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, socio-
economic, 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, socio-
economic, 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
 On-Going Poverty Outreach Report
Institución: Mibanco
Fecha: (Ser completado trimestralmente)

Tasa de Tasa de
Línea de Pobreza Cambio Línea de comparison
Estadísticas Macroecon. y Ajuste a la Tasa de (en 2002 nuevos (nuevos soles Pobreza (en de pobreza
Línea de Pobreza PIB/Cápita Inflación soles/cáp/anual) per US$) US$) (ajustada)
3685 #DIV/0!

Saldo Activos # de clientes

PARTE A: Número de Ingreso de Monto Vigente del Totales de al final de
Estadísticas Resumenes por Nivel de Número de Clientes % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo la Micro- periodo
Pobreza Clientes (1) % de Clientes Monto de Cartera % de Cartera Nuevos (3) Nuevos Hogar (media) (media) do (media) (media) (2) empresa anterior
Nivel 1 (1er quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 2 (2o quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 3 (3er quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 4 (4o quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 5 (5o quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Población Total de Clientes 0 #DIV/0! 0 #DIV/0! 0 #DIV/0! 0

Saldo Activos # de clientes

PARTE B: Número de Ingreso de Monto Vigente del Totales de al final de
Estadísticas Resumenes por Tamaño de Número de Clientes % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo la Micro- periodo
Préstamo Clientes % de Clientes Monto de Cartera % de Cartera Nuevos (3) Nuevos Hogar (media) (media) do (media) (media) (2) empresa anterior
Tamaño de Préstamo = $0-$200 #DIV/0! #DIV/0! #DIV/0!
$201-$400 #DIV/0! #DIV/0! #DIV/0!
$401-$1,000 #DIV/0! #DIV/0! #DIV/0!
$1,001-$3,000 #DIV/0! #DIV/0! #DIV/0!
más que $3,000 #DIV/0! #DIV/0! #DIV/0!
Total 0 #DIV/0! 0 #DIV/0! 0 #DIV/0! 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
- ACCION Staff: 12 days
- MFI Staff: 5 days
- MFI Management: N/A
- Clients: N/A
Phase 2: Validation surveys
• ACCION Staff: 15 days
• MFI Staff: 4 days
• MFI Management: 1 day
• Survey Firm: 30 days
• Clients: 400 hours
Time & Cost

Phase 3: Perform assessment Phase 4: Implement On-going

& write report Poverty Outreach Report
- ACCION Staff: 20 days • ACCION Staff: 5 days
- MFI Staff: 1 day • MFI Staff: 20 days

- MFI Management: 1 day • MFI Management: 2 days

• Clients: N/A
- Clients: N/A
Time & Cost

Phase 5: Track MFI poverty Phase 6: Product development

outreach over time
• ACCION Staff: variable
- ACCION Staff: 1 day per • MFI Staff: variable
quarter
• MFI Management: variable
- MFI Staff: .5 days per
quarter • Clients: variable (may involve
focus groups)
- 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

On-Going Use
Adaption Validation Testing Implementation (Annual)
Cost Category
I. Personnel $6,400 $2,250 $19,350 $6,800
Including ACCION and MFI staff
II. Travel, Transportation & Per Diem $2,400 $2,000 $2,400 -
III. Other
Validation survey firm - $10,000 - -

TOTAL ESTIMATED COST $8,800 $14,250 $21,750 $ 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 Comparison: Mibanco Data and Validation Survey
All figures in Soles per Year, $1/=S/3.5
Median Mean
Validation survey
Income per Capita 7,069 16,735
Expenditure per Capita 3,253 4,080
Mibanco MIS
Income per Capita 3,755 5,391
Expenditure per Capita 1,929 2,235

Peru Lima Provinces

Ratio of Validation:MiBanco Data Median Mean Median Mean Median Mean
Expenditure per Capita* 1.6 1.9 1.8 2.0 1.3 1.8
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
Income per Capita 103,880 146,358
Expenditure per Capita 32,848 50,591
SOGESOL MIS
Income per Capita 88,500 196,270
Expenditure per Capita 12,000 15,393

Ratio of Validation:SOGESOL Data

Median Mean
Income per Capita 1.1 1.9
Expenditure per Capita 3.0 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)

.4

.3
Fraction

.2

.1

0
0 1 2 3 4 5 10
adjfactor_exp
Distribution of Validation:Mibanco Expenditure Ratios
Results - Mibanco

Poverty Measure Adjustment Factor Poverty Rate

1. Individual, household-level HH-specific adjustment 33%
adjustment factor
2. Household-level median adj. Lima=1.8 30%
Factor Provinces=1.3

• 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)
 On-Going Poverty Outreach Report
Institución: Mibanco
Fecha: (Ser completado trimestralmente)

Tasa de Tasa de
Línea de Pobreza Cambio Línea de comparison
Estadísticas Macroecon. y Ajuste a la Tasa de (en 2002 nuevos (nuevos soles Pobreza (en de pobreza
Línea de Pobreza PIB/Cápita Inflación soles/cáp/anual) per US$) US$) (ajustada)
3685 #DIV/0!

Saldo Activos # de clientes

PARTE A: Número de Ingreso de Monto Vigente del Totales de al final de
Estadísticas Resumenes por Nivel de Número de Clientes % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo la Micro- periodo
Pobreza Clientes (1) % de Clientes Monto de Cartera % de Cartera Nuevos (3) Nuevos Hogar (media) (media) do (media) (media) (2) empresa anterior
Nivel 1 (1er quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 2 (2o quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 3 (3er quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 4 (4o quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Nivel 5 (5o quintile de gastos del hogar) #DIV/0! #DIV/0! #DIV/0!
Población Total de Clientes 0 #DIV/0! 0 #DIV/0! 0 #DIV/0! 0

Saldo Activos # de clientes

PARTE B: Número de Ingreso de Monto Vigente del Totales de al final de
Estadísticas Resumenes por Tamaño de Número de Clientes % de Clientes Ingreso de Hogar/Cáp Desembolsa Préstamo la Micro- periodo
Préstamo Clientes % de Clientes Monto de Cartera % de Cartera Nuevos (3) Nuevos Hogar (media) (media) do (media) (media) (2) empresa anterior
Tamaño de Préstamo = $0-$200 #DIV/0! #DIV/0! #DIV/0!
$201-$400 #DIV/0! #DIV/0! #DIV/0!
$401-$1,000 #DIV/0! #DIV/0! #DIV/0!
$1,001-$3,000 #DIV/0! #DIV/0! #DIV/0!
más que $3,000 #DIV/0! #DIV/0! #DIV/0!
Total 0 #DIV/0! 0 #DIV/0! 0 #DIV/0! 0
Discussion