Of Course We’re Serving the Poor…!
Of Course We’re Serving the Poor…!
We all agree with the following statement, right? “Our MFI’s mission is to have an impact on poverty; so of course, we only reach out to poor people…”
Not so fast. In one instance, the management for Negros Women for Tomorrow (NWTF-Philippines) found that they were not serving as many of the poor as they had previously thought…and they decided to do something about it. It all started when, dissatisfied with the client screening and assessment tool they had been using, NWTF decided to adopt Grameen Foundation’s Progress out of Poverty Index (PPI) instead. After the initial pilot, NWTF found that, much to its surprise, just over 40% of its clients were actually above the poverty line based on the PPI (versus results of only 2% using the previous means test, based on housing conditions).
So NWTF simply chose the PPI, and voila, the desired results to serve more of the target population occurred…? Not exactly. NWTF also had to ensure that the PPI was integrated across their performance management systems to ensure that the end goals were actually reached. NWTF began by setting a goal of no more than 10% of new clients over the poverty level and created an action plan that included staff training on how to collect and interpret the data, MIS integration and revision of the loan application. In implementing its action plan and through discussions with staff and clients, NWTF realized it also needed to adjust its loan sizes and loan terms to better respond to client needs. Only then, and after months of monitoring, was NWTF able to move toward its goal. Six months after implementing the new targeting strategy, only 25% of incoming clients were above the poverty line.
NWTF found that it had to answer the following key questions for success:
• Based on the new poverty information on our clients, what is the most effective process for setting realistic outreach objectives?
• How to integrate the tracking and reporting of the new data into our existing Management Information Systems?
• How to train field staff beyond just completing the new steps, but also by addressing why the steps exist and how to interpret the results?
• How to keep this process as simple as possible and not overwhelm our staff?
Based on your experience, what are the most important issues to overcome when the need to refocus on client outreach arises?
Would love to hear what you think...thanks!
Chris Linder
We all agree with the following statement, right? “Our MFI’s mission is to have an impact on poverty; so of course, we only reach out to poor people…”
Not so fast. In one instance, the management for Negros Women for Tomorrow (NWTF-Philippines) found that they were not serving as many of the poor as they had previously thought…and they decided to do something about it. It all started when, dissatisfied with the client screening and assessment tool they had been using, NWTF decided to adopt Grameen Foundation’s Progress out of Poverty Index (PPI) instead. After the initial pilot, NWTF found that, much to its surprise, just over 40% of its clients were actually above the poverty line based on the PPI (versus results of only 2% using the previous means test, based on housing conditions).
So NWTF simply chose the PPI, and voila, the desired results to serve more of the target population occurred…? Not exactly. NWTF also had to ensure that the PPI was integrated across their performance management systems to ensure that the end goals were actually reached. NWTF began by setting a goal of no more than 10% of new clients over the poverty level and created an action plan that included staff training on how to collect and interpret the data, MIS integration and revision of the loan application. In implementing its action plan and through discussions with staff and clients, NWTF realized it also needed to adjust its loan sizes and loan terms to better respond to client needs. Only then, and after months of monitoring, was NWTF able to move toward its goal. Six months after implementing the new targeting strategy, only 25% of incoming clients were above the poverty line.
NWTF found that it had to answer the following key questions for success:
• Based on the new poverty information on our clients, what is the most effective process for setting realistic outreach objectives?
• How to integrate the tracking and reporting of the new data into our existing Management Information Systems?
• How to train field staff beyond just completing the new steps, but also by addressing why the steps exist and how to interpret the results?
• How to keep this process as simple as possible and not overwhelm our staff?
Based on your experience, what are the most important issues to overcome when the need to refocus on client outreach arises?
Would love to hear what you think...thanks!
Chris Linder
Tags: Foundation, Grameen, NWTF, PPI, client, outreach
Views: 5
Replies to This Discussion
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Permalink Reply by Bart De Bruyne on -
Hi Chris,
I work for Trias in Tanzania on rural micro-finance.
An exclusive poverty focus is not really the objective as population density doesn't allow much market segregation. To recover costs, we can only hope to access as much as possible families in the villagein order to be able to supply rural financial services.
Even then, we are interested to track somehow depth of outreach and PPI seems to me a really inetersting approach, The main difficulty is to access the poverty score cards and the backing studies relating this to nation wide poverty studies. Where is this information available and easily accessible for interested organisations. Do you know?
Regards,
Bart De Bruyne
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Permalink Reply by Chris Linder on -
Hi Bart-
I'm going to respond in two-parts. That is a great point about Poverty and Mission. Some MFIs do not, or simply cannot, focus exclusively on the poor. And that is OK. Gary Woller recently said [and I'm paraphrasing] at a SEEP/AED seminar recently (rolling out the Social Performance Map - more on in next post) that what is important is not that an MFI must target the poor. But whatever the mission (e.g. 1. targeting the poor or 2. targeting low to middle income entrepreneurs with existing businesses), the MFI has to match that mission with concrete, measurable objectives and be integrated within your operations. There needs to be a systematic way that the MFI can prove it is achieving its mission and a way to improve upon it. Where we are all trying to go is to help answer questions like, "If an MFI has a mission to serve low-income entrepreneurs, and all they measure is financial performance, how do they know they are acheiving their social performance goals? How do they consciously adapt their operations and products to meet those goals?"
