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DRAFT [April 14, 2005]

(with input from Rob Gailey, Jan Maes, Gaamaa Hishigsuren, Chris Dunford, Sean
Kline, Nigel Biggar, Sarah Ward, Jay Banjade, Cindy Ivanic-Lilllig, Carol Elwin,
Stacey Young, Jennifer Thompson, Marianne Benet, Maria Elena Perez, Vinode,
Syed Hashemi, Monique Cohen)

Poverty Outreach Working Group

Outline for Paper on Approaches for Reaching Very Poor People

The purpose of the paper is to document successful experiences in reaching very poor
people and to outline areas for future exploration.

The primary audience for the paper is practitioners with one section at the end to donors.

Section 1. Experiences in providing MED services to very poor people1 – successes

and failures

Common issues and challenges around reaching very poor people.

Key tangible challenges expressed in the findings to date and from general anecdotes
from the MF industry players who have attempted to reach further down to reach very
poor people. This might tie in with the debate and emerging question areas (or even the
general findings section). Some of the ones: a. self-selection – when the community
rejects very poor people from participating b. the cost of access – geographically
(distance, infrastructure – roads, communication, etc. and safety – often the poorest
people live in the most dangerous places), language, staffing, etc. c. farming/rural – the
macro picture on farming is bleak in terms of global subsidies for the wealthy,
increasingly erratic weather patterns, overpopulation and the pressures that places on
resources, etc. d. the impact of chronic poverty (5+ years or generation after generation
living in absolute poverty) on prospective clients and the psychological, social, and
mental tolls their circumstance take on people’s ability to take initiative, have dignity,
hope for the future, overcome stigmas, etc. e. Education – and its significant influence on
people’s lives f. Government (closely impacts education among other things) and its
significant influence on people’s lives g. Religion and other cultural attitudes about a
person’s place in life and what they can or cannot do

For Success --highlight important ingredients to being successful in reaching very

poor people.
• Leadership is critical
• Organizational buy-in
• Active Targeting is necessary
• Building up confidence of clients
• Flexible product and service design
• Flexible repayment option
Very poor people are defined as: those living in the bottom fifty percent below the national
poverty line established by the national government of the county in which those individuals live;
or, living on the equivalent of less than $1 per day, PPP.
• Cost Effectiveness
• Secure place to save

See Appendix 1 for suggested format for each case study – this format is a combination
of HAMED case study format and POWG suggestions for evaluation criteria.

See Appendix 2 for possible case studies to highlight

Section 2. Break out the learning in three categories –

• What are the general findings?

(take a look at grid Jan has created to gather common elements)
• What are the areas of debate?
i.e. role of grants, targeting groups of people (with AIDS, refugees, ex-
combatants, orphans, street kids, etc).
• What are the emerging questions? For further research?

Section 3. Suggestions for program innovation, what kind of pilots would we like to



Strategic Alliances with Social Protection groups

Rural Poverty Approaches

Geographic outcasts – DRC, Somalia, Southern Sudan, Liberia, etc. – the places where
no one wants to do MED

Section 4. Recommendations to donors -- what kind of learning opportunities would

we like donors to support?

Begin section by discussing things that have to be done to get to new


The donors and practitioners are afraid to invest in innovation – the industry expects high
performance standards which makes it difficult for NGOs to experiment.

Research topic –Understand behaviour of the very poor?

Linkages between MFIs and grassroots -- grant programs linking with ME programs.
i.e. -- LINKS program – CRS, CARE, Africare, ARC --- Sierre Leone ARC is starting, CSR is
doing market research and linkages, CARE working on roads, being done all in conjunction with
each other. Another integrated program such as this could be explored to serve very poor people.

ARC and WR have talked about funding a reliable credit scoring system available to refugees that
they can take with them when they move from one location to another in their search for safety.
If they save/repay with one MFI, MFIs in the new region where they go would recognize their
good record.

