Identifying Complementary Programs to Maximize the Impact of Microcredit

Julie Humberstone and Jennifer Singer ____________________________________________________________
Presented at FINCA International's 2006 Research Symposium March 24th, 2006

Table of Contents Executive Summary ................................................................................................................ 2 Introduction ............................................................................................................................... 3 Methodology ............................................................................................................................. 3 Assessing Poverty ..................................................................................................................... 3 Assessing Impact....................................................................................................................... 4 Identifying Vulnerabilities ........................................................................................................ 5 Results........................................................................................................................................ 6 Assessing Impact....................................................................................................................... 6 Overall Vulnerabilities ............................................................................................................. 7 Regional Vulnerabilities ........................................................................................................... 7 Country Vulnerabilities ............................................................................................................ 8 Discussion ................................................................................................................................. 8 Housing..................................................................................................................................... 8 Literacy ..................................................................................................................................... 9 Other Vulnerabilities .............................................................................................................. 10 Conclusion............................................................................................................................... 12 Appendix: Statistics.............................................................................................................. 14 Works Cited ............................................................................................................................. 16

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Executive Summary Microcredit has been recognized as a powerful and effective tool for combating poverty. The poor’s access to credit has been rapidly expanding over the past 15 years. However, to successfully combat poverty, extending access to credit must be coupled with a persistent push to maximize the positive impact of microcredit programs. Complementary programs are one means of maximizing impact. During the summer of 2005, FINCA interns interviewed over 3,500 microcredit clients in 10 program locations. The data collected from these interviews can be used to not only to assess impact, but also to explore the vulnerabilities that prevent some clients from rising out of poverty. Identifying these vulnerabilities, in turn, suggests complementary programs that may mitigate the vulnerabilities and maximize the impact of the microcredit program. A comparison of the poverty level of new and mature clients reveals that clients appear to experience a positive impact from program participation. A higher percentage of mature clients than new clients live above the poverty line. Discriminant analysis is used to uncover some important insights into the vulnerabilities that may impede clients’ success. Three variables: “housing,” “literacy,” and “other” vulnerabilities contribute the most to the difference between clients that are living below the poverty line and clients that are living above the poverty line. The housing variable refers to the quality of a clients’ housing, specifically whether they have electricity, sanitation facilities (a flush toilet), and a telephone. The literacy variable refers to whether a client can read, write, and do basic math. The other vulnerabilities variable indicates the existence of circumstances such as natural disasters, chronic or terminal illness in the family, recent death in the family, large family size, or single-parent households. The other vulnerabilities variable also includes illness and death of family members from HIV/AIDS. The variables that discriminate between those living below and above the poverty line vary somewhat between specific regions and between the 10 program locations. However, housing consistently emerges as a variable that makes a difference to a client’s poverty level. Pinpointing the vulnerabilities that discriminate between clients living above the poverty line from those that continue to live below the poverty line allows microcredit practitioners identify the complementary programs or interventions that will maximize the impact of microcredit. Practitioners in FINCA program locations may want to look more closely at conditions surrounding housing, literacy, and other vulnerabilities, such as chronic illness, and consider complementary programs that address these conditions. Ultimately, these targeted interventions can assist greater numbers of clients to rise out of poverty.

