Do Microfinance Institutions Reach the Poorest?

This policy brief presents results from case studies on the poverty outreach of four MFIs from Central Africa, East Africa, Southern Africa and South Asia. CGAP supported the research conducted by International Food Policy Research Institute (IFPRI) during 1999 and 2000 to design and test a simple, low-cost operational tool to measure the poverty level of MFI clients relative to non-clients.

The selected four MFIs constituted a heterogeneous group serving a diverse clientele and using different approaches to service delivery. In each country, 300 non-clients and 200 new clients of MFIs were randomly selected. The field research was carried out over a period of 4-6 weeks.

All four institutions were found to reach clients that were as poor as the poorest third of non-clients residing in the operational area of the MFI. However there were large differences in the depth of poverty outreach between the MFIs. The study found the results consistent with the mission, priorities and targeting practices of the case study MFIs.