crucial to building a safer and more equitable world — and will show our constituents that development programs are truly making a difference.”

The parliamentarians continue with a concern that:

…sustainable microfinance for the very poor has not received sufficient priority in your policies and practice aimed at cutting absolute poverty in half by 2015, the most crucial — and most difficult — of the MDGs. As important as it is to support well-designed health, education, and good governance programs, these interventions alone will not ensure that some 600 million people move out of poverty.

The parliamentarians ask the heads of these powerful institutions for the following:

  • Increased funding for microenterprise: We urge you to make substantial increases in the proportion of your institutions’ lending and grants that go to microenterprise and actually reach clients. For example, the World Bank estimates that an average of $168 million in funding, less than one percent of Bank resources approved annually, is approved each year for microenterprise. We believe resources devoted to microenterprise should at least be doubled (emphasis added).
  • At least 50 percent of funds reaching the poorest: By December 31, 2004, we would like to see your institutions make the commitment to having at least 50 percent of your microfinance funds reach clients who are below US$1 a day when they start with a program.
  • Use of cost-effective poverty measurement tools to ensure meeting the target: By December 31, 2005, the microenterprise institutions should be required to use cost-effective poverty measurement tools that can determine which families start below US$1 a day and use the same or similar tools to show which families have moved above US$1 a day.
  • Annual reporting of results: By December 31, 2006, we would urge your institutions to report, on an annual basis, the amount of funds provided for microenterprise and the percentage of those funds that reach families who begin with a program at below US$1 a day.

In their letter, the parliamentarians discuss the new U.S. law and say, “We believe your institutions should be a vital part of this process and urge you to adopt a similar procedure.”

Relevant resources

Ecuadorian Government commits to support entrepreneurs with disabilities

The Technical Secretariat provides financial inclusion support to entrepreneurial projects led by persons with disabilities. Says Alex Camacho Vásconez, Technical Secretary, “This commitment will allow us to take part in an international movement that seeks to reduce extreme poverty all over the world.” Read the full press release.

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The Microcredit Summit Campaign welcomes the Government of Ecuador as the first government to make a Campaign Commitment, joining a global coalition of 54 partner organizations working to help 100 million families lift themselves out of extreme poverty.

The Technical Secretariat for the Inclusive Management on Disabilities (Secretaría Técnica de Discapacidades) of the Vice-presidency of the Republic of Ecuador is developing the “Productive & Financial Inclusion Model” through public-private partnerships. The model provides financial capacity building and training in support of enterprises run by persons with disabilities, and the Technical Secretariat has supported 257 enterprises to date. The Technical Secretariat commits to support 500 entrepreneurial projects led by persons with disabilities through the Productive & Financial Inclusion Network by December 31, 2015.

Furthermore, the Technical Secretariat understands the vital importance of measurement indicators to assess progress in meeting its objectives in serving persons with disabilities. It is currently working with partners to identify and assess the relative strengths of available poverty measurement and other indicators. The Technical Secretariat commits to implement a set of measurement indicators, including indicators to assess poverty levels, during the first half of 2015.

Alex Camacho Vásconez, explains why they have joined the Microcredit Summit Campaign and this global coalition:

“Our commitment to advise more than 500 entrepreneurs with disabilities in 2015 and to implement tools for the assessment of poverty levels of the members of this priority group directly supports the objectives of the 100 Million Project,” said Alex Camacho Vásconez, Technical Secretary. “The signature of this commitment will allow us to take part in an international movement that seeks to reduce extreme poverty all over the world. This strategic partnership with a global actor such as the Microcredit Summit Campaign is of great value as it constitutes a guarantee for the beneficiaries of the Productive Inclusion model and international recognition as a good practice for the global eradication of poverty.”

Read the Government of Ecuador’s Campaign Commitment letter.

The Microcredit Summit Campaign looks forward to welcoming our new partners to the global coalition and sharing their progress towards achievement of their Commitment at the 18th Microcredit Summit. The Campaign’s 100 Million Project is building a movement among financial service stakeholders committed to helping to end extreme poverty through: public statements of commitment to action, expanding practices to reliably measure movement out of extreme poverty, and promoting innovations and best practices to accelerate movement out of poverty.

