Poverty Measurement Discussion Group, Paper #3

Welcome to the third edition of the Microcredit Summit Campaign's Poverty Measurement Discussion Group (PMDG). More than 710 people are now part of this Discussion Group.

Background and Purpose

The Microcredit Summit's goal is to reach 100 million of the world's poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the year 2005. In 1996, the Summit's Organizing Committee adopted the definition of the "poorest" from the Policy Advisory Group of the Consultative Group to Assist the Poorest (CGAP). For the purposes of the Microcredit Summit Campaign, the "poorest" are those families in developing countries in the bottom 50 percent of the population living below their country's poverty line. In industrialized countries, the Summit's goal focuses on reaching families below the poverty line of their country.

The specificity of the Summit's goal provides an important clarity of purpose but also a tremendous challenge, because most practitioners do not know of simple, low-cost methods available for assessing the poverty level of their clients. This is why the Microcredit Summit Campaign launched the PMDG in October 1997. The PMDG's purpose is to discuss and disseminate the best practices being used in the field for measuring and monitoring poverty levels of clients in a cost-effective manner. We acknowledge that the discussion so far has focused on finding the poorest families in developing countries. We welcome submissions on methods of targeting poor families in industrialized countries.

Establishment of a Poverty Measurement Tool Kit

Recently, the Microcredit Summit Campaign Executive Committee approved the creation of a Microcredit Summit Poverty Measurement Tool Kit (PMTK). The first two measurements to be included in the PMTK were the CASHPOR House Index (CHI) and the Small Enterprise Foundation's Participatory Wealth Ranking (PWR), two tools which were discussed at length in the first two issues of the PMDG papers. It is hoped that these tools represent the first of many measurements to be included in the PMTK. As more tools are brought to the attention of the Secretariat, the Secretariat will disseminate the most well-documented ones for discussion. Following a discussion among the PMDG, the most promising tools will be presented to the Campaign Executive Committee for possible inclusion in the PMTK.

In this third issue of the PMDG, four new tools are presented for discussion. Each tool is being used currently by a microcredit institution that has agreed to let their methodologies be circulated for discussion. Please read the enclosed descriptions and respond to the Secretariat with your comments no later than July 30, 1999.

Four New Tools

RHUNU UNESCO, Mr. C.A. Samaradivakara
At Rhunu Unesco in Sri Lanka, a card is completed for each beneficiary family with information gathered from a survey done of the family's circumstances. Points are determined for certain levels within each category. Points (0-10) are awarded for each indicator; the lower the overall score, the poorer the family. Families scoring 30 points or less are considered living below the poverty line in Sri Lanka, whereas families scoring 20 points or less are considered in the bottom half of those living below the poverty line. The survey includes:

1) Monthly income for a family (US$50 = 10 points / $40 = 8 points / $30 = 6 points / $20 = 4 points / $10 = 2 points)

2) Quality of housing (Permanent = 10 points / Semi-permanent = 5 points / Temporary = 0 points)

3) Health
a. Access to pure water within 100 yards (Owns or has access to pure water source = 2.5 points / No access to pure water source = 0 points)
b. Access to proper toilet facilities within 100 yards (Permanent water-sealed toilet = 2.5 points / Water-sealed toilet needing improvement = 1 point / No toilet facilities = 0 points)
c. Nutritional level of the children (as evidenced by a Child Development card maintained by the government = up to 2.5 points)
d. Immunization of children (as evidenced by a Child Development card maintained by the government = up to 2.5 points)

4) Number of school going children (Full score = 10 points / 2 points deducted for every child ages 6 - 18 that is not attending school)

5) Availability of electricity (Electricity = 10 points / No electricity = 0 points)

FAMILY DEVELOPMENT FUND, UNICEF
The Family Development Fund (FDF) in Egypt uses a tool that targets some of the poorest villages of Upper Egypt, and their target population is very poor women. Female high school graduates from the community are selected as loan officers and trained to do assessments. Community-based loan committees serve as a final verification of the assessments. Criteria for selection include the following:

1) Female-headed households (widows, divorcees, women married to unemployed men, women married to disabled men)

2) Per capita income of the family members is not more than Egyptian Pound 40.00/US$12 per month (based on interviews with the women regarding their sources and amount of income)

3) Land owned or leased should not be more than 4 Kerats (total 0.17 acres)

4) Women eligible for the Sadat Pension Scheme and receive social security from the Ministry of Social Affairs

Priority for loans is given to those who meet more than three items of the above criteria.

INTERNATIONAL RESCUE COMMITTEE SEAD PROGRAM, Sunimal Alles
The International Rescue Committee's SEAD program in the Ivory Coast works primarily with Liberian refugees in the Ivory Coast. Staff carry out baseline surveys and document findings before any assistance is provided. The loan staff observe for themselves, as well as interview participants and their neighbors, concerning several items differentiated by the titles very poor, not so poor, non poor.

Description of benchmark: Very Poor (VP) / Not So Poor (NSP) / Non Poor (NP)

1) Cooking Utensils (VP = Leaking, damaged, limited quantity / NSP = Better pots, 1 set of dishes / NP = Better quality, more than 1 set)

2) Sleeping condition (VP = Floor or mat / NSP = Mattress / NP = Bed)

3) Clothes (VP = Torn or dirty / NSP = Patched / NP = Good clothes)

4) Slippers (VP = No footwear, different models, damaged / NSP = Repaired and second hand / NP = Better/new shoes and slippers)

5) Food (VP = Dry rice, 1 meal a day / NSP = Rice with soup, 2 meals a day / NP = Rice with meat/fish, 3 meals a day)

6) Health condition (VP = Skin rash, infected eyes, sore feet, cough, running nose, diarrhea / NSP = Some of the same as for the very poor, but better health, buys medicines from street vendors / NP = Visits to the doctor, medicines from pharmacy)