Consumer credit– many poor need education, housing, and healthcare loans in
conjunction with enterprise loans. An interesting pattern of people who are in
impoverished conditions seems to revolve more around the non-business aspects of life.

Youth mobilization
Annex 1

(Title of intervention)

I. Context

A. Socioeconomic overview
Describe existing or pre-existing circumstances (i.e. political or economic
instability, natural disasters, HIV/AIDS prevalence/incidence, socio-cultural
crises) that affect the health and welfare of the population, especially those
living in poverty.

B. Purpose of intervention
Purpose and distinguishing characteristics of the program/intervention.
Targeting Methodology.

C. Description of target group/clients/members

Location and type of community (rural, urban), number of beneficiaries and
average group size if appropriate.

II. Description of Methodology

A. Summary of design concepts: Include rationale of intervention –

What is your theory of change? What did you know about client
behaviour that led you to this intervention? What are the intended
impacts of your program? How are the inputs designed to achieve those
intended impacts?

B. Process/steps in implementations: Summary of work plan, action

steps and example of the typical process followed.

C. Method of measuring results: Briefly describe monitoring


III. Results

How replicable is the program?

Impact? Summary of program indicators, outputs and impact i.e..highlights
from evaluations, results of impact studies, anecdotal evidence of
improvement in economic status, household income level, health and welfare
of beneficiaries and their families (especially children) etc. Include end of
project indicators if available.

IV. Resources Required/Cost to the institution

Evaluate the Cost Effectiveness and Sustainability

V. Challenges and Pitfalls/Lessons Learned

VI. Contact information/ sources of information

Organization and contact person for additional information. Please include

name, email, telephone and mailing address.
Annex 2
Possible Case studies to include

- MFOs that are known for targeting very poor people and vulnerable
- new pro-poor initiatives by “mainstream” MFOs
- CGAP Pro-Poor Innovation Challenge (with IFAD for rural microfinance)
- World Bank Development Market Place (international and national
competitions) finalists (and winners) of microfinance related proposals
- Trickle Up Symposium (December 2004) articles
- Robert Hickson (Microfinance Services PTY Ltd, Goondiwindi, Australia)
provides a short overview (See paper in reference section) on innovations and
approaches in the provision of microfinance services to extremely poor
households. He makes an interesting distinction between approaches that
attempt to change the capacity of people to use finance and approaches that
aim to modify services and products (demand led microfinance)-
- Survey through listserves?

Highlight cases in:

Asset Transfer
Self Help Groups
Strategic Alliances: With MFIs,
Development agencies,
MFIs and Health,
Social Protection and ME orgs

