ACCION International

Poverty Assessment Tool: Depth of Outreach
SEEP Poverty Assessment Working Group May 6, 2004 Karen Horn Welch & Patty Lee Devaney

Introduction & Objectives
Brief review of ACCION s poverty assessment tool and methodology Project update Introduction Time & cost Data collection & analysis Misreporting or data manipulation Adaptation Key findings from our poverty assessments of Mibanco, Peru and SOGESOL, Haiti Discussion

ACCION poverty Assessment Tool
Based on household-level income and expenditure data Evaluate the absolute poverty level of MFI clients in comparison with the national/regional populations. Examine relationship between poverty and demographic, socioeconomic, and loan data Conduct validation surveys Monitor poverty on an on-going basis

ACCION poverty Assessment Tool
Phase 1: Analysis of MIS data from loan application Phase 2: Conduct validation surveys Phase 3: Write poverty assessment report (examining the relationship between poverty and demographic, socioeconomic, and loan data) Phase 4: Implement on-going Poverty Outreach Report Phase 5: Track poverty outreach over time; understand client characteristics based on their poverty levels Phase 6: Develop products to increase outreach to the poor

OnOn-Going Poverty Outreach Report
Institución: Mibanco Fecha: (Ser completado trimestralmente) Tasa de Línea de Pobreza Cambio (en 2002 nuevos (nuevos soles soles/cáp/anual) per US$) 3685 Tasa de comparison de pobreza (ajustada)

Estadísticas Macroecon. y Ajuste a la Línea de Pobreza

Tasa de PIB/Cápita Inflación

Línea de Pobreza (en US$) #DIV/0!

PARTE A: Estadísticas Resumenes por Nivel de Pobreza Nivel 1 (1er quintile de gastos del hogar) Nivel 2 (2o quintile de gastos del hogar) Nivel 3 (3er quintile de gastos del hogar) Nivel 4 (4o quintile de gastos del hogar) Nivel 5 (5o quintile de gastos del hogar) Población Total de Clientes

Número de Clientes (1) % de Clientes Monto de Cartera % de Cartera #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0! 0 #DIV/0!

Número de Clientes Nuevos (3)

Saldo Vigente del Ingreso de Monto % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo Nuevos Hogar (media) (media) do (media) (media) (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0! Saldo Ingreso de Monto Vigente del % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo Nuevos Hogar (media) (media) do (media) (media) (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0!

Activos Totales de la Microempresa

# de clientes al final de periodo anterior

0 Activos Totales de la Microempresa # de clientes al final de periodo anterior

PARTE B: Estadísticas Resumenes por Tamaño de Número de Clientes Préstamo % de Clientes Monto de Cartera % de Cartera Tamaño de Préstamo = $0-$200 #DIV/0! #DIV/0! $201-$400 #DIV/0! #DIV/0! $401-$1,000 #DIV/0! #DIV/0! $1,001-$3,000 #DIV/0! #DIV/0! más que $3,000 #DIV/0! #DIV/0! Total 0 #DIV/0! 0 #DIV/0!

Número de Clientes Nuevos (3)

0

Project Update:
What we¶ve been doing for the past year«

Additional Poverty Analyses & Developed Validation Framework Household validation surveys at Mibanco Poverty monitoring report at Mibanco (programming stage) SOGESOL poverty analysis (published as ACCION InSight 8) Household validation surveys at SOGESOL BancoSol poverty analysis Household validation surveys at BancoSol Banco Solidario poverty analysis

Introduction
Why did ACCION pursue a poverty measurement tool?
MFI driven: Missions and competition Legislation

Poverty distinctions:
Poor/ non-poor, based on pertinent poverty line Poverty distribution (1-5) 5 NSE levels (A-E)

Time & Cost
Phase 1: Analysis of MIS data from loan application Phase 2: Validation surveys
ACCION Staff: 15 days MFI Staff: 4 days MFI Management: 1 day Survey Firm: 30 days Clients: 400 hours

- ACCION Staff: 12 days - MFI Staff: 5 days - MFI Management: N/A - Clients: N/A

Time & Cost
Phase 3: Perform assessment & write report Phase 4: Implement On-going Poverty Outreach Report
ACCION Staff: 5 days MFI Staff: 20 days MFI Management: 2 days Clients: N/A

- ACCION Staff: 20 days - MFI Staff: 1 day - MFI Management: 1 day - Clients: N/A

Time & Cost
Phase 5: Track MFI poverty outreach over time Phase 6: Product development
ACCION Staff: variable MFI Staff: variable MFI Management: variable Clients: variable (may involve focus groups)

- ACCION Staff: 1 day per
quarter

- MFI Staff: .5 days per
quarter

- MFI Management: .5 days
per quarter

- Clients: N/A

Total Budget
Costs:
ACCION Poverty Assessment Tool: Estimated Costs of Adaption, Validation, Implementation, and On-Going Use

Adaption Cost Category I. Personnel Including ACCION and MFI staff II. Travel, Transportation & Per Diem III. Other Validation survey firm TOTAL ESTIMATED COST $6,400 $2,400 $8,800