The Technical Secretariat for the Inclusive Management on Disabilities was created in 2013 to coordinate the transfer of programs and projects from the Misión Solidaria Manuela Espejo to the guiding ministries; following Executive Directive No. 547, enacted January 14, 2015, this was transformed into the Technical Secretariat forthe Inclusive Management on Disabilities.

Among its roles are the coordination of  cross-sector implementation of public policy in matters concerning disabilities such as development and enactment of policy, plans, and programs to raise awareness about persons with disabilities within the initiative of Participatory and Productive Inclusion and Universal Access under the national program Ecuador Lives Inclusion (Programa Ecuador Vive la Inclusion).


We invite you to join the Government of Ecuador and…

Get Inspired. Set a Goal. Make a Commitment.

Join the movement to help 100 million families lift themselves out of extreme poverty:

#tbt: Top 10 Reasons That Fewer Loans Are Going to the Poorest

ddd

1. Myopic focus — For many years, the indicators used to measure microfinance performance have focused on numbers of clients and the sustainability or profitability of the institutions that reach them. These indicators tell us little about whether we are achieving the real aim of microfinance — helping people lift themselves out of poverty. Without tools to measure our ultimate ends, we satisfy ourselves by measuring our means instead.

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We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in Vulnerability: The State of the Microcredit Summit Campaign Report, 2013. For two years in a row, we have reported a decrease in the total number of extreme poor (those living on less than $1.25 a day) that had received a loan. Our “Top 10 Reasons” chapter in the 2013 Report are still very relevant.


What has caused a reduction in microfinance clients worldwide? And why have all of those reductions been from the poorest clients? Here are our top 10 reasons.

10. Andhra Pradesh crisis in India — Our reports show that India accounts for almost all of the reduction in clients worldwide. Most of these reductions come from Andhra Pradesh, where fast growth led to overlending, cases of harsh collection practices, and heavy regulation from the state government. Many MFIs and banks stopped lending to microfinance clients and self-help groups as a result.

9. Maturing markets — Some of the fastest growing markets in the world, including Bangladesh and parts of Latin America, have reached a point where a large proportion of the people most easily reached have become clients, and MFIs’ growth is slowing as they seek ways to lower costs and reach more remote and more difficult markets.

8. Global economic crisis — Microentrepreneurs and the financial institutions that serve them could not remain insulated from the worldwide economic crisis. Less economic activity in the developed world meant less tax revenue and greater focus on domestic spending by Western governments. It also led to a drop in donations to international charities. Remittance flows dwindled, which negatively affected economic activities in towns and villages dependent on income from family members in other countries.

7. Investor wariness — Banks and other investors in India and other countries curtailed their investments in microfinance, while international microfinance investment vehicles continued to invest almost three-quarters of their funds in Eastern Europe and Latin America, regions with less outreach to the poorest.[1]

Villager in Nangolkot, Noakhali, Bangladesh
Photo credit: Shamimur Rahman and Giorgia Bonaga

6. Donor fatigue — Many bilateral donors have reacted to growing commercialization and negative press by reducing their support for microfinance. This means less funding is coming in for groups that may need subsidies to build sustainable programs to reach poorer and more remote clients.

5. Herd mentality — MFIs find it easier to operate in locations where other MFIs have already developed the market. Investors find it easier to invest in MFIs where other investors have already done the due diligence. The result is a piling-on effect that eventually leads to bad debts and a retreat from the microfinance market.

4. Patchy information — Global reporting on microfinance activity (including our own in this report) shows data by country. This disguises the fact that, within a country, some locations may have more than enough microfinance services available while others have very little. Without accurate and timely maps that localize activity, it can be hard to see which markets are overheating until it is too late.

