SEEP Presentation 1

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Improving the Impact of Microfinance on Poverty

Action Research Programme

Presentation to SEEP Poverty Assessment Working Group

6th May, 2004

Anton Simanowitz, Programme Manager



� Developing systems based on needs of partners and theirstakeholders

� Strengthen internal poverty assessment & monitoringsystems

� Verify and test these systems

� Linkages to national/international poverty lines

Imp-Act Poverty Assessment and Monitoring



1. PRIZMA Poverty Score card ± risk of being poor

1. Track client poverty status as part of the credit scoringprocess

2. Locally relevant indicators are linked to national poverty

data through LSMS poverty survey

3. Data is integrated into on-going monitoring system toallow for tracking of client status and assessment of impact.

4.Collection of data for all clients on all loans?

Examples of povertyassessment tools



Prizma Poverty ScorecardVery Poor 0-1 � Poor

2-4 � Vulnerable Non-Poor 5-6 � Non-Poor

7+

Indicator 0 1 2

P

o

v

e

rt

y

R

is

k

EducationWhat is the education level of

female HH head/spouse/partner?� Primary > Primary ±

Residence Where does family reside?Rural/Peri

� 10,000

Urban

>10,000±

Employment StatusWhat it the employment status of

the female HH head/spouse?

Unemploye

d

Employed

Formal/infor

mal

±

Family Size What is HH size? > 5 � 5 ±

W

el

l-

b

ein

g

pr

o

xi

e

s

Meat ConsumptionOn average, how often does

family consume meat?

Rarely

0-2 x/wk

Sometimes

3-5 x/wk

Often

>6 x/wk

SweetsConsumption

On average, how often does

family consume sweets with main

meal?

Rarely

0-2 x/wk

Sometimes

3-5 x/wk

Often

>6 x/wk

Household Assets

Does family possess a color TV

or stereo/CD player? None One Both

Transport Assets Does family possess a vehicle? NoneOld

>5 years

New

� 5 years

Poverty Status Score

0-12



1. Poverty screening tool with list of proxy povertyindicators

2. Integrated into MIS system

3. Collection from 1 in 10 clients

4. Additional base-line data collected on first loanapplication

(see hand out)

LAPO Participation form




1. Poverty screening and monitoring tool

2. Plan to integrate into MIS

� Housing ± CASHPOR house index� Food security ± FFH tool� Education ± access by school age children� Productive assets

3. Currently indicator accuracy and sensitivity being testedby Hugo Melgar

C ARD Re-means test




1. Locally defined ie. not just money, therefore islikely not to completely correlate with $/day

2. Very accurate through triangulation

3. Cost-effective and is widely applied. SEF has nowranked in excess of 300,000 people

4. Main cost is skilled facilitators� facilitation skills also used widely in the work of

loan officers� staff time involved in PWR is partly or fully off-set

by the marketing impact of holding a PWR exercisein a community.

SEF - PWR




1. Motivation

� Commitment to social mission

� Specific focus on poverty outreach and impact

� System designed to measure poverty outreach toallow MFI to improve its depth of outreach andprevent mission drift

� Additional monitoring component to 1) track clientchanges as an organisational learning/marketresearch tool 2) act as an early warning system forproblems

� External reporting on absolute poverty status



1. Step One: Defining social objectives± what to measure

Design process



Step Two: Selecting poverty indicators

�R elate to national poverty data

� Sensitive to changes ± short, medium, long-term

� Simple, reliable and consistent for MFI tocollect

� Simple, non-intrusive and quick for clients toanswer

Design process



Step Three: Testing indicators

� LAPO

tested against CGAP

povertyassessment for same clients

� CAR D tested using IRIS expendituresurvey

� PRIZMA ± use of secondary data tocompare to LSMS

� SEF, generic testing of PWR against CGAP poverty assessment

Design process



Step Four: Data collection andmanagement system

� Integrating into existing field staff activities

� Sampling or census?