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Introduction Microcredit has been recognized as a powerful poverty alleviation tool that offers “hope to many poor people of improving their own situation through their own efforts.”1 As a result, the poor’s access to credit has grown rapidly in recent years. In 1990 only a few dozen microcredit programs in the world were reaching less than 2 million clients.2 By the end of 2004 over 92 million people had loans with microcredit institutions. Of those 92 million, over 66 million were considered among the world’s poorest.3 The U.N.’s Millennium Development Goals include the eradication of extreme poverty by 2015. To achieve the goal of eradicating poverty, microcredit practitioners are not just increasing access to credit, but are also focusing attention on creating cost-effective tools to measure microcredit’s impact.4 Impact assessment tools track the degree and pace of the poor’s movement out of poverty and can help practitioners maximize their impact. During the summer of 2005, FINCA interns interviewed more than 3,500 microcredit clients in 10 program locations. Using the data gathered in these interviews, this paper explores how FINCA’s assessment can be used not only to assess impact, but also to identify ways to maximize impact. The FINCA Client Assessment Tool (FCAT) uses money and social metric scores to assess the poverty level of a client’s household. We combine all intern datasets gathered in 2005 and compare the money and social metric scores of new and mature clients. Comparisons made between the scores of new and mature clients can indicate whether mature clients are “better off” than clients receiving their first microcredit loan. The money and social metric scores are also used to identify factors that limit the impact of microcredit programs. We answer the question: What variables are most strongly connected with a client’s poverty level as determined by the money and social metric scores? By identifying the variables that are most important to the poverty level of clients, we uncover the vulnerabilities that limit the impact of the microcredit program. For example, a variable with a strong negative impact on the total social metric score may indicate a vulnerability that, if addressed, would increase clients’ ability to rise out of poverty with the help of microcredit. We can then identify the types of complementary programs that may mitigate these vulnerabilities. Targeted complementary programs can help microcredit organizations fulfill their mission to help people rise out of poverty.

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The Hidden Wealth of the Poor The Economist, Vol. 377, Issue 8451. Nov. 5, 2005. pp. 3. Bornstein, David. How to Change the World: Social Entrepreneurs and the Power of New Ideas. 2004. Oxford University Press: Oxford. pp. 184 3 Daley-Harris, Sam. State of the Microcredit Summit Campaign Report 2005. 2005. The Microcredit Summit Campaign: Washington, D.C. pp. 1. 4 Ibid. pp. 29.

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Methodology Assessing Poverty During the summer of 2005, FINCA interns interviewed clients from 10 microcredit program locations: Guatemala; Nicaragua; Haiti; South Africa; the Democratic Republic of Congo; Zambia; Malawi; Kosovo; Samara, Russia; and Tomsk, Russia. Interns interviewed a total of 3,530 clients. Approximately 300 clients were interviewed in most program areas. One of the primary purposes of the survey was to assess the poverty level of clients. The first method applied to assess poverty level was the money metric score. Clients were asked about household expenditures, including expenditures on food, cooking fuel, utilities, transportation, education, and other categories. Expenditure information was used to calculate a client’s Daily Per Capita Expenditure (DPCE). The DPCE serves as the money metric score. Interns compared the money metric score to poverty standards and categorized clients as very poor (generally defined as the lower 50 percent of clients below the poverty line), moderately poor (upper 50 percent of clients below poverty line), or vulnerable non-poor (above poverty line). The second method of assessing poverty level was the social metric score. The social metric score was an aggregate score based on eight measures of well-being. The eight social metrics included food security, educational situation, social capital, housing, empowerment, health, literacy, and general vulnerabilities (such as natural disasters, chronic or terminal illness in the family, recent death in the family, large family or single parent households). Clients were categorized as very poor, moderately poor, or vulnerable non-poor based on the following standards: Table 1: Social metric poverty standards
Category Vulnerable Non-poor Moderately Poor Very Poor Social Metric Score 25-32 17-24 8-16

More clients may actually live in poverty than is reflected by their social or money metric score, due to the difficulty of accurately assessing poverty across diverse regions and cultures. However, used together, the money and social metric scores capture many of the elements that determine whether a client is living below or above the poverty line. Assessing Impact In addition to assessing the poverty level of each client, interns also used money and social metric scores to assess the impact of microcredit by comparing the scores of new and mature clients. In our analysis, new and mature client scores from all program areas are assembled to generate an overall comparison of new and mature clients.

