Including the Excluded: Lessons Learned From the Poverty Targeting Strategies Used by Microfinance Providers

This paper examines the strategies employed to target the poor and provides an analysis of how they differ, depending on the mandate and the development paradigm of the provider. The paper discusses:

• The rationale for poverty targeting;
• Methods of poverty targeting which involve:
  • Identifying and reaching the poor,
  • Attracting the poor,
  • Discouraging or excluding the non-poor.
• Combining methods to form a targeting strategy;
• Targeting costs and benefits.

The paper concludes that the differences in poverty-targeting strategies depend on the pressure for microfinance service delivery to be financially self-sufficient, and also on whether it is one of several complementary services. These differences can be broadly classified into two different orientations, they are:

• Targeting-plus (borrowing from, and complementary to, the expression 'credit-plus') approach where the targeting is integrated with program delivery;
• Targeting by attraction where products and services are designed to attract clients to the provider.