Poverty Measurement: Challenges and Benefits
MicroSave's India Focus Note 96 highlights practical challenges and benefits of poverty measurement tools for MFIs. It is inspired by MicroSave's experience with the Social Performance Management Implementation Project, which piloted the Grameen Foundation's Progress out of Poverty Index tool, among other instruments, with MFIs in India, Sri Lanka, and Bangladesh. Several organizations have developed standardized survey-based tools that aim to define and facilitate outreach to the poor. But selecting an appropriate tool poses challenges to MFIs in the areas of cost, regulations, and lack of customization. Benefits to MFIs of poverty measurement include:
- Check against mission drift through monitoring of client poverty levels;
- Benchmarking;
- Product development;
- Client segmentation for better decision making;
- Client selection.
The Note concludes that coordinated efforts are needed to overcome the challenges MFIs face in using these tools and demonstrate the cost and benefit for the MFI.