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The poverty standards used to categorize the social metric scores were the same for each program location, and scores were easily compared. However, Daily Per Capita Expenditure (DPCE) scores were in local currencies and could not be easily compared. Therefore, DPCE scores were converted into a percentage of the poverty line, based on the poverty standards of each country. The client’s DPCE as a percentage of poverty line served as a new money metric score. Clients were categorized as very poor, moderately poor, or vulnerable non-poor based on this new money metric score. Only 32 out of the total 3,530 clients fell into the very poor category according to social metric scores. As previously mentioned, the social metric score alone may not capture all clients who fall below the poverty line. The social metric score may be a better macro-indicator of poverty than it is a micro-indicator of poverty. While both the money metric and social metric scores are used to categorize clients in this analysis, the social metric score was used in the primary analysis because it provided more compelling results. The use of the social metric score in the primary analysis will be discussed further below. Because of the relatively small number of clients in the very poor category (according to the social metric scores) the very poor and moderately poor categories were collapsed. All comparisons in this analysis are made between clients living below the poverty line and clients living above the poverty line. Identifying Vulnerabilities Through discriminant analysis, the FINCA dataset can also be used to identify the most important client vulnerabilities. Discriminant analysis is a statistical technique used to examine whether two or more groups can be distinguished from each other. In this analysis, the two groups are clients living below the poverty line and clients living above the poverty line. Discriminant analysis produces a model that is a linear combination of predictor variables. The score obtained from the model distinguishes between the two groups. The validity of the model is measured by how accurately it can classify a particular client in the correct group. The model also reveals which variables contribute to the separation between the two groups. By identifying the variables that contribute the most to the separation, the important vulnerabilities may be identified. All respondents (N=3530) were included in the initial discriminant analysis. The total social metric score was used to place clients into the two groups: those living below the poverty line and those living above the poverty line. The eight measures of well-being were included as the potential predictor variables. The eight measures of well-being are: food security, educational situation, social capital, housing, empowerment, health, literacy, and other vulnerabilities (such as natural disasters, illness in the family, death in the family, large family size, or single-parent household). Additional discriminant analysis was conducted, varying three inputs. First, in addition to the eight measures of well-being, other variables were tested to determine if they contributed anything to the separation of the two groups. The additional variables were location of residence (rural versus urban), age, years of education, household size, number of income earners in the household, number of relatives that have died from AIDS, and number of

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relatives that are infected with HIV. Second, the money metric scores rather than the social metric scores were used to classify the clients in the two groups. Third, individual programs were tested to examine whether the most significant vulnerabilities varied. Regional differences were also tested. The data was grouped into three regions: Latin America/Caribbean, Africa, and Eurasia. The sample size for each country and region is listed in Table 2. Table 2: Sample sizes for each country and region
Country Guatemala Nicaragua Haiti South Africa The DRC Zambia Malawi Kosovo Samara Tomsk N 579 645 325 260 215 300 300 305 305 296
Region Latin America Africa Eurasia N 1549 1075 906

Results Assessing Impact Charts 1 and 2 display the percentage of new and mature clients that live below and above the poverty line according to both measures of poverty. Chart 1
Poverty Level Based on Social Metric Score
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Below Poverty Line Above Poverty Line 27.7% 18.9% 81.1% 72.3%

New Clients Mature Clients

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Chart 2
Poverty Level Based on Money Metric Score
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Below Poverty Line Above Poverty Line 41.4% 35.7% 64.3% 58.6% New Clients Mature Clients