3. Better measurement — In the past few years, many MFIs have more widely adapted poverty measurement tools, such as the Progress out of Poverty Index®, Poverty Assessment Tool, and the Food Security Survey. The MFIs that employ these tools often find that the number of the poorest that they are serving is less than they originally estimated. This means that some of the reduction in numbers of the poorest being served reported to us is due to more accurate reporting on the number of poorest clients.

2. Misaligned incentives — he market provides few rewards to those MFIs that reach poorer and more remote clients because reaching these clients usually entails higher costs and smaller margins. Without ways of recognizing those that reach the poorest, MFIs will have few incentives to extend to this market and will find it difficult to attract funding to do so.

1. Myopic focus — For many years, the indicators used to measure microfinance performance have focused on numbers of clients and the sustainability or profitability of the institutions that reach them. These indicators tell us little about whether we are achieving the real aim of microfinance — helping people lift themselves out of poverty. Without tools to measure our ultimate ends, we satisfy ourselves by measuring our means instead.

Farmers (credit - Andrés Quinche)_comp

Photo credit: Andrés Quinche


[1] Symbiotics, 2012, “2012 Symbiotics MIV Survey: Market Data & Peer Group Analysis,” (Geneva, Switzerland: Symbiotics), http://bit.ly/MIV_survey.

Disability Inclusion, in Ecuador and Around the World: An Interview with Larry Reed

Larry_Sa-Dhan_2012

This following article was originally published on the Center for Financial Inclusion blog

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This article was originally published on the CFI blog.

>>Posted by Jeffrey Riecke, Communications Associate, Center for Financial Inclusion

Last month Larry Reed, director of the Microcredit Summit Campaign, attended the International Summit of Productive Inclusion in Guayaquil, a conference focused on financial inclusion for one of the world’s most underserved populations: persons with disabilities. The event was organized by Ecuador’s Office of the Vice President, whose leadership has been seminal in advancing disability inclusion in Ecuador and around the world. I caught up with Larry to learn more about the event and the Microcredit Summit Campaign’s efforts to support persons with disabilities living in extreme poverty.

To watch the session that Larry spoke in, click here and jump to around minute 49 (Larry speaks at minute 51); the session took place in Spanish.


1. The event included diverse stakeholders and topics related to financial inclusion for persons with disabilities. Did anything in particular stand out to you?

The first thing that impressed me was just how big it was. Over 2,000 people attended the event, and it was also live-streamed. The 2,000 people were not only a diverse group in terms of sector, but also in how they related to persons with disabilities. And the interesting thing was that about half the people in the audience were either people with disabilities or caregivers for people with disabilities. The event included a fair where people could buy things made by people with disabilities. Even the food stands for lunches were all run by people with disabilities. It was an event that actually practiced what it preached.

The event aimed to further the work of Ecuador’s previous vice president on inclusion for people with disabilities and extend it into the financial sector. They’ve done a lot of work in Ecuador to get people with disabilities included. For example, there’s a law that says for any company over 25 employees, 4 percent of its employees must be people with disabilities. But, because there are not very many large companies in Ecuador, that law results in employment for only a small portion of the population that has disabilities. The government sees a need for self-employment and small businesses run by people with disabilities. And to advance that they need to have the financial sector providing services that help promote business start-up and growth.

2. You were quite active at the event, delivering several speeches and serving on multiple panels. Could you tell us about these discussions?

My role at the event was mostly to talk about what financial inclusion was doing in other parts of the world. I dealt not specifically with people with disabilities, but with efforts elsewhere that helped include previously excluded people. I tried to show how that would apply to people with disabilities.

We looked at the things the Microcredit Summit Campaign is actively promoting as financial inclusion strategies that reach people in extreme poverty and assist movement out of poverty — things like supporting agricultural value chains, linking government cash transfer programs to microfinance graduation programs or asset-building programs, technology development that reaches to the poorest, linking savings groups with the financial system through mobile payments, and so forth. I promoted activities that could be applied to people with disabilities.

