FINCA International

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FINCA International

• SEEP Network Conference
• Washington, D.C.
• 22 October 2003

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Outline of Presentation

• Poverty Impact Assessment Research
  Summer 2003
• Purpose of Research
• What is Poverty How is it Measured?
• Review of FINCAs Poverty Assessment Tools
• Putting the Tools into Practice
• Strengths
• Weaknesses

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Poverty Impact Assessment Research - Summer 2003

• 11 programs Ecuador, Honduras, Zambia, Uganda,
  Malawi, Armenia, Georgia, Azerbaijan, Kyrgyzstan,
  Tomsk Samara
• 15 interns BYU, Princeton, Harvard, NYU,
  Columbia, U of MN, U of Wisconsin
• 3361 clients interviewed

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Purpose of Research

• 1. To give FINCA affiliates initial client
  poverty level data.
• 2. To further test and validate poverty and
  impact assessment tools.

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What is Poverty How is it Measured?

• The World Bank defines poverty as pronounced
  deprivation in well-being. (World Development
  Report 2000/01)
• What is well-being?
• Rowntree defined poverty as a level of total
  earnings insufficient to obtain the minimum
  necessities for the maintenance of merely
  physical efficiency, including food, rent, and
  other items.(WDR 2000/01)
• Historically poverty has only been defined and
  measured using the income or money metric
  approach.

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What is Poverty How is it Measured?

• Poverty is now viewed as a multidimensional
  phenomenon. As such, it requires an holistic
  approach in defining and measuring it.
• Other approaches in addition to the money-metric
  approach include
• Basic needs approach access to necessities such
  as food, shelter, schooling, health services,
  potable water sanitation facilities.
• Human capability approach emphasis placed on
  peoples abilities and opportunities to enjoy
  long, healthy lives, to be literate and to
  participate freely in their society.(Lok-Dessalli
  en)

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What is FINCAs Approach?

• FINCAs poverty assessment tools are a
  synthesizing of all the approaches
• Money-metric
• Basic Needs
• Human Capability

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One Tool, Two Measures of Poverty Social Impact

• Daily per Capita Expenditure (DPCE)
• DPCE Total monthly household expenditures/
  household size/30 days
• Total monthly expenditures
• Food
• School
• Health
• Home
• Utilities
• Transportation
• Fuel
• Clothing
• Savings
• Other

• Social Metrics
• 8 different areas related to poverty
• Food Security
• Education
• Healthcare
• Housing
• Social Capital
• Empowerment
• Literacy
• Vulnerabilities
• Each area is scored based on a corresponding
  question with four possible answers.
• All areas are then totaled to create a
  poverty/social metrics index

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Monthly Household Expenditures

• Exchange Rate

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To Establish Poverty Level of Client

• DPCE is measured against country specific poverty
  lines
• Official poverty line in Zambia 3404 Kwacha/day
• A client with DPCE of 2515 Kwacha would be
  considered poor

• Poverty/Social Metrics Index is measured against
  social metrics cut-offs
• 8-15 non poor
• 16-23 poor
• 24-32 very poor

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Putting the Tools into Practice

• Two Approaches
• Use of interns to do one time runs every year or
  every two years with use of handhelds.
• Approach used by small MFIs
• Institutionalization
• High range system Assessments performed by
  credit officers with use of handhelds on ongoing
  basis and tools are incorporated into existing
  MIS (SIEM)
• Low range system Assessments also performed by
  credit officers with use of handhelds yet tools
  function with a parallel system (Pendragon Forms
  Microsoft Access)

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Externally Intern ApproachPros and Cons

• Positives
• 1. Fast (one month), including report
• 2.Low cost in short-run (2 interns/5,000)
• 3. Outside perspective
• 4. Limited distraction of field staff
• Negatives
• 1. Doesnt capture seasonality (June-August
  only).
• 2. Limited continuity
• 3. Expensive over the long run
• 4. Limited capacity to integrate poverty
  assessment with impact evaluation.

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Institutionalized ApproachPros and Cons

• Strengths
• 1. No data entry costs
• 2.Ongoing data collection (routine), becomes
  habitual
• 3.Gives management timely assessment of
  program
• 4. Improved client targeting, correcting
  mission drift
• 5. Integrates with impact evaluation
• 6. Contributes to field staff knowledge of
  clients, upgrades staff skills
• Weaknesses
• 1. Expensive and time-consuming MIS
  adaptation in short-run
• 2. Risks of field officer bias
• 3. Forces policy definitions and staff
  enrollment challenges

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Investing in Capacity to Measure Double Bottom
Line

• Economic Bottom Line 1. Requires accountants
  and
• other finance staff
• 2. Standardized performance
• indicators

• Social Bottom Line
• 1. Requires a mission
• compliance officer who
• holds energy for
• a. Client targeting
• b. Poverty assessment
• c. Impact evaluation
• c. Market research
• d. Product innovation based on
• research findings
• e Reporting to donors
• investors

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Total Clients Interviewed