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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.


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.


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


- Functional literacy


- 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


- 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


- Gender sensitization


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).


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.


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.


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,[email protected].


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.

The SEEP Network Poverty Outreach Working Group ��

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

�� The SEEP Network Poverty Outreach Working Group

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?


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


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?


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?


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.


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.


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.


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?


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?


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


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:[email protected]

About SEEP

SEEPisaninternationalnetworkofover70organizationscommittedtoreducingpovertythroughmicrofinanceandenterprisedevelopment.SEEPmembersareactiveinover140countriesandreachover25millionmicroentrepreneursandtheirfami-lies.SEEPpromotesprofessionalstandardsofpracticeinmicrofinanceandenterprisedevelopment,conductscapacitybuildingactivitiesforitsmembersandotherpractitioners,createsanddisseminatespublicationsforapplicationinthefield,andservesasacenterforcollaborationonabroadrangeofsector-relatedissues.

–DanadeKanter,ExecutiveDirector