The same things apply in Ecuador as in many countries where many people with disabilities live in rural areas and could earn an income through agricultural work of some type, even though they have a disability. The event featured examples of some of those types of businesses, but the big challenge is how to look at the whole value chain to make sure there’s enough value to be created — that there are markets for what people grow so that those businesses can succeed and thrive.

3. What messages did you take home with you?

The key thing to me in this whole area of including the excluded is a change of mindset. What it does to a country and to a people when they begin to see a broader definition of “we”? The spirit that was tangible at the event was the sense that, “We can do this. We can care for all our people, and we as a society are better off because we include them.” I think that’s the message we have to get out into the whole financial inclusion world. Everyone has abilities, everyone has something to contribute, and we, our economies and our societies are better off if everyone is included.

4. Disability inclusion is a severely under-addressed issue globally. How did it come to the fore in Ecuador?

This all started in the previous administration with the previous vice president, Lenin Moreno, who is paraplegic. Moreno is now the Special Envoy on Disability and Accessibility to the United Nations, heading up some of the U.N.’s work in this area, and Ecuador is sought after all over the world for advice on how to do this work.

Former Vice President Lenín Moreno surrounded by supporters and well-wishers (2013). Photo: Fernanda LeMarie - Cancillería del Ecuador.

Former Vice President Lenín Moreno surrounded by supporters and well-wishers (2013). Photo: Fernanda LeMarie – Cancillería del Ecuador.
By Ricardo Patiño [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Moreno had been a business man, and one day he went out to buy a loaf of bread and someone was robbing the store. He got shot and became paralyzed. He almost gave up, and what brought him back to feeling like life was possible for him as a paraplegic was laughter therapy. And so he has published a few books on good jokes. Out of it all he became a well-known motivational speaker, and then he was picked as the vice presidential candidate, and his party won. Moreno then led a movement to include people with physical disabilities, with himself representing the contribution that people with disabilities could make to society.

While I was there I went out for a run and noticed all the bus stops and buses are handicapped accessible. You don’t step up into the bus. They open the door, more like that of a subway, and someone with a wheelchair can roll right on.

In their disaster preparedness work, teams of survey takers went out to the rural areas – villages, everywhere — and identified where every person with a disability lived. Then in the disaster plans they included how they would locate these people and evacuate them if there is a tsunami, tornado, or earthquake.

5. Switching gears slightly, how does providing financial services to persons with disabilities fit with the Microcredit Summit Campaign’s push to ensure that vulnerable populations are not excluded from MFIs?

One of our key goals at the Campaign is to see 100 million of the world’s poorest families move out of extreme poverty as a result of access to appropriate financial services and other help as they may need it. As we become more granular in looking at that goal and how we address it, we find that there’s a need to identify the groups of people that are traditionally excluded or among the poorest in different parts of the world, and ask what strategies help address the needs of those groups. People with disabilities is one of those groups.

Even within microfinance organizations that want to serve the poor, there are often unwitting prejudices about the capabilities of people with disabilities, and they end up excluded. So we think this is one of the areas that we need to highlight for microfinance organizations to make sure that they are being inclusive and that where possible and necessary they are taking steps to ensure people with disabilities can access their services and can use them well. At a couple of our Summits Josh Goldstein [who leads CFI’s disability inclusion work] has participated and presented and made Campaign Commitments. We’ve also had workshops on including people with disabilities for Summit participants.

Use headphones and listen only to the left earpiece to hear the original English.

6. What would you identify as the biggest barriers to advancing financial inclusion for persons with disabilities?

Probably the number one barrier is the range of prejudices or assumptions that people grow up with and maintain throughout life. One way of targeting these is helping people see how people with disabilities can contribute and identifying the types of activities they can be involved in.

Other barriers are found among financial institutions’ policies and physical structures. I once spoke with Josh about this. Often a microfinance institution will have a branch office on the second floor because that’s less expensive. However, this doesn’t mean you can’t serve people outside of the second floor office space. Is there a way of creating a kiosk or holding meetings in other locations that are accessible?

7. Our disability inclusion team has been enthusiastic about its collaboration with the Microcredit Summit Campaign. Is this topic gaining traction with other Campaign members? Is there a movement to advance financial inclusion for persons with disabilities?