Clients appear to experience a positive impact from program participation. A higher percentage of current clients than new clients live above the poverty line. But the question remains regarding how to increase or improve impact. A discriminant analysis provides some important insights into the vulnerabilities that may impede clients’ success. Overall Vulnerabilities In the initial discriminant analysis, all respondents were included. The social metric scores were used to group clients as below or above the poverty line and the eight measures of wellbeing were included as potential predictor variables. The resulting model can correctly classify a client as below or above the poverty line 95.1% of time, indicating the combination of variables in the model effectively discriminates between the two groups. All eight measures of well-being are part of the model and help to discriminate between those living below the poverty line and those living above the poverty line. The eight measures contribute directly to the social metric score, so this finding is not surprising. More importantly, the discriminant analysis reveals the relative contribution of the eight variables. Three variables stand out as most important: housing, literacy, and the other vulnerabilities variable. These three variables make a larger contribution to the model and correlate more strongly with the discriminant scores generated by the model than the other five social metrics. (Relevant statistics are listed in the appendix.) Using just the three most dominant variables, the model correctly classifies clients 86.7% of the time, attesting to the relative importance of these three variables in discriminating between the groups. The results found in the initial analysis were confirmed when respondent’s were grouped using the money metric scores rather than the social metric scores. Once again, the three variables that contributed the most to discriminating between the two groups were housing, literacy, and

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the other vulnerabilities variable. In both cases, housing is the strongest discriminating variable. Variables other than the eight social metrics were also tested, but did not contribute significantly to the quality of the model. Regional Vulnerabilities The discriminant analysis was repeated looking at specific regions to determine if the same variables contribute to the distinction between those above the poverty line and those below the poverty line in each region. The premise of this test was that different vulnerabilities may impede client success in different areas. Two regions were examined: Africa and Latin America/Caribbean. Eurasia was not examined as a region because only one respondent fell below the poverty line according to the social metric measure of poverty. The discriminant analysis including only African respondents confirms our initial findings. Once again, housing, literacy, and other vulnerabilities are the most important variables. In the Latin America/Caribbean region, housing and literacy again appear as important variables. Food security also appears important for the first time. Education and other vulnerabilities may also have some importance. Housing and literacy are the common denominators between the two regions. The importance of housing is confirmed when grouping clients using the money metric scores rather than the social metric score. Country Vulnerabilities Discriminant analysis was conducted on individual countries as well. In Guatemala, literacy is the most important variable. Housing is also influential, and there is some evidence that social capital is important. In Nicaragua, no one variable strongly stands out. However, food security seems to carry some importance, along with housing, literacy, and the other vulnerabilities category. In Haiti, housing and other vulnerabilities again appear important. Education and social capital may also be important in Haiti. In South Africa, housing, literacy, and other vulnerabilities clearly dominate. In the Democratic Republic of Congo housing is again important, along with empowerment, health, and possibly education. Housing and other vulnerabilities are important in Zambia as well, along with social capital and possibly health. Finally, in Malawi housing, other vulnerabilities, literacy, and social capital are most important. While the analysis of individual countries reveals some important differences, housing again serves as the strongest common denominator. Relevant statistics for both countries and regions appear in the appendix.

Discussion Poverty is most often measured monetarily, but in many countries measuring earnings or expenditures does not provide a complete picture of an individual’s quality of life. The addition of eight social metrics in the FINCA study provides additional insight on the life of microcredit clients. The social metric variables give a more complete image of poverty in the countries studied. The discriminant analysis pinpointed three variables that play an important role in

