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SEEP AGM Consumer Guide (October 2008)

Progress Out of Poverty Index (PPI)

The Progress out of Poverty IndexTM (PPI) is a simple and accurate tool that

measures poverty likelihoods of individuals and groups. Using the PPI, MFIs canbetter determine the extent to which their products and services meet clients needs,how quickly clients leave poverty, and what helps them to move out of poverty

faster. The PPI is based on an approach developed by Mark Schreiner of MicrofinanceRisk Management, L.L.C. It is a user-friendly tool that estimates the likelihood that

clients fall below the national poverty line, the poverty line that defines the pooresthalf below the national poverty line or the $1/Day/PPP and $2/Day/PPP international

poverty lines. While the PPI is built on a universal methodology, each PPI is country-specific and based on that country's nationally representative income andexpenditure household survey. The data from the national income and/orexpenditure survey are analyzed to rank indicators that strongly correlate with

poverty. These indicators are then tested and vetted with local MFIs and their

representatives.

CGAP, Grameen Foundation and the Ford Foundation endorse the use of rigorouspoverty assessment tools and believe the Progress out of Poverty Index (PPI) is a

highly effective tool for those institutions interested in measuring the likelihood ofclient poverty. To date, fourteen PPIs have been developed for Bangladesh, Bolivia,

Haiti, India, Indonesia, Kenya, Mali, Mexico, Morocco, Pakistan, Palestine, Peru, thePhilippines, and Vietnam. Grameen Foundation and the Ford Foundation are currentlydeveloping additional PPIs, and expect that a total of 38 PPIs will be in use by June2009.

For more information on the PPI go to www.progressoutofpoverty.org or email

spm@grameenfoundation.org.

USAID Poverty Assessment Tool (PAT)

The USAID Poverty Assessment Tool (PAT) is a short, accurate, country-specificsurveydeveloped under contract with the IRIS Center at the University of Marylandthat measures the prevalence of poverty and extreme poverty within a group ofbeneficiaries.A household is considered to be very poor (extreme poverty) if it fallsamong the bottom 50% of those below a countrys national poverty line, or if its percapita consumption falls below the international extreme poverty line of $1 per day(PPP). Each survey includes between 10 and 33 questions derived from andcalibrated to that countrys nationally representative household survey.The data

gathered through the PAT surveys is entered into a template, and the Epi Infostatistical software is used to automatically estimate the share of households livingbelow the applicable poverty line. Each tool is meant to be administered in ten totwenty minutes. It is recommended that the PAT be applied once the personbecomes a client of the microfinance program, to minimize bias, and then only on anaggregate basis in order to balance potential errors and maximize accuracy. (As withany quantitative tool, the level of accuracy is much lower at the individual householdlevel.)

http://www.microfinance.com/http://www.fordfoundation.org/http://www.progressoutofpoverty.org/http://www.fordfoundation.org/http://www.progressoutofpoverty.org/http://www.microfinance.com/

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To date, tools have been certified for the following 25 countries, with a total of 31expected by the end of 2009: Albania, Azerbaijan, Bangladesh, Bosnia &Herzegovina, Cambodia, Colombia, East Timor, Ethiopia, Ghana, Guatemala, Haiti*,India, Indonesia, Jamaica, Kazakhstan, Kosovo, Madagascar, Malawi, Mexico*, Peru,the Philippines*, Serbia, Tajikistan, Uganda, and Vietnam. The three tools markedwith an asterisk (*) were developed by USAID in consultation with the Grameen

Foundation and are based on PPIs. All other tools were developed by USAID through acontract with the IRIS Center, which also supports the implementation of the tools viaregional training, one-on-one assistance via a help desk, and a suite of onlineresources.

For more information, go to www.povertytools.org or contact Brian Beard atbbeard@iris.econ.umd.edu or Anthony Leegwater at aleegwater@iris.econ.umd.edu.