1. Executive Summary
Recent legislation mandates that one-half of U.S. Agency for InternationalDevelopment (USAID) microenterprise funds must benefit very poor people (defined asthose living on less than $1 a day, or those living in the bottom 50% below their country's poverty line). In order to monitor this, USAID was also required to develop and certifytools for assessing the poverty level of microenterprise beneficiaries.Representing the voice of practitioners, the SEEP Network’s Poverty OutreachWorking Group (POWG) has been working closely with the University of Maryland’sIRIS Center to develop and test these new poverty measurement tools. Since the beginning of 2005 the POWG also started to focus its attention beyond povertyassessment and on innovative microenterprise development (MED) approaches that assistvery poor people. Since measuring client poverty levels by itself does not guarantee thatthey are receiving appropriate and effective services, the POWG has taken a stronginterest in learning
the very poor can not only be reached but also assistedeffectively.In a first step, POWG members submitted case studies of MED approaches thatthey considered successful in reaching and assisting the very poor. These and other casestudies of promising approaches for assisting very poor people were summarized in a paper
that describes the common features of these approaches and identifies initialhypotheses about their success factors. One of the most encouraging findings of this paper is that many microenterprise development programs
indeed assist the very poor through a variety of approaches, ranging from fully subsidized grants to savings promotion to sustainable credit delivery. A brief summary of these preliminary findingsis presented in the next section.These case studies for the most part, however, provide insufficient data on their depth of outreach, cost and impact of the featured MED approaches. And in the fewcases that offer more than just anecdotal evidence, the data is often context-specific andhard to compare with that of other approaches. To make the data more reliable andrelevant for practitioners interested in reaching further down or in assisting very poor target groups more effectively, more in-depth research and validation of the findings isneeded. USAID and other donors, such as ILO and CGAP, who are interested in MED todeepen its poverty outreach, have encouraged the POWG to develop this paper into a book with detailed case studies and to eventually develop a poverty down reach learningagenda and training materials.In the recognition that “traditional” microfinance has largely bypassed the very poor, research is needed to better understand the special needs of the very poor and toidentify successful approaches and their success factors for assisting them with effectivewith MED services. The funding that is being sought in this proposal is to support thisresearch through validation of existing, promising MED case studies that target the very
See Annex 1: Microfinance and Microenterprise Development Services for Very Poor People: PromisingApproaches from the Field.