Grameen Foundation Social Performance Initiative

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Progress out of Poverty Index
Jeff Toohig Sanabel Conference Sanaa June 13,
2007
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What is the PPI?
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The Progress out of Poverty Index

• The PPI is a Measurement Management tool
• Composed of simple, non-financial indicators
  derived from national household surveys
• Enabling MFIs to manage performance by knowing
  their clients poverty status
• Integrate financial indicators with social
  indicators
• Translate mission into practice

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With client poverty levels an MFI can

• Understand the rate clients cross a poverty line
  as scores change over time
• Correlate product offerings and distribution
  channels to poverty levels
• Understand drop-outs better
• Accurately report poverty level
• Internally, Investors, Donors, Rating Agencies

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With client poverty levels an MFI can

• Know its clients

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Building the PPI Where does it come from?

• Start with country specific national survey
• Create a Scorecard of the best 10 indicators of
  poverty status
• Results are highly accurate
• With 90 Confidence Morocco PPI
• Accurate within /- 2 for groups
• Accurate within /-12 for individuals

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The PPI What does it look like?
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The PPI What does it look like?
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The PPI What does it look like?
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10
The PPI What does it look like?
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0
3
0
0
0
11
6
4
0
30
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The PPI Portfolio analysis
MFI Poverty B Gone has 3,000 clients. 1,000
have scores of 20 1,000 have scores of 30 1,000
have scores of 40 The overall likely portfolio
rate is 1,000x (55 32 26) 3,000
37 Overall Poverty Rate
Progress out of Poverty Index for Morocco by
Microfinance Risk Management, L.L.C.
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Analysis that leads to Action

• Linking poverty likelihoods with
• Client retention
• Client repayment rates
• Client recruitment
• Client business activity
• Client age and loan cycle
• Client community location

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Global Update
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Regional Update

• Grameen-Jameel PPI Pilot underway in Morocco
• PPI created for Palestine through CGAP
  partnership
• Egypt a priority but data access a roadblock
• Need to support regional appetite

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Morocco Update

• PPI Pilot underway in Morocco
• Fondep
• 5 branches with sample of 690 clients
• Pilot staff training completed
• Data collection underway
• Data analysis and implementation plan July 2007
• Zakoura
• 4 branches with sample of 640 clients
• Pilot staff training completed
• Data collection underway
• Data analysis and implementation plan July 2007

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Establishing PPI as the industry standard

• MFI uptake
• CGAP co-branding
• Sychronizing with social investors, USAID and MF
  Rating agencies
• Endgame
• MFIs reach deeper and meet client needs better

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PPI Summary

• Easy-to-use, inexpensive, transparent, objective
• Estimates likelihood that a person is poor
• MFIs use policy cut-offs for targeting
• Track over time for progress out of poverty
• Practicality and accuracy both matter
• One page, few indicators, simple weights
• Field workers can compute scores on paper in real
  time
• Valid for any program, not just microfinance

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What do the data look like?
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Case studies (NWTF Results)
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Case studies (NWTF Results)
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Case studies (NWTF Results)
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Case studies (NWTF Results)
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PPI Summary

• Easy-to-use, inexpensive, transparent, objective
• Estimates likelihood that a person 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 both matter
• One page, few indicators, simple weights
• Field workers can compute scores on paper in real
  time (no software required)
• Valid for any program, not just microfinance