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placing clients below the poverty line. The housing, literacy, and other vulnerabilities variables will be discussed with regards to their potential to be targeted with complementary programs in order to maximize the impact of microfinance. Housing Housing is a crucial variable to distinguishing between those that live below the poverty line and those that live above the poverty line. The connection between housing and clients who fall under the poverty line could simply be a symptom of the spending patterns of those with less money. Poorer clients may not be able to afford the components of the housing metric: electricity, sanitation (flush toilet), and especially phone. They may spend their limited income on what they consider more essential, such as food and rent. However, the importance of the housing variable could also indicate that poorer clients do not have access to the components of the housing metric. Lack of access to these components may keep clients from rising above the poverty line (particularly as measured by the social metric assessment). As with each social metric, the housing variable components represent essential elements of development as they represent basic steps towards independence and self-reliance. A number of studies confirm the notion of housing as a consistent variable distinguishing those who live below the poverty line from those who live above it. A study in Uganda studied clients in three programs: FINCA, FOCCAS, and PRIDE.5 The data was first collected in November and December 1997 to obtain baseline information and then was repeated in the same months in 1999 to assess impact.6 It examined whether participation in a microfinance program led to improvements in the economic welfare of households, enterprise growth, and stability.7 The study also looked at microfinance programs helping clients’ households reduce financial vulnerability through diversification of income sources and accumulation of assets.8 The particular household amenities were not specified as in the FINCA study (electricity, sanitation, telephone), but it does describe household amenities with regards to number of rooms, number of economically active individuals, urban or rural etc. The value of durable assets (mattress, radio, stove, beds) purchased was specified in the joint FINCA, FOCCAS and PRIDE study. The value of these assets was found to increase, which was regarded as a strong indicator of the impact of microfinance on clients, serving as a proxy measure of household wealth.9 The increase between 1997 and 1999 in the average value of an asset purchased by clients was more than twice that of non-clients. Overall in every asset category studied, client households were more likely to have acquired the specific consumer durable good than non-client households.10 This study shows that microcredit had a positive impact on client’s household amenities in Uganda and possibly reduced their financial vulnerability. It also demonstrates the connection between household amenities and a client’s position relative to the poverty line.
5 Gayle Morris, Carolyn Barnes. An Assessment of the Impact of Microfinance: A Case Study from Uganda. Journal of Microfinance. Provo: Summer 2005.Vol.7, Iss. 1; pg. 39. 6 Ibid 7 Ibid 8 Ibid 9 Ibid 10 Ibid

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Literacy The “other vulnerabilities” and literacy variables listed in the FINCA study also distinguish between those that live below the poverty line and those that live above the poverty line. These two variables are not symptoms of the different patterns of spending between the very poor and less poor. Rather, they suggest impediments to rising out of poverty and, most importantly, they suggest impediments to success for microcredit clients. These impediments may be mitigated, thereby increasing the success of clients and the impact of microcredit programs. The AIMS Study in Peru did an analysis of Household Economic Portfolio and found that microcredit had a positive impact on microenterprise net-revenue, accumulation of fixed assets, and employment generation. 11 At the household level the results were not as positive. “No positive impact of micro credit on expenditure on household appliances and education was reported. However, income-increase for the treatment group contributed to increase on expenditure on food consumption.”12 These statistics could represent a unique case in Peru due to the economic recession of 1997-1999; however, it does still indicate that during economically challenging times, food consumption comes first and education and household appliances are left behind.13 According to the AIMS study, microfinance organizations have a great potential to improve the impact of microcredit on these poor families. Both the AIMS study and the findings of this paper suggest that by investing in literacy programs, particularly during times of economic slowdowns, the impact of microcredit can be improved. In Paul Mosley and June Rock’s study of six microfinance organizations, respondents stated that the first thing they spent money on, in the event of increased income, was educational expenditures.14 Educational expenditures were also found to be the last thing (if possible) to be cut in the event of an income shortfall.15 This indicates that even initial involvement of a client in microcredit may have long-term impact as clients prioritize spending income on education over other areas. In the same study of SEF clients in Uganda, it was found that the impact of microfinance schemes had a tendency to correlate positively with income, and a propensity for impact to approach or even fall below zero as income fell well below the poverty line.16 Instances such as these indicate where microcredit can pinpoint those below the poverty line and focus on variables that will raise them above the poverty line. Other Vulnerabilities The other vulnerabilities variable is frequently one of the strongest discriminating factors between clients below and above the poverty line. Other vulnerabilities include natural disasters, chronic or terminal illness in the family, recent death in the family, large family or single-parent households. Clients reporting one or more vulnerabilities were not asked to
11 Khalily, M.A. Baqui. Quantitative approach to impact analysis of microfinance Programmes in Bangladesh – What have we learned? Journal of International Development 16. 2004. P. 339 12 Ibid 13 Ibid 14 Mosley, Paul; Rock, June Microfinance, labour markets and poverty in Africa: A Study of Six Institutions. Journal of International Development; April 2004; 16; 3; 474 15 Ibid 16 Ibid

