A1261382410HPCaS

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Progress Out of Poverty Index
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Agenda

• Introductions
• The Progress out of Poverty Index, Global Rollout
• SPM Context
• What is the PPI Design and Use
• Uses of PPI Data Case Study Snapshots
• Resources
• Questions and Discussion

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What is the PPI?

• An objective client poverty assessment and
  targeting tool, which
• Provides social performance data
• Enables MFIs to manage social performance
• An inexpensive and easy to collect scorecard
• Derived from representative national household
  income and expenditure surveys
• Comprised of simple, non-financial indicators

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Global Rollout of the PPI

• Middle East/ North Africa
• Palestine
• Morocco on hold
• Yemen
• Coming 2009-2010
• Tunisia
• Egypt
• Syria
• Jordan
• Latin America
• Mexico
• Haiti
• Bolivia
• Peru
• Ecuador
• Coming 2009-2010
• Colombia
• Nicaragua

• Asia
• Philippines
• Pakistan
• Bangladesh
• India
• Indonesia
• Vietnam
• Nepal
• Coming 2009-2010
• Cambodia
• China
• Sri Lanka
• Sub Saharan Africa
• Nigeria
• Kenya
• Malawi
• Mali
• Ethiopia

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The PPI in Context
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The Reason for SPM
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Social Performance Defined

• What is social performance?
• The effective translation of an institution's
  social mission into practice in line with
  accepted social values1
• What is Social Performance Management (SPM)?
• Taking the steps to deliberately manage and
  achieve desired results
• Define desired performance
• Measure against desired performance

INTENT AND DESIGN               ACTIVITIES
            OUTPUT             OUTCOME /
IMPACT
1Defined by the Social Performance Task Force.
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Why is Social Performance Important?

• Internally
• Achieve the social goals set in mission
  statements
• Accountability through organizational
  transparency
• Creates a more client-centered organization
• Externally
• Permits social performance benchmarking
• Demonstrates blended results to donors and
  investors

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The Reason for SPM
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Objectives of PPI Use

• Understand poverty levels of clients
• And change in those levels
• Measure outreach
• Use poverty level data to improve products and
  services
• to measure the achievement of the social goals
  as in the mission statement and to design and
  deliver better products and services to our
  clients.

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What can the PPI do for MFI management?

• Inform management decisions about processes,
  programs, products, and provision of services
• Target clients for specific products and services
• Help in responding to competitive pressures, by
  understanding the balance of financial and social
  returns
• Market to investors with a social bottom line

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What can the PPI do for the Industry?

• Allow investors to better target investments
• Better, more transparent segmentation of the
  microfinance market
• Reliably demonstrate poverty outreach
• Provide timely and accurate social performance
  information to regulatory bodies, social
  investors, donors, and rating agencies

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What is the PPI?
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Construction of the PPI
All indicators on the national household survey
are ranked according to how strongly they predict
poverty levels. The full list of 400-1000
indicators is narrowed to the 100 most powerful
ones.
National Survey
100 indicators
Using both statistics and expert judgment, a 10
indicator scorecard is constructed.
10 indicators
PPI
Each possible response is assigned point value
based on the original national survey responses.
The total score (summing from 0 to 100) is then
linked to probabilities of falling above or below
the poverty lines.
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What does the PPI look like?
SAMPLE
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PPI in Action
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PPI Fundamentals Basic use
Client Response
Indicators
Points
8
0
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PPI Fundamentals PPI score
8
0
5
2
0
0
0
0
0
9
24
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PPI Fundamentals Poverty likelihood
The client interviewed has a 54 likelihood of
falling below the national poverty line and a 46
likelihood of being above it.
PPI score of 24
Poverty Likelihood
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PPI Fundamentals Portfolio analysis

• For example, an MFI has 3,000 clients
• 800 clients have scores of 10
• 1,000 clients have scores of 30
• 1,200 clients have scores of 50

Poverty Likelihood
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The PPI Fundamentals Portfolio analysis

• The poverty distribution for the MFI of 3,000
  clients is
• (80066) (1,00044) (1,20027)
• 3,000
• 43 or 1292 of the 3,000 clients
• are below the national poverty line

Poverty distribution of the MFI portfolio
Average of the individual poverty likelihood
percentages

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The PPI Fundamentals Portfolio analysis
Total Clients Total Clients
3,000 3,000

Year 1 Year 2
43 35 Portfolio Poverty Distribution
1292 1050 Clients Below the Poverty Line

8 8 Change in Poverty Distribution ()
242 242 Clients Cross the Poverty Line
19 19 Change in Poverty Levels ()

• Tracking changes over time
• Suppose the same group of clients, from the
  previous example, is re-tested one year later and
  the portfolio likelihood is 55 below the
  national poverty line.

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How are PPI data used?
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PPI Case Study NWTF

• Negros Women for Tomorrow (NWTF) in the
  Philippines
• Integrated the PPI collection across all branches
  after piloting two years ago
• Collected information on additional indicators to
  use as it refines its outreach and its products
  and services
• Compared data by branch to understand what
  products and services are most effective
• Outcomes
• Changed its eligibility requirements for incoming
  clients by targeting 10 percent of clients above
  the poverty line
• Facilitated entry for the poorest clients by
  adjusting loan size, loan cycle period and
  possible pre-payment options

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PPI Case Study NWTF

• NWTF results from a census PPI implementation

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PPI Case Study Fonkoze

• Products tailored for clients at different levels
  means there is a need to differentiate those
  clients
• Collect PPI as part of Evaluation Card from all
  clients
• Use Social Impact Monitors to track 20 of
  clients over time
• Outcomes
• Clear poverty level distinctions for each product
  type.
• Ability to track client poverty level changes
  over time.
• Improve product design and targeting to serve its
  clients better.

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PPI Case Study Fonkoze
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Age and Poverty
Entering Clients Entering Clients Entering Clients Entering Clients
Age Range Num Below 1/Day/PPP Below 2/Day/PPP
18ltAgelt24 63 42 89
25ltAgelt34 212 42 90
35ltAgelt44 106 33 85
Age gt 45 35 27 81
Grand Total 416 38 88
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PPI Summary

• Easy-to-use, inexpensive, transparent, objective
• Estimate likelihood that a household is poor
• Use policy cut-offs for targeting
• Take average to get portfolio poverty rate
• Track over time for progress out of poverty
• Practicality and accuracy
• One page, few indicators, simple weights
• Field workers can compute scores on paper in real
  time (no software required)
• Valid for any program serving the poor, not just
  microfinance

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Progress Out of Poverty Website