7) Schooling (VP = No children in school / NSP = Boys in school / NP = All children in school)

8) Housing (VP = Leaking house, no door, cloth to cover entrance / NSP = 1 front door, 1 room cemented / NP = Cemented house floor, 2 doors, good roof, 4 windows, flowers in yard)

9) Furniture (VP = No chairs, some benches / NSP = 2 chairs or stools / NP = Sufficient furniture)

10) Utilities (VP = No toilet, 1 or no lantern, uses fire for light / NSP = Shallow pit latrine, 2 lanterns, well for water / NP = Covered well for water pump, flushing toilet)

11) Domestic employees (VP = none / NSP = none / NP = one employee)

12) Transportation (VP = Walking / NSP = Paying for taxi / NP = Bicycle or motorbike)

13) Radio (VP = None / NSP = Old or damaged / NP = Good or new)

14) Ice box (VP = None / NSP = Clay pot to cool water and drinks / NP = Refrigerator)

15) Animals (VP = None / NSP = Sheep, chickens / NP = Cows, sheep)

16) Business income (VP = No income or working as laborer / NSP = Part time / NP = Regular employment)

17) Economic activities (VP = Gathering and selling palm nuts and wood / NSP = Buying and selling wood, table market / NP = Larger table market, store, cosmetic shop)

LIFT ABOVE POVERTY ORGANIZATION (LAPO), Uwa Izekor
The Lift Above Poverty Organization in Nigeria developed their poverty measurement tool after visiting Grameen Bank in 1990. Their tool provides a scoring system between 25 and 100, with the higher scores indicating greater poverty. People are eligible for a loan from LAPO if they score 50 points or above, as their economic situation would correspond similarly with people living below Nigeria's official poverty line. LAPO staff have indicated that people scoring 70 points or above would have economic situations that correspond similarly with the Summit's target group, the bottom half of the population living below the Nigerian poverty line. The questions take five minutes to complete per client. This is used as an initial cut-off to determine eligibility. Before a client receives a loan, there are five more meetings with loan officers who can use these meetings to verify the accuracy of the information provided in the first interview. The list of criteria include:

1) PERSONAL
a. Level of formal education (None = 12 points / Half primary = 8 points / Full primary = 6 points / Half secondary = 4 points / Full secondary = 2 points)
b. Number of dependants under twenty years of age (Above 9 = 10 points / Between 6 and 9 = 8 points / Between 3 and 5 = 5 points / Between 1 and 2 = 3 points / None = 2 points)
c. Marital status (Widow = 10 points / Separated or divorced = 6 points / Married = 5 points / Single = 4 points)

2) HOUSEHOLD
d. Building (Rented = 12 points / Inherited = 6 points / Own = 3 points)
e. Size of dwelling place (1 room = 7 points / 2 rooms = 5 points / 3 rooms = 3 points / Flat/Bungalow = 2 points)
f. Highest form of entertainment owned (None = 12 points / Radio = 6 points / T.V. = 1 point)

3) BUSINESS/ OCCUPATION
g1. Worth of business [in Naira US$1 = 88 NGN] (No business or 1000-5000 = 15 points / 6000-10000 = 10 points / 11000-20000 = 8 points / 21000-50000 = 5 points / 5100 and above = 3 points)
OR
g2. Size of farm (Small = 15 points / Medium / 9 points / Large = 3 points)
h. Monthly income (Below national minimum wage = 12 points / Above national minimum wage = 5 points)

4) LOCATION
i. Location (Rural = 10 points / Semi-urban or Local Government Headquarters = 6 points / Urban or State capital = 3 points)

 

SCORE SHEET	(Maximum, Minimum)
1. Level of formal education	(12 points, 2 points)
2. Number of dependants under 20 years of age	(10 points, 2 points)
3. Marital status	(10 points, 4 points)
4. Building - house	(12 points, 3 points)
5. Size of dwelling place	( 7 points, 2 points)
6. Highest form of entertainment owned	(12 points, 1 points)
7. Worth or business OR Size of farm	(15 points, 3 points)
8. Monthly income	(12 points, 5 points)
9. Location	(10 points, 3 points)
TOTAL	(Maximum = 100 points / Minimum = 25 points)

Submitting Comments for Discussion

The goal of the PMDG is to find consensus on the poverty measurement tools that are being proved successful in different regions and different contexts. We welcome comments on the methods discussed above.

Comments on these tools should focus on the following:

Challenging the tool: Does the tool make sense to you? If not, why not? Would the tool be effective in identifying the population in the bottom 50 percent below the poverty line in your community, country, or region? If not, why not?

Verifying the tool: Share the experience of your organization if this tool is being effective in identifying the population in the bottom 50 percent below the poverty line. Why is it working? How do you know that it is effective?

Improving the tool: Have you modified one of these methodologies? If so, how? Why is it effective?

We also welcome comments on poverty measurement tools that have NOT yet been addressed in this forum. In all cases, we are most interested in comments that:

Describe, in detail, a methodology currently in use to identify the poverty level of program clients AND discuss the strengths and weaknesses of that methodology in terms of cost-effectiveness for the program, and the accuracy in identifying families in the bottom 50 percent of those living below poverty in developing countries (or identifying families below the poverty line in industrialized countries).

Deadline for Submitting Comments

Please submit all comments on Poverty Measurement Discussion Group Paper # 3 by e-mail, fax, or mail no later than July 30, 1999.

Please submit all comments to Anna Awimbo, Research Director at:
E-mail: awimbo@microcreditsummit.org
Fax: 1.202.637.9600
Microcredit Summit Secretariat
Attn. Anna Awimbo, Research Director
440 First Street, Suite 460
Washington, D.C. 20001 USA