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Permalink Reply by The Imp-Act Consortium on -
Hi to both,
I just wanted to echo Chris’ point – I don’t think we’re in a position to be normative about an MFI’s mission. Some aim to serve less poor populations, and others aim to serve those excluded in other (non-economic) ways. The point about SPM, as Chris says, is to make sure you’re effectively serving your target market, however defined.
That said, I think we’re at an interesting point within the industry where we start being less dogmatic about automatic trade-offs between social and financial performance when we reach out to more remote areas.
One of our research partners, AMK, looked at operational data and found that branches in poorer regions do not suffer from poorer growth, and that operating costs per client were necessarily higher (in some cases, average loan sizes are higher in poorer regions). So for them, expanding into more remote areas (coupled with a focus on institutional efficiency) is not a trade-off, because in that case lower competition means faster growth. Again, it all depends on the individual market, but I think that it’s worth going back and questions our original assumptions about trade-offs, and looking where potential synergies might exist, and why – and more importantly, how we can build on these.
What are your thoughts on this?
Katherine
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Permalink Reply by Chris Linder on
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Bart-
2nd post on where to look re: the SP tools around Assessments, Audits and Ratings:
For resources about the tools, the Social Performance Task Force with the help of SEEP, AED, and USAID rolled-out a very comprehensive "Social Performance Map" recently, touching upon all aspects of Social Performance. There is a section that covers the various SP tools out there (Chapter 10), so you may want to look at that.
From that same meeting, the SP Task Force also has a great slide (Slide 28) on where all of the Tools fit within the SP Continuum. The Power Point is on the same website.
For the PPI, check out GF's website or you may want to contact Nigel Biggar or Jeff Toohig at spm@grameenfoundation.org (or maybe AFMIN would know). They (or CGAP) may be rolling-out the PPI for Tanzania, or you might be able to convince them to put Tanzania on the list. As it has been explained to me, the PPI is either based on the country level household survey (if it exists) or the country-specific World Bank Living Standards Measurement Survey. You may be able to find both yourself.
Does that help? Does anyone else have any suggestions on where to look?
Thanks-
Chris
BTW - Just to make a clarification for everyone - the SEEP/Task Force "Social Performance Map" mentioned above is very comprehenisive and touches upon all aspects of Social Performance, including areas such as Social Responsible Investing and SP Indicators, etc. What we are trying to do is concentrate on a much more focused piece of SP, Social Performance Management, in creating the Roadmap Document [see our group site under the groups tab - Social Performance Management is covered in the Task Force document in Chapters 5 and 14-Governance]. The roadmap will attempt to address not so much "What to Measure" but rather address how MFIs will use the data collected to change their operations and adapt their products through a SP lens, i.e. the "How", so that they may achieve their mission-related goals.
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Permalink Reply by Jerome Peloquin on -
Chris...
The issue of mission drift is rampant within the MFI communities and the NWTF study and reaction is an excellent example of an exemplar MFI really changing lending behaviors. Was it Aristotle who said, the unexamined life is not worth living? The MFI dynamic is obvious. First, there is the drive to “sustainability,” where the non-profit is struggling to survive. It has to grow and manage its PAR tightly to assure its existence. All compensation systems are focused upon loan officer performance. Pay is heavily performance biased. In order to survive the loan officer must produce loans.
The drive is to find those who can pay back the loan. Consequently, the more income the borrower has the more likely the loan is to be repaid. This militates against loaning to the very poor at the BoP. What eventually happens is that lending moves from the very poor to the unbanked. NTWF’s analysis and measurement of their practice and subsequent management attention to the issue speaks well for them. Most such efforts do not succeed because management, in spite of their pronouncements to the contrary, want good loans more than they want to serve the poor. This is communicated to the Branch Managers and the loan officers by the behavior of management and the compensation system.
Saying we serve the poor does not make it so. It is not the memos we write but how we reward our employees and how we manage that tells the line manager what is really important. Not only must management measure results. It must act on them. It must make systemic changes in the compensation and supervisory process if real change is to be sustained. - Attachments:
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Permalink Reply by Chris Linder on
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Thanks Jerry for sharing the documents on incentives, etc.
What is the saying? "Do as I say, not as I do" or something like that. That rarely ever works.The "do" has to match the "say".
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Permalink Reply by Jerome Peloquin on
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Well Eric, this may become part of the never ending story... I have several issues relevant to your prior comment about the role of The Roadmap in "...how to manage social performance." Still, as you say for many MFI''s the larger issue remains. During the Quality movement, the saying was, "...talk the talk, but also walk the walk." (don't just talk about it - Do It)
Earlier on the MF Practice I offered these job aids for review and we got over fifty requests for copies. Chuck Waterfield had to open up a url on his site to respond to the requests.
I use these when teaching process modeling and management. The ability to document one's processes is the first step in understanding the behavioral environment of the workplace so that incentive can be effectively managed. Tools like these operationalize concepts and make them transportable to the field with a high confidence in expected outcomes.
We could customize a set of these tools to reflect the Social Performance Roadmap and turn a relatively abstract document into a decision model for action...? - Attachments:
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