I think the message is starting to get through. It’s something we need to continue to work on, but Campaign members are already motivated to help people who are excluded. So in their case, it’s mostly pointing out what exclusion looks like in this area and what the steps they can take to promote inclusion. We’re seeing a number of organizations starting to work through that.

For example, Fundación Paraguaya is actually working with the government of Ecuador to figure out how to do financial inclusion for persons with disabilities in Paraguay. On the flip side of this, I spoke with the Ecuadorian government and suggested that they need to do more analysis on the results of their disability inclusion work, and I suggested using the “Poverty Stoplight” system Fundación Paraguaya created. It’s one of the best systems for tracking movement out of poverty, as well as a source of information that helps clients look at their own situation and see how they might improve their lives. Right away upon hearing this Alex Camacho of the Vice President’s Office sat down with Jimena Vallejos of Fundación Paraguaya and they started planning how to share the information on using the stoplight system.

8. Any closing thoughts you’d like to share?

One lasting image I have from this conference is the delegation from Brazil.It was two people who work in the government on rights for people with disabilities, a blind woman and a paraplegic man. I first noticed them because they were staying in the same hotel. I kept looking for the other people from Brazil who got them there — and there wasn’t anyone. As they went through the venue, it was just the two of them together, the blind woman pushing the wheelchair of the paraplegic man and he providing directions to her. Her legs could propel him, his eyes could guide her. It was such a great image of the theme that everyone has something to contribute. We all have something to give, and if we can work together and provide the necessary means, we then include all those abilities in our society — and we’re all better because of it.

Oikocredit Commits to Better Measure Progress out of Poverty

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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 Microcredit Summit Campaign welcomes Oikocredit as the newest Campaign Commitment member, joining a global coalition to help 100 million families lift themselves out of extreme poverty. Read the full Press Release


Oikocredit has been increasingly focused on measuring social impact to ensure that the organizations it funds are properly targeting their outreach and have launched their Campaign Commitment to actions fulfilling this aim.

Image courtesy of Oikocredit.

Image courtesy of Oikocredit.

Oikocredit managing director, David Woods, said committing to the Microcredit Summit was in line with Oikocredit’s social mission. “Measuring and monitoring change in microfinance partners and their clients is an important part of Oikocredit’s social and financial activities,” said Mr. Woods.

Key excerpts of Oikocredit’s Campaign Commitment:

  • Supporting at least four MFI partners in developing capacity in using Progress out of Poverty Index (PPI) data over time.
  • Providing MFI staff with training in data analysis and management.
  • Providing MFI management with training on how analysis and usage of PPI data can help to improve products and services, be accountable to stakeholders and profile their organization.
  • Encouraging its microfinance partners to use the PPI tool for targeting purposes and increase the number of MFIs reporting PPI data by the end of 2014 to 100.
  • Where possible, provide or facilitate access to needed support in the use of the PPI tool and the installation of needed systems to capture and process data within the MFIs.

 

Join Oikocredit in stating YOUR Campaign Commitment

Grameen Foundation has a new PPI Certification – Learn About it during our Upcoming E-Workshop

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Join us Tuesday June 24th at 10:00 AM (EDT / GMT – 4) for the E-Workshop Webinar:

“Instilling Confidence in Poverty Measurement: The New PPI Certification”

This webinar will be conducted in English. For our Spanish-speaking colleagues, the Portal de Microfinanzas (@Portal_MF) will be live-tweeting in Spanish the key points addressed by the speakers.

Click here to find what time the webinar will be in your county


Join us for an e-workshop co-hosted by the Microcredit Summit Campaign and Grameen Foundation for a discussion on the recent improvements to the Progress out of Poverty Index® Certification and the new additions to the Standards of Use

Featuring Frank Ballard, the Program Officer from the Grameen Foundation‘s Social Performance Management Center, and Analí Oda, a Senior Analyst from Planet Rating, and Chiara Pescatori, Deputy Social Rating Director at MicroFinanza Rating, this webinar will introduce participants to the changes and benefits of the new PPI Certification. 