� Periodicity of data collection?

� Staff management/incentives/monitoring

� Ensuring data quality

Design process



Step Five: Data processing, analysis andreporting

� standarisation and automation via MIS?� analysis patterns and trends� disaggregation� graphs

� standard formats and additional analysis� warning system or just reporting

Eg. PRIZMA (see powerpoint hand out)

Design process



Step Six: Using data for management

�R eporting on poverty outreach

� Monitoring changes in poverty outreach

� Disaggregation by Branch, loan officer,

product etc

� Using data as early warning system

Design process



Eg. SEF

� Quarterly view of poverty levels of newclients (disaggregated by Branch)

� Quarterly view of poverty level of drop-outs (and rates disaggregated by no. of

variables ± Branch, loan officer, businesstype, loan amounts etc

� Vulnerable centre early warning system(savings, attendance, arrears -> drop-out)

Use of system



Eg. PRIZMA� HR ± staff commitment to social

performance� Market segmentation� Drop-out link to poverty status� Products and services ± better client

understanding

� Competitiveness ± better promotion totargeted clients and retention

� Improving Efficiency ± link to activitybased costing and understanding coststructure

Use of system



Development costs for pioneers eg. PRIZMA

PAWG Questions: Time and cost

senior staff Prizmafrontline

staff

M CTA

M Canalyst

1. Agree Rationale 5 4

2. Identify data sources 5 0

3. Develop indicator pool 7 4

4. Narrow pool to select few 2 2 3

5. Define measures and ranges 2 0 6 22

6. Develop simple scorecard 2 0 8 12

7. Develop cut-off points forcategories

2 0 6 12

8. Determine frequency of collection 1 2 1

9. Develop reporting formats 2 0

10. Determine means of quality

control

3 4

TOTAL 31 16 24 46



Start-up costs for replicants?

R unning costseg. PRIZMA, LAPO ± virtually cost-less data

collection

� some additional costs for data analysis

and reporting




SEF cost-effectiveness study


Table 1: Costs of impact management activity at SEF

Cost item Monthly Annual

Start-up costs (1) ± $1 690Development department (2) $384 $4 611

Photocopies of forms $26 $308Capture client information $227 $2 720

Update client records $96 $1 154

Branch Manager data capture $26 $314

Fieldworker Training $700 $8 400Branch Manager training/workshops $192 $2 308Zonal assistants training/workshops $77 $923 Workshop overhead costs ± $615 TOTALS $1 728 $21 353



SEF cost-effectiveness study ± value of information


Table 1: Return to SEF impact management investment, 06/02-12/03

TCP Interest income/impact management costs

AmountRate of return to

impact managementinvestment

Income above hypothetical May 2002 µstagnation¶ level $369 3501153%

Income from improved client retention $118 333 369% Imputed income from programme growth $251 017 784% Cost of impact management during the period $32 029 ±



³SEF¶s experience shows that althoughimpact monitoring costs money to do, it is

a case of either spending money toanticipate problems or spending money tofix them afterwards. In this respect,impact monitoring should be understoodin terms of opportunity cost . Preliminary

indications are that impact monitoring isoverwhelmingly cost effective whenconsidered in these terms.́ (Ted Bauman,April 2004)




� Is this specific to poverty assessment orall research?

� Where time pressure is a problem is anissue ± LAPO, SEF, SAT

� Fitting into existing activities ± danger of linking to loan application process

� Interviewing own clients or not ±potential problem

� Monitoring/triangulation ± keymanagement task is spot-checking

� Appropriate questions and positioning

PAWG Questions: Mis-reporting and datamanipulation



� PRIZMA ± internal auditing� LAPO ± spot checking

� key is that this is seen as core part of operations

PAWG Questions: Mis-reporting and datamanipulation



Improving the Impact of Microfinance on Poverty

Action Research Programme

www.Imp-Act.orgwww.microfinancegatew ay .org/i m pact

SEEP Presentation 1

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