a. Direct Financial Subsidy
i. BRAC’s Challenging the Frontiers of Poverty Reduction Program /
Targeting the Ultra Poor (CFPRP/TUP) – contact Imram Matin
ii. Trickle Up Program – (JAN TO WRITE UP)
iii. IRC/ARC in refugee populations – Sarah Ward to write
b. Mixed Grant/Credit Models
i. BRAC’s Income Generation for Vulnerable Group Development
1. food subsidies and skill training
2. required monthly savings
3. access to microcredit at later stage
ii. ADRK Burkina Faso
1. equipment grant, 25% has to be repaid over 5 years (and
serves as down payment for new loan)
2. training and technical assistance free of cost
iii. Caritas Bangladesh
1. hand pumps for irrigation to be paid back over 24 months
2. free installation and technical assistance
1. three step program: grants-microloans-advanced loans
v. Ashrai, Bangladesh (??)
c. Credit Plus programs
i. Education, Literacy
1. Credit with Education (health issues): Freedom From
ii. Healthcare
iii. Training and technical assistance
1. Conservation International, Mexico (small-scale coffee
farmers BPL)
d. Savings-led microfinance – CONTACT Hugh Allen, Kim Wilson, Madi
Hirschland, Jeff Ashe
i. PACT: WEP, WORTH (group savings and literacy) – Jan to write
and Jeff Ashe to review
ii. India Self-Help Model – get Kim Wilson to write about SHG
model and Hugh Allen to talk about replicability in Africa
iii. OXFAM’s Banking on the Poor Initiative
iv. Flexible Savings products (Safe Save, Bangladesh)
v. Savings Products by KAFC, Kyrgyzstan
vi. Matched Savings (TUP – Cambodia, PLWHA)
vii. Commitment savings device (SEED, Philippines)
viii. Asset-based savings (CARE, Zimbabwe)
e. Credit-only programs
i. Cross-Subsidization: Balanced mix of poor and poorest clients
ii. New products for very poor people
1. CBDIBA, Benin: smaller loans for the poorest women
administered through small groups
iii. Group Lending
1. Grameen
2. NABARD, India to SHGs
iv. Targeted lending
v. More flexible loan terms
1. Qinghai Community Development Project (China) – Laura
to contact Robert Hickson
f. Micro-insurance
i. Health insurance
1. Pre-paid healthcare: Center for the Advancement of
Community Healthcare, Uganda.
2. PACT Myanmar
ii. Life insurance
1. Alternativa Solidaria Chiapas, Mexico
iii. Crop insurance
g. Business Training
i. MEDA, Haiti: literacy and business training
ii. CRS, FFH India (and elsewhere): Learning Conversations
Use locals to develop vision of community. Product is structured
to be easily adaptable. The conversations identify the poorest in village so
they are not excluded. FFH WRITING CASE STUDY

iii. PALS (field tested by TUP), Linda Mayoux

iv. ILS (ASA, India), Helze Noponen
h. Other
i. Credit in form of cattle (to pastoralist women in Kenya, WEEC)
ii. WAGES, Togo (no savings requirement for loans by returning
refugees and very vulnerable populations?)
iii. Strategic partnership with Credit Unions (FFH)

Vulnerable Groups
a. Rural poor (landless, near landless, remote rural poor)
b. Refugees, IDPs
c. Minorities (ethnic, tribal, immigrants)
d. Bonded Labor
i. ILO, India (French Institute of Pondicherry) – CONTACT CRAIG
ii. International Justice Mission, India
iii. National Rural Support Program, Pakistan
e. People with disabilities (PWD)
f. People living with HIV/AIDS (PLWHA)
g. Women (including widows and woman-headed households)
i. MEDA, Pakistan: isolated rural women
ii. ASA – reaching Dalit women and empowering them to become
Community Credit Officers. (GAAMAA TO WRITE CASE
h. Elderly
i. Resource Integration Center (Bangladesh) RPPIC winner
i. Children (orphans, street children)
YOSEFO, Tanzania: savings and loan product for tuition
POWG member follow up:

Nigel Biggar -- (Good case study on leadership is Fundacion Adelante with Director
Tony Stone/Honduras).
Another good case study for leadership is Udaia Kumar SHARE case study – SHARE
program also a good case study – use CGAP PAT

Input from Hashemi on Innovation Challenge experiences

Strategic Alliances and Linkages

Jan Maes - Trickle Up experience with Grants and matched savings - Talk about the

Jay Banjade - Asset Transfer -- Save has experimented in Nepal. – start with a loan and
have borrower set the terms. Give financing resources with a longer long term.

Fonkoze – MEDA, ADRA – linkages to bring clients together – another case study of
Fondasyon Kole Zepòl (FONKOZE), Haiti
PPIC recipient – ask Hashemi
FONKOZE's remittance service costs $10 per transfer regardless of the amount, which
compares favorably to the average of $0.25 per dollar charged by other transfer
companies. In addition, FONKOZE offers customers better currency exchange rates, the
opportunity to collect funds near their homes in rural areas, and the ability to link these
funds to other financial services such as savings accounts. Although high-cost transfer
companies currently have very strong market presence among both Haitians and Haitian
immigrants in the US, FONKOZE's previous marketing efforts have shown that
awareness of FONKOZE's service can be increased through targeted publicity in ethnic
Haitian media.