The presenters will share their knowledge and experiences on how the renovated PPI Certification can improve an organization’s measurement of poverty, enhance its reputation, and build confidence in its practices.

Through the valuable insights offered in this webinar, participants will gain a better understanding of effective and reliable poverty measurement and the benefits that it has to offer.

Speakers: 

MCSC Logo Jesse Marsden, Research & Operations Manager (moderator)
Grameen Logo
Frank Ballard, Program Officer, Social Performance Management Center
Planet Rating Logo
Analí Oda, Senior Analyst
MicroFinanza Logo
Chiara Pescatori, Deputy Social Rating Director

Join us for this stimulating conversation to gain a deeper understanding of the improvements in the new PPI Certification and the benefits that it has to offer!

Follow this e-workshop and the Campaign’s 100 Million Project:

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Use hashtags #100MGoal and #Commit100M

Learn more about the 100 Million Project Project and Campaign Commitments

From Intent to Action: Resources to Pursue Responsible Inclusive Finance

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Dina Pons of Incofin IM, the moderator of the workshop, “Responsible, client-centric practices at every level, and demonstrated commitment to fulfilling its mission,” started the presentation with the following description of Responsible Inclusive Finance:

Every institution along the value chain of “responsible inclusive finance” – whether socially or financially motivated – employs responsible, client-centric practices at every level of its business and demonstrates commitment to fulfilling its mission.

Read the summary of proceedings for this workshop.

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Defining “Poverty”: Pro-Poor Principles series

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“As a simple global benchmark, [the Seal will] reference a poverty line that approximates the bottom ~40% of the population. In many countries, the national poverty line is about the same as the bottom ~40%, as can be see in the graph below. This definition intentionally reflects a level that is practical, achievable and relevant to ensuring deep financial inclusion. Broadly, it represents outreach to the bottom half of the financially excluded. At the same time, in order to recognize MFIs that have achieved deeper outreach to the very poor, the Seal of Excellence indicators identify the percentage of clients from the bottom ~20% as well.”

Read more!

Truelift

Pro-Poor Principles series
On 15 May 2013 we announced our Pro-Poor Principles in a blog post, found here. In this continuing series of blog posts, we will elaborate on the path that brought us to these Pro-Poor Principles of microfinance. The principles will inform both the learning environment in our community of practice, as well as our methodology for determining organizations that will be recognized by the Pro-Poor Seal of Excellence. We appreciate any thoughts you have on the Pro-Poor Principles and how best to apply them to practice. If you would like more information, please contact MeasureLearnChange[at]gmail.com.

Defining “Poverty”

A simple plan
There have been many varied measures of poverty established over the past two decades in our global efforts to alleviate poverty. Hundreds of National Poverty Lines have been established by individual country governments, and institutions such as the World Bank have used figures ranging anywhere from…

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Announcing: the Pro-Poor Principles

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As the culmination of three years of work, the Pro-Poor Principles form the foundation for good practice in reaching and serving poor clients.

  1. Principle 1: Purposeful Outreach to People Living in Poverty
  2. Principle 2: Services that Meet the Needs of People Living in Poverty
  3. Principle 3: Tracking Progress of People Living in Poverty

Read more!

Truelift

Pro-Poor Principles series
We are proud to announce the Pro-Poor Principles! As the culmination of three years of work, the Pro-Poor Principles form the foundation for good practice in reaching and serving poor clients. They also serve as the core of our assessment framework that will help to identify those organizations doing the most to reach people living in poverty, to meet their needs, and to track progress over time.

The journey to the principles included alpha and beta testing, using a lengthy set of indicators which were reduced and refined. Many meetings and months of deliberation were conducted by our Technical Committee of industry experts. Performance against these standards will help to define the level of recognition that a microfinance institution can receive from the Seal of Excellence Secretariat.

In this continuing series of blog posts, we will elaborate on the path that brought us to these Pro-Poor…

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