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specify the nature of those vulnerabilities. However, it is highly probable that a growing number of those vulnerabilities can be attributed to AIDS crisis in Africa where data clearly supports this. The AIDS crisis in Africa and elsewhere compels development practitioners to design appropriate assistance policies for households experiencing a death, illness or taking on orphans. Sub-Saharan Africa represents only 10% of the world's population but accounts for 60% of all people living with HIV/AIDS. The region thus represents an estimated 25.4 million people who are HIV-positive.17 It can be noted that when looking at regional differences in the discriminant analysis, significant variables identified in Latin America included housing and literacy whereas when Africa was studied separately, these two variables also proved significant with the addition of the ‘other vulnerabilities’. The category includes many vulnerabilities apparent in a region with the epidemic: chronic or terminal illness in the family, recent death in the family, and singleparent households. It is important to understand how chronic illness and death, possibly associated with HIV/AIDS, negatively affects households and the influence of microcredit in helping impacted households access capital and services. In addition to asking about other vulnerabilities, the FINCA interviewers asked some clients about the number of family members affected by HIV/AIDS. However, it is likely that this information does not represent the full impact of the disease. Particularly in Africa, this may be attributed to a lack of privacy during interviews and the social stigma surrounding the disease. Nearly 80% of households studied in the household-impact assessment in Uganda experienced unanticipated, financially demanding events between 1997 and 1999, the two most common being medical expenses and death of a household member.18 In 1999 more than 80% reported medical expenses and 40% reported a death, (likely associated with HIV/AIDS). The differences between clients and non-clients in 1997 and 1999 were significant.19 The impact of adult deaths on households may be mitigated either through programs that minimize poverty and vulnerability or by assistance targeted to the poorest and most vulnerable households. 20 In addition, to the extent to which microcredit programs improve access and lower the total costs of borrowing, they may not only stimulate growth and investment but also help resource-poor households overcome the impact of an adult death in the areas hard-hit by the AIDS epidemic.21 Even though the FINCA dataset does not quantify the number of “other vulnerabilities” that are related to HIV/AIDS, when looking at African countries, HIV/AIDS is a major issue. More research must be done regarding the role that HIV/AIDS plays on the impact of microfinance and the potential to mitigate the negative impact.

17 Buss, Terry F. Microcredit in Sub-Saharan Africa: A Symposium. Journal of Microfinance. Provo: Summer 2005. Vol 7. Iss. 1; pgs 1,11. 18 Gayle Morris, Carolyn Barnes. An Assessment of the Impact of Microfinance: A Case Study from Uganda. Journal of Microfinance. Provo: Summer 2005.Vol.7, Iss. 1; pg. 39 19 Ibid 20 Lundberg, Mattias; Mujinja, Phare. Sources of Financial Assistance for Households Suffering an Adult Death. The World Bank, Policy Research Working Paper Series: 199. 21 Ibid 199.

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Uganda and Malawi provide clear examples where FINCA has partnered with complementary organizations in order to better serve their clients. In Uganda, clients were offered a separate loan product for bednets (at an approximate cost of $3USD). This represents a small cost on the part of FINCA but has a significant impact on the health of clients and thus the impact of microcredit. In Malawi, FINCA partnered with Johns Hopkins University Bloomberg School of Public Health’s Center for Communication Programs (CCP). This program integrated HIV/AIDS prevention with village banking. Results have been positive including increased client retention and satisfaction, HIV/AIDS testing and a general decrease in taboo associated with HIV/AIDS. FINCA utilized CCP’s expertise in education and communication strategies in order to train FINCA village bank members as peer educators and to build a model which can be replicated worldwide, integrating HIV/AIDS prevention education into microfinance programs. These two programs represent ways in which FINCA can partner with leading organizations in the areas highlighted – housing, literacy, and other vulnerabilities. FINCA can continue as a leader in its core competency of providing access to credit, while allowing other organizations to utilize the channels created through the village banks to have a more significant impact on poverty.