Pro Mujer – Peru focal centers.

Grameen Bank – Beggar’s program as an example of something a bank can do – get write
up from GF

R. Dhonte, AXE. Banking with the poorest. (

Madeline Hirschland (2003) Savings operations for very small remote depositors : some
strategies. (Microfinance Gateway)

Jeffrey Ashe (2003) OXFAM America’s Banking on the Poor Initiative

CGAP. Past RPPIC and PPIC Winners. (

Linda Jones (2004) MEDA. Reaching Low-Income Women with Enterprise

Development Services: Challenges and Opportunities.

Matin Imran and David Hulme (2003). Programs for the Poorest: Learning from the
IGVGD program in Bangladesh.

Kathleen Stack and Didier Thys (2000). A business model for going down market:
combining village banking and credit unions.

David Gibbons (CASHPORE, 2000). An interview with… Serving the poorest

sustainably (The Microbanking Bulletin)

Syed Hashemi. CGAP Focus Note 21. Linking Microfinance and Safety Net Programs to
Include the Poorest. The case of IGVGD in Bangladesh.

Parker, Joan (Development Alternatives). CGAP Focus Note 20. Microfinance, Grants,
and non-financial responses to poverty reduction: where does microcredit fit?

Khan Sharier (2004). Turning Bangladesh’s beggars into businessmen.

Mayoux, Linda (2004). Microfinance and Women’s Empowerment: Rethinking Best


Tankha, Ajay (1999). Some NGO Dilemmas in Reaching the Poorest with Microfinance.

Daru Patrick and Craig Churchill (when?). The prevention of debt bondage with
microfinance and related services: preliminary lessons.

International Conference on Microcredit in Bangladesh. BRAC’s Microfinance Canvass:

Financial Services and Strategic Linkages.

Matin, Imran (when?) BRAC. Microfinance engagements of the Extreme Poor:

Preliminary highlights from case studies.
Hickson, Robert (UNDP). Reaching Extreme Poverty: Financial Services for the Very

Datta, Dipankar and Iqbal Hossain (2003) CONCERN. Reaching the Extreme Poor:
Learning from Concern’s community development programs in Bangladesh.

Ashe, Jeffrey (2003). Oxfam America’s Banking on the Poor Initiative.

Cohen, Monique (2003). Reducing Vulnerability: The demand for microinsurance.

Hulme, David and Karen Moore and Andrew Shepherd (2001). Chronic poverty:
meanings and analytical frameworks. Institutute of Development Policy and
Management, University of Manchester and University of Birmingham

Effective strategies for reaching the poor, The Small Enterprise Foundation,
Development Department, Simanowitz Anton

Money Matters – Stuart Rutherford

David Hulme and Paul Moseley – book on finance and development

MF Risk management and Poverty - AIMS

Is micro-finance reaching the poor? An overview of poverty targeting methods

Gonzalez Aguilar, V.

SHG Banking: A Financial Technology for Reaching Marginal Areas and The Very Poor
Seibel, H.D.

Microfinance for the Poorest: A Review of Issues and Ideas for Contribution of Imp-Act
Simanowitz, A.

Financial services for the very poor – thinking outside the box

Depth of Outreach: Incidental Outcome or Conscious Choice? Nexus (43) 7, 11, Small Enterprise
Education and Promotion Network: New York, by Thys Didier, 2000

Measuring and managing social performance, Sean Kline, and Managing trade-offs ,Jonathan
Morduch - Dec 2004, IDS Insights, Issue #51


Simanowitz, Alliance of Micro Enterprise Development Practitioners, July 1998

Simanowitz A., and Walter, A. (2002) Ensuring Impact: Reaching the Poorest While
Building Financially Self-Sufficient Institutions, and Showing Improvement in the Lives
of the Poorest Families. Pathways Out of Poverty. Innovations in Microfinance for the
Poorest Families.