Validation Testing $2,250 $2,000 $10,000 $14,250

Implementation $19,350 $2,400 $21,750 $

On-Going Use (Annual) $6,800 6,800

Data Collection & Analysis
Frequency: Every time loan data is collected (baseline data); once every three years (validation surveys) Who analyzes the data? MFI management & staff; ACCION poverty team Feedback: Collaborative process continuous feedback Decision-making
Early buy-in & frequent interaction with senior management (commercial manager) ensures their engagement Poverty Outreach Report quarterly review of results (similar to financial reporting) Balanced scorecard Product development

Misreporting / Data Manipulation
The tool is based on standard loan application process
Asking for info pertaining directly to microenterprise (hh size; income and expenditure) Bias clients wanting a bigger loan (overstate income & understate expenditure)

Validation surveys were meant to overcome the risk of misreporting

Misreporting / Data Manipulation
Validation surveys revealed different results than the original MIS data.
In asking questions for different purposes, we re getting different answers
Loan application gathers information focusing on microenterprise Validation survey gathers information focusing on entire household

How can we use the results?
We can use the original loan application data for tracking trends and distribution of poverty (based on expenditure) within the client population Harder to pinpoint where clients fall relative to the poverty line without making an adjustment to the original data

Validation Framework
Objectives
Assess validity of original results Quantify the difference between loan application data & LSMS-type data Determine an adjustment factor

Sample selection

Data Comparison: Mibanco & Validation Survey
Data Compariso : Miba co Data a d Validatio S rvey All figures in Soles per Year, $1/=S/3.5 Median Mean Validation survey Income per apita 7,069 16,735 xpenditure per apita 3,253 4,080 Mibanco MIS 3,755 5,391 Income per apita xpenditure per apita 1,929 2,235
Per Median Mean 1.6 1.9 ima Provi ces Median Mean 1.3 1.8

Ratio of ali atio : iBa co Expenditure per Capita*

ata

Median 1.8

Mean 2.0

Data Comparison: SOGESOL & Validation Survey
Data Comparison: SOGESOL Data and Validation Survey All figures are in Gourdes per Year, $1=43g Haiti-Port au Prince Median Mean Validation Survey 103,880 146,358 Income per apita xpenditure per apita 32,848 50,591 SOGESOL MIS 88,500 196,270 Income per apita xpenditure per apita 12,000 15,393 Ratio of Validation:SOGESOL Data Income per apita xpenditure per apita Median 1.1 3.0 Mean 1.9 4.0

Considerations
Adjustment Methodology Assumptions
Relatively small adjustment factor Constant variance of adjustment factor across households

Findings
Larger than expected adjustment factor Wider variance

Distribution of Ratios (adjustment Factors)
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Results - Mibanco
Poverty Measure 1. Individual, household-level adjustment 2. Household-level median adj. Factor Adjustment Factor HH-specific adjustment factor Lima=1.8 Provinces=1.3 Poverty Rate 33%

30%

Constant adjustment factor
limited impact on overall poverty rate cannot accurately classify individual households by poverty level

Getting back to the original question«
Given data considerations, how can we accurately track and define the poverty level of microfinance clients? Use a constant adjustment factor to the household expenditures for one portion of the Poverty Outreach Report
We can estimate the percentage of the client population above and below the poverty line with a good degree of certainty

Report unadjusted data for the remainder of the report
Maintains the true distribution of client expenditure and associated characteristics for analysis within the MFI (practical for MFIs purposes)

OnOn-Going Poverty Outreach Report
Institución: Mibanco Fecha: (Ser completado trimestralmente) Tasa de Línea de Pobreza Cambio (en 2002 nuevos (nuevos soles soles/cáp/anual) per US$) 3685 Tasa de comparison de pobreza (ajustada)

Estadísticas Macroecon. y Ajuste a la Línea de Pobreza

Tasa de PIB/Cápita Inflación

Línea de Pobreza (en US$) #DIV/0!

PARTE A: Estadísticas Resumenes por Nivel de Pobreza Nivel 1 (1er quintile de gastos del hogar) Nivel 2 (2o quintile de gastos del hogar) Nivel 3 (3er quintile de gastos del hogar) Nivel 4 (4o quintile de gastos del hogar) Nivel 5 (5o quintile de gastos del hogar) Población Total de Clientes

Número de Clientes (1) % de Clientes Monto de Cartera % de Cartera #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0! 0 #DIV/0!

Número de Clientes Nuevos (3)

Saldo Vigente del Ingreso de Monto % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo Nuevos Hogar (media) (media) do (media) (media) (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0! Saldo Ingreso de Monto Vigente del % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo Nuevos Hogar (media) (media) do (media) (media) (2) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0!

Activos Totales de la Microempresa

# de clientes al final de periodo anterior

0 Activos Totales de la Microempresa # de clientes al final de periodo anterior

PARTE B: Estadísticas Resumenes por Tamaño de Número de Clientes Préstamo % de Clientes Monto de Cartera % de Cartera Tamaño de Préstamo = $0-$200 #DIV/0! #DIV/0! $201-$400 #DIV/0! #DIV/0! $401-$1,000 #DIV/0! #DIV/0! $1,001-$3,000 #DIV/0! #DIV/0! más que $3,000 #DIV/0! #DIV/0! Total 0 #DIV/0! 0 #DIV/0!

Número de Clientes Nuevos (3)

0

Discussion

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