Conclusion Hasan Zaman, in his study of microfinance in Bangladesh, suggests that microcredit may be a more effective remedy against poverty and vulnerability if it is complemented with other interventions.22 He goes on to say that this does not imply that microfinance institutions ought to provide these services, but that facilitating linkages to providers of other non-credit interventions could be effective.23 Identifying variables which most significantly affect a client’s poverty level can pinpoint the best areas for development practitioners to focus on in order to maximize the impact of microcredit. Whereas many studies of microcredit focus on access to credit as the sole poverty alleviation tool, this perspective of microcredit impact is unique. Money and social metrics are not assumed to improve following client involvement. In contrast, this paper looks at microcredit as a tool that can be used in conjunction with other interventions. Although this analysis of FINCA’s data is preliminary, it provides insight into which vulnerabilities should be focused on and would provide the largest benefit to clients if complementary services were offered. Housing, literacy, and the other vulnerabilities category (such as death due to AIDS) appear repeatedly as the vulnerabilities that most affect client’s lives and poverty levels. Targeted interventions, therefore, may involve programs that address these issues in a way that is appropriate for a specific country or region. For example an intervention program may remove barriers to adequate housing, provide literacy training,

22 Zaman, Hassan. The Scaling-Up of Microfinance in Bangladesh: Determinants, Impacts, and Lessons. World Bank Policy Research Working Paper 3398, September 2004. p. 18 23 Ibid. p. 18

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educate clients about ways to protect themselves against illness, or establish savings programs that help clients prepare for unexpected expenses, such as funerals. FINCA has created networks of women in countries allover the world. These networks represent a channel which can be utilized by partner organizations in order to maximize the impact of microfinance and have a more positive impact on poverty in the long-run. While impact assessment tools were created to track the degree and pace of the poor’s movement out of poverty, this analysis of FINCA’s client assessment data translates the data into active next steps. It identifies variables that coincide with instances of poverty, suggesting areas for targeted interventions utilizing appropriate technology and complementary services that will enable microcredit to become a more effective poverty alleviation tool.

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Appendix: Statistics

Coefficients*

Overall Housing Literacy Vulnerabilities Social Capital Empowerment Education Health Food Security

0.472 0.461 0.412 0.304 0.299 0.245 0.238 0.232

Africa Vulnerabilities Housing Literacy Social Capital Educational Empowerment Health Food Security

0.572 0.569 0.503 0.498 0.412 0.381 0.267 0.242

LA/Caribbean Literacy 0.477 Housing 0.462 Vulnerabilities 0.389 Social Capital 0.372 Educational 0.295 Food Security 0.287 Empowerment 0.279 Health 0.253

Structure Matrix**

Housing Literacy Vulnerabilities Education Health Food Security Social Capital Empowerment

0.575 0.435 0.417 0.388 0.364 0.348 0.182 0.130

Housing Vulnerabilities Literacy Educational Health Empowerment Social Capital Food Security

0.412 0.378 0.368 0.288 0.248 0.187 0.170 0.098

Housing Food Security Educational Literacy Health Vulnerabilities Social Capital Empowerment

0.540 0.459 0.423 0.405 0.388 0.335 0.13 0.089

Coefficients

Guatemala Literacy Housing Social Capital Empowerment Vulnerabilities Education Health Food Security

0.699 0.451 0.443 0.423 0.344 0.289 0.253 0.173

Nicaragua Vulnerabilities Literacy Food Security Empowerment Social Capital Housing Education Health

