MaRSSocial Entrepreneurship Summit 2008

Nigel BiggarGrameen Foundationnbiggar@grameenfoundation.orgwww.progressoutofpoverty.org

Today’s Discussion

What is • Microfinance?• Grameen Foundation?• Social Performance Management?• The Progress Out of Poverty IndexTM (PPITM)?• The PPI used for?Why Does This Matter?

Microfinance Is a Proven Poverty-Alleviation Tool

Grameen Foundation is a Leading Microfinance Network

• Grameen Foundation's mission is to enable the poor, especially the poorest, to create a world without poverty.

• Based in Washington, DC and Seattle, WA• 56 partners in 25 countries

– Social Performance, Technology, Finance, Human Capital

We Must Manage Our Social Performance

• Endgame: MFIs more effective at poverty alleviation

• Social Performance Management

• Measure poverty levels of MFI clients• Understand poverty change over time• Adjust products and services to meet client

needsSocial Performance Management is the effective translation of social goals into practice

Progress out of Poverty IndexTM

• The PPI is a simple poverty measurement tool• 10 non-financial indicators• Benchmarked to international poverty lines• Estimates the likely poverty levels of

households

•The PPI is based on an approach developed by Mark Schreiner of Microfinance Risk Management, L.L.C.•CGAP, Grameen and Ford Foundation support the use of the PPI

7

I ndicator P oints

1. How many children aged 0 to 17 are in the household? ≥5 4 3 2 1 Zero0 8 11 17 22 31

2. What is the household's primary energy source for cooking? Any other fuel8

3. Does the household own a television? No Yes0 4

4

Total:

V alues

Firewood and chips, charcoal, or none0

PPI Fundamentals: Basic use India

Client Response

Weighted Numeric Value

8

0

Indicators

4

Points

8

PPI Fundamentals: PPI scoreI ndicator P oints

1. How many children aged 0 to 17 are in the household? ≥5 4 3 2 1 Zero0 8 11 17 22 31

2. What is the household's primary energy source for cooking? Any other fuel8

3. Does the household own a television? No Yes0 4

4. How many hectares of land does the household own? Rural, 0 to 0.4 Rural, 0.41 to 2 Rural, >24 7 10

5. What is the principal occupation of the household? Agricultural labourers

Operators and labourers, bricklayers, construction

workers

Cultivators, farmers, fishers, hunters, loggers, unknown

Sales workers, service workers,

transport-equipment operators

Professional, technical, clerical,

administrative, managerial, executive, teachers

0 6 8 11 13

6. How many almirah/ dressing tables does the household own? None One Two or more0 2 9

7. No Yes0 5

8. Does the household own a pressure cooker or pressure pan? No Yes0 5

9. Does the household own a sewing machine? No Yes0 6

10. How many electric fans does the household own? None One or two Three or more0 5 10

Total:Source: Calculations based on Schedule 1.0 of the 59th Round (2003) of India's Socio-Economic Survey (NSSO, 2005).

V alues

Firewood and chips, charcoal, or none0

Is the residence all pucca (burnt bricks, stone, cement, concrete, jackboard/ cement-plastered reeds, timber, tiles, galvanised tin or asbestos cement sheets)?

Urban, any amount0

8

0

4

0

6

2

0

5

0

0

25PPI Score

9

0-4 88.5% 100.0% 0.0%

5-9 96.3% 100.0% 0.0%

10-14 81.7% 100.0% 0.0%

15-19 82.0% 100.0% 0.0%

20-24 73.6% 98.8% 1.2%

25-29 60.6% 98.0% 2.0%

30-34 52.8% 96.1% 3.9%

35-39 39.0% 96.9% 3.1%

40-44 36.3% 95.6% 4.4%

45-49 22.1% 86.2% 13.8%

50-54 5.2% 73.4% 26.6%

55-59 6.6% 81.3% 18.7%

60-64 6.8% 79.3% 20.7%

65-69 3.6% 53.4% 46.6%

70-74 2.8% 39.7% 60.3%

75-79 0.0% 24.8% 75.2%

80-84 0.0% 21.0% 79.0%

85-89 0.0% 21.6% 78.4%

90-94 0.0% 5.3% 94.7%

95-100 0.0% 4.5% 95.5%

Totals 39% 85% 15%

Total Below $1/Day/PPP

PPI ScoreTotal Below $2/Day/PPP

Total Above $2/Day/PPP

Poverty Likelihoods

PPI score of 25

Poverty Likelihood

Use of PPI data

• Outreach – Is MFI reaching its target population?

• Portfolio segmentation– Different products for different clients

• Change over time– Poverty movement

Targeting: poverty distribution for entering clients

Original (2005) Target (2009)

NWTF (Philippines)

•

Portfolio Segmentation

Targeting and segmentation: three products for three poverty groups Poverty Scores of Incoming CLM Members, Solidarity & Ti Kredi (Twoudino) Clients

0%

5%

10%

15%

20%

25%

5 9 13 17 21 25 29 33 37 41 45 49Scores

Fre

qu

ency

New Solidarity Clients

CLM Members

Ti Kredi, Twoudino

So What?

• Not Microfinance-Specific• We measure what we value and value what we

measure• Key issues:

– Reaching our intended target group– Relevance of products and services– Change over time

• We will never be able to improve outcomes if we’re not strategic about our work

Nigel BiggarGrameen Foundation

nbiggar@grameenfoundation.orgwww.progressoutofpoverty.org