Many microfinance organizations are concerned about reaching the poorest sections of society, and are prepared to carry out screening procedures to identify these people. This article describes a pilot study to compare two such screening methods, the Visual Indicators of Poverty test (VIP) and the Participatory Wealth Ranking process (PWR), which have been used by Small Enterprise Foundation in South Africa. A study is described which demonstrated the inaccuracy of VIP, a system based on static, externally judged criteria, when compared to PWR, which uses local knowledge of individual poverty. This article focuses on some of the challenges faced in designing a cost-effective operational system based on participatory mapping and wealth ranking.
Measuring the impact of microfinance programmes on client businesses and proving that changes can be attributed to the intervention are notoriously difficult. In response to this, some argue that client loyalty is sufficient evidence of client satisfaction and of positive impact, and that further measurement is unnecessary. This article argues against this: impact assessment is necessary not only to demonstrate to donors that their interventions are having a positive impact, but also to provide information that allows MFIs to improve their services, and thus improve impact. The article describes the move away from donor-led impact events, towards more practitioner-focused processes, and outlines the experience of individual organizations and international projects, most notably the AIMS project, in developing impact assessment that is more responsive to practitioner needs. Practitioner-focused impact assessment looks at how impact information can feed into management and product design processes, and provide frequent and timely information. Many challenges remain, particularly in terms of ensuring a diversity of approaches and applications for IA, and the inclusion of a range of stakeholders in defining what should be included in the impact assessment process, and in the analysis and use of results. These challenges are the focus of a Ford Foundation sponsored action-research programme, Imp-Act.
Half of Haiti's population can be characterized as extreme poor, and face widening gaps in equality, increasing social marginalization, no sustainable livelihood options and increasing food prices. In response to this, Haiti's largest microfinance institution, Fonkoze, provided extremely poor households with a series of protective and promotional inputs for 18 months to help them build sustainable livelihoods. Importantly, the programme does not seek to graduate members ‘out of poverty’ but to a point where their livelihoods are strong enough to participate in a ‘small credit’ programme that seeks to further develop their assets and savings, and with significant hand-holding, ultimately graduate them into mainstream microfinance. This article seeks to explore the effectiveness of the intervention and its implications for the lives of Haiti's poorest, as well as reflect upon our understanding of the pathways out of extreme poverty.