0.462 0.445 0.422 0.407 0.400 0.347 0.329 0.27

Haiti Vulnerabilities Social Capital Housing Education Literacy Health Empowerment Food Security

0.470 0.454 0.381 0.341 0.281 0.272 0.320 -0.013

Structure Matrix

Literacy Housing Education Social Capital Empowerment Health Vulnerabilities Food Security

0.542 0.382 0.278 0.247 0.226 0.223 0.222 0.178

Food Security Housing Literacy Education Vulnerabilities Empowerment Social Capital Health

0.406 0.403 0.332 0.330 0.294 0.284 0.276 0.260

Education Vulnerabilities Housing Literacy Social Capital Health Food Security Empowerment

0.590 0.546 0.459 0.376 0.365 0.359 0.197 0.008

Coefficients

South Africa Literacy Housing Vulnerabilities Empowerment Social Capital Food Security Education Health

0.708 0.580 0.537 0.429 0.404 0.396 0.367 0.090

DRC Empowerment Housing Health Vulnerabilities Social Capital Education Literacy Food Security

0.625 0.602 0.453 0.354 0.327 0.295 0.184 0.174

Structure Matrix

Literacy Housing Vulnerabilities Education Social Capital Empowerment Health Food Security

0.441 0.372 0.326 0.224 0.223 0.175 0.158 0.09

Health Housing Education Empowerment Social Capital Vulnerabilities Literacy Food Security

0.457 0.436 0.375 0.365 0.203 0.191 0.178 0.145

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Coefficients

Zambia Vulnerabilities Social Capital Housing Education Literacy Empowerment Health Food Security

0.646 0.579 0.534 0.429 0.417 0.365 0.291 0.188

Malawi Vulnerabilities Social Capital Housing Literacy Education Empowerment Food Security Health

0.572 0.537 0.536 0.496 0.478 0.356 0.191 0.167

Structure Matrix

Vulnerabilities Housing Health Literacy Food Security Education Social Capital Empowerment

0.402 0.370 0.338 0.303 0.294 0.248 0.233 0.058

Vulnerabilities Housing Literacy Education Empowerment Social Capital Food Security Health

0.373 0.364 0.355 0.333 0.253 0.189 0.185 0.174

*The coefficients allow comparisons between the magnitude and relative contribution of each variable. **The structure matrix provides the Pearson correlation between the individual variables and the discriminant model.

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Works Cited Bornstein, David. How to Change the World: Social Entrepreneurs and the Power of New Ideas. 2004. Oxford University Press: Oxford. Buss, Terry F. Microcredit in Sub-Saharan Africa: A Symposium. Journal of Microfinance. Provo: Summer 2005. Vol 7. Iss. 1; pp 1,11. Khalily, M.A. Baqui. Quantitative approach to impact analysis of microfinanceProgrammes in Banglades – What have we learned? Journal of International Development 16. 2004. pp. 339 Lundberg, Mattias; Mujinja, Phare. Sources of Financial Assistance for Households Suffering an Adult Death. The World Bank, Policy Research Working Paper Series: 2508, 199. Morris, Gayle; Barnes, Carolyn. An Assessment of the Impact of Microfinance: A Case Study from Uganda. Journal of Microfinance. Provo: Summer 2005.Vol.7, Iss. 1; pp. 39, 16 pgs. Mosley, Paul; Rock, June Microfinance, labour markets and poverty in Africa: A Study of Six Institutions. Journal of International Development; April 2004; 16; 3; 474 Woolard, Ingrid; Klasen, Stephan. Determinants of Income Mobility and Household Poverty Dynamics in South Africa. Journal of Development Studies, vol 41, no5. July 2005. pp. 865-97 Zaman, Hassan. The Scaling-Up of Microfinance in Bangladesh: Determinans, Impacts, and Lessons. World Bank Policy Research Working Paper 3398, September 2004. pp. 18

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