Promising Approaches for Reaching Very Poor People
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Transcript of Promising Approaches for Reaching Very Poor People
8/8/2019 Promising Approaches for Reaching Very Poor People
http://slidepdf.com/reader/full/promising-approaches-for-reaching-very-poor-people 1/14
Presentation byLaura Foose, Alternative Credit Technologies, LLC
and Jan Maes, Trickle Up
March 11, 2005
The Implications of the Microenterprise for Results
and Accountability Act of 2004 ±Promising Approaches for Reaching Very Poor People
8/8/2019 Promising Approaches for Reaching Very Poor People
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OverviewOverview
What are the implications of theMicroenterprise Results andAccountability Act of 2004 (H.R.3818)?
Why did the legislation come aboutand what do advocates of it hopewill be accomplished?
What are promising approaches for
reaching very poor people? How can microfinance products
and services be designed toachieve greater depth of outreach?
8/8/2019 Promising Approaches for Reaching Very Poor People
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Microenterprise Results and Accountability Act of Microenterprise Results and Accountability Act of
2004 (H.R. 3818)2004 (H.R. 3818)
The legislation requires that 50% of all USAIDmicroenterprise resources benefit the very poor
The legislation defines the term very poor as thosehouseholds living in the bottom 50% below the nationallydefined poverty line or those living on the equivalent of less
than $1/day (in Purchasing Power Parity (PPP)).
In addition, the legislation requires USAID to develop, fieldtest and certify no fewer then two low-cost methods for partner institutions to assess the poverty level of their currentand prospective clients.
All partner organizations applying for microenterpriseassistance from USAID will be required to begin using thecertified tools to determine and report the poverty level of current and prospective clients no later than October 1, 2006.
8/8/2019 Promising Approaches for Reaching Very Poor People
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Why did the legislation come about?Why did the legislation come about?
Pro-poor advocates wanted transparency in the industryabout who we are really reaching.
Policymakers, donors and development practitioners
want to access reliable information about the povertylevels of the beneficiaries/clients of developmentservices so that they can steer their investments andprograms toward the population segments they want toreach.
Mainstream microfinance is integrating into the formalfinancial system, with commercialization and strategicpartnerships with banks. With this emphasis on scalingup, very poor people are being left behind.
8/8/2019 Promising Approaches for Reaching Very Poor People
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Who is being reached?Who is being reached?
Most microfinance clientstoday fall in a band aroundthe poverty line
The extreme poor are rarely reached by
microfinance
Social safety net programs areoften more appropriate for the
destitute and extreme poor Source: Monique Cohen/CGAP Presentation
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Developments as a result of the legislationDevelopments as a result of the legislation
Certification of Poverty Assessment Tools
Social Performance movement
Development of products and services that are
more appropriate for very poor people
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Promising Approaches for Reaching Very Poor PeoplePromising Approaches for Reaching Very Poor People
Flexible Savings
Credit products designed for the very poor
Grants for seed capital
Asset transfer programs
Leasing
Non-financial Services: health, literacy, social action
Strategic Alliances
± between grant programs and microfinanceprograms
± between social safety net programs and
microfinance programs
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Examples of Promising ApproachesExamples of Promising Approaches
BRAC (Bangladesh)
Asset grants
Training
Health services
SEF (South Africa)
Microcredit tailored tothe very poor and
Participatory WealthRanking
ARC (Guinea)
Three-Steps Approach:
1. Start-Up Grant2. Basic Loan
3. Advanced Loan
TUP (Cambodia)
Seed capital grants
Savings match
8/8/2019 Promising Approaches for Reaching Very Poor People
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BRACBRAC
Challenging the Frontiers of Poverty Reduction-Targeting the Ultra Poor Program
TARGET GROUP
Ultra Poor Women in Bangladesh
MODEL
Foundation for sustainable livelihood by: Asset Grants: physical capital Health: human capital Social Development (support group formation): social capital
Savings: promotional focus
RESULTS
Reduced vulnerability Savings product: from promotional to protectional focus?
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ARC ARC
Three Step Program
TARGET GROUP
Vulnerable women in refugee camps
MODELThree-Step Approach1. Startup grant (and business development training)2. Small basic loans3. Larger advanced micro-loans
RESULTS Over 20,000 refugees served since 1996 Only 3% loan loss rate High level of graduation from grant to loans Increased asset ownership from grants to loans
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Trickle Up ProgramTrickle Up Program
TARGET GROUP
People living with HIV/AIDS in Phnom Penh slums
MODEL
Local Partner Agency: healthcare ± home visits Business training Business leader and assistant Seed capital grants Savings incentive through matched savings
RESULTS Pilot project Businesses survival rate improved Savings help through crises Access to ARV improved
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SEFSEF
Tshomisano Credit Programme (TCP)
TARGET GROUP
Poorest members of a community
MODEL
Three stages1. motivation2. business planning3. on-going support
Constant monitoring of client satisfaction through impact monitoringsystem
RESULTS
Business value, independent household savings, and satisfaction withfood and housing increase steadily over the cycles
Graduates move up to the MicroCredit program at SEF
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Common elements of effective programs reaching the poor:Common elements of effective programs reaching the poor:
Leadership is critical
Organizational buy-in
Active Targeting is necessary
Building up confidence of clients
Flexible product and service design
Cost Effectiveness
Secure place to save
Flexible repayment option
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Final RemarksFinal Remarks
Even among very poor people there aresubcategories: extreme poor, destitute«
Not everyone who is very poor can be
assisted with MED or MF
Reaching down comes at a cost
- financial sustainability is not always
possible
- cost-efficiency is crucial