Appraising the Poverty Outreach of Microfinance: A Review of the CGAP Poverty Assessment Tool (PAT)

Assessment of the poverty level of microfinance clients is important for both practitioners and donors. For practitioners, increased understanding of the target market and whether it is being reached can help in the design of financial services better suited to the needs of different groups of clients. For donors seeking to ensure the most effective use of their scarce resources for combating poverty, poverty assessment is used to assist in making decisions on resource allocation. While there is much evidence that microfinance can be a critical input towards the achievement of the Millennium Development Goals and the reduction of poverty (Littlefield et al. 2003), the impacts of microfinance are not automatic. To achieve significant directs impacts on poverty it is essential that Microfinance Organisations (MFOs) reach poor and very poor clients, and therefore measurement of poverty outreach becomes an important proxy indicator for the success of microfinance in achieving impacts on poverty. This paper is aimed at donors, policymakers and practitioners interested in the mechanisms by which the poverty level of microfinance clients can be assessed. It is primarily a review of the CGAP Poverty Assessment Tool (PAT), and highlights the potential applications for the tool, issues to consider in its use, and possible further steps in the development of the tool. It goes on to consider the broader issue of poverty assessment in microfinance, and proposes an important additional use for the PAT in validating and improving the credibility of low-cost practitioner assessment and monitoring tools.Financial Economics, Food Security and Poverty,

Poverty, voice and advocacy: a Haitian study

Over the past ten years, Fonkoze (a non-profit organisation in Haiti) has adapted the 'graduation' model of lifting families out of extreme poverty through its Chemen Lavi Miyò (CLM) or 'pathway to a better life' programme. Yet despite international recognition for this approach, Fonkoze’s work is little known within Haitian policy circles on social protection and poverty. This paper is the product of a 12-month action research project by Fonkoze with support from the Institute of Development Studies (IDS). It used a rapid outcome mapping approach (ROMA) as a framework for creating an advocacy strategy through which Fonkoze could influence the development of Haiti’s social protection policy. It also aimed to give voice and promote downwards accountability to people who have lived experience of ultra-poverty by enabling them to articulate their views within the policy process. he report concludes by highlighting the problem that donors tend to channel their resources through separate government ministries or departments, which though inevitable (to some extent) given the context, is also unhelpful in promoting a coordinated social protection policy.DFIDUSAIDSidaOmidyar Networ

Environmental flow requirements: A social dimension

Environmental flow requirements: A social dimensio

Appraising the Poverty Outreach of Microfinance: A Review of the CGAP Poverty Assessment Tool (PAT)

Assessment of the poverty level of microfinance clients is important for both practitioners and donors. For practitioners, increased understanding of the target market and whether it is being reached can help in the design of financial services better suited to the needs of different groups of clients. For donors seeking to ensure the most effective use of their scarce resources for combating poverty, poverty assessment is used to assist in making decisions on resource allocation. While there is much evidence that microfinance can be a critical input towards the achievement of the Millennium Development Goals and the reduction of poverty (Littlefield et al. 2003), the impacts of microfinance are not automatic. To achieve significant directs impacts on poverty it is essential that Microfinance Organisations (MFOs) reach poor and very poor clients, and therefore measurement of poverty outreach becomes an important proxy indicator for the success of microfinance in achieving impacts on poverty. This paper is aimed at donors, policymakers and practitioners interested in the mechanisms by which the poverty level of microfinance clients can be assessed. It is primarily a review of the CGAP Poverty Assessment Tool (PAT), and highlights the potential applications for the tool, issues to consider in its use, and possible further steps in the development of the tool. It goes on to consider the broader issue of poverty assessment in microfinance, and proposes an important additional use for the PAT in validating and improving the credibility of low-cost practitioner assessment and monitoring tools

Issues in Designing Effective Microfinance Impact Assessment Systems

This paper is based on work conducted by Imp-Act - a three-year action-research programme aiming to improve the quality of microfinance services and their impact on poverty. Learning from the experiences of 30 microfinance organisations (MFOs) in four continents, Imp-Act is developing and encouraging the use of internal practitioner-focused impact assessment that can serve as a means to improve practice and service delivery, not merely satisfy the needs of external stakeholders. The paper looks specifically at the benefits of designing and implementing effective practitioner-focused client and impact assessment. It considers the types of questions MFOs should be asking in terms of use of impact assessment tools, such as indicators. It makes the point that impact assessment must be context-specific, taking into consideration the type of information to be gathered and the purpose of this information. Above all, it stresses that impact assessment is an ongoing process, rather than a one-off event which benefits neither the clients nor the organisation

Issues in Designing Effective Microfinance Impact Assessment Systems

This paper is based on work conducted by Imp-Act a three-year action-research programme aiming to improve the quality of microfinance services and their impact on poverty. Learning from the experiences of 30 microfinance organisations (MFOs) in four continents, Imp-Act is developing and encouraging the use of internal practitioner-focused impact assessment that can serve as a means to improve practice and service delivery, not merely satisfy the needs of external stakeholders. The paper looks specifically at the benefits of designing and implementing effective practitioner-focused client and impact assessment. It considers the types of questions MFOs should be asking in terms of use of impact assessment tools, such as indicators. It makes the point that impact assessment must be context-specific, taking into consideration the type of information to be gathered and the purpose of this information. Above all, it stresses that impact assessment is an ongoing process, rather than a one-off event which benefits neither the clients nor the organisation.Financial Economics,

Community participation/community-driven

Community participation/community-drive

Effective strategies for reaching the poor

This article provides some practical insights into the way in which a microfinance institution (MFI) can structure its support so as to maximise its chances of helping the poorest raise their living standards. The debates concerning the ability of microfinance to empower women and alleviate poverty, particularly for the poorest, are acknowledged but not discussed in detail. Drawing on the experience of the Tshomisano Credit Project (TCP) of the Small Enterprise Foundation (SEF), the article challenges the assumption that success can be judged by clients' repeated loan-taking and institutional performance, and stresses the need to understand the impact of credit and savings on people's livelihoods. The article details three areas which the SEF views as critical for successfully alleviating poverty through microfinance: identifying the poorest and designing a project which actively encourages their participation; drawing on SEF members' resources and defining the SEF's role as support through facilitation; and incorporating a learning system which constantly questions the impact of the programme and actively differentiates between impacts on people in different contexts.

Ensuring Impact : Reaching the Poorest While Building Financially Self-Sufficient Institutions, and Showing Improvement in the Lives of the Poorest Families: Summary of Article Appearing in Pathways Out of Poverty: Innovations in Microfinance for the Poor

This paper is about microfinance and its contribution to the eradication of poverty for millions of the world's poorest people. The Millennium Development goals set a critical challenge of halving absolute poverty in the world by 2015. Microfinance can make an important contribution to these goals by reducing income poverty, vulnerability, and empowering women to choose when and how to access other development services such as health and education. Donors should invest in poverty-focused microfinance as a key part of their Millennium Development strategies. Practitioners should explore how to ensure that programs become more effective in working with the poorest. The paper demonstrates the fallacy that microfinance cannot be an appropriate strategy for the poorest. It is not the poverty level of potential clients that determines access and impact, but the design of the services provided. Not all people need microfinance, but most groups can benefit. There are trade-offs between social and financial objectives, but MFIs can and do reach and impact on the poorest and achieve financial self-sufficiency