Estimating the Depth of Microfinance Programme Outreach: Empirical Findings from Rural Pakistan
This paper assesses the depth of microfinance programme outreach in rural Pakistan. It focuses primarily on the empirics of poverty targeting and depth of programme outreach. It examines data from a primary household survey of 1,132 respondents in Punjab Province, Pakistan to analyze the category of poor being reached by the programme, namely very poor, middle poor and less poor households.
The study interviews borrower (treatment) and non-borrower (control) households in order to make comparisons. It uses Principal Component Analysis to allocate a specific poverty score to each household in relation to all other households in the sample. It then ranks sampled households in order of varying poverty levels and compares borrower and non-borrower households to estimate programme outreach. Findings indicate that:
- Depth of microfinance's poverty outreach is significantly lower than what service providers have claimed;
- Poorest households amongst the surveyed sample are not being reached to the desired extent;
- Large portion of total outreach is focused on the least poor.
The study reflects on policy implications to enhance depth of programme outreach to address the needs of the poorest of the poor, in order to contribute meaningfully and effectively towards combating poverty.
