Microfinance Poverty Assessment Tool
Authors: Henry, Carla; Lapenu, Cecile; Zeller, Manfred; Sharma, Manohar
Publication date: October 2003
The Microfinance Poverty Assessment Tool was developed as a much-needed tool to increase transparency on the depth of outreach of microfinance institutions (MFIs). It is intended to assist donors and investors to integrate a poverty focus into their appraisals and funding of financial institutions through a more precise understanding of the clients served by these institutions. Used in conjunction with an institutional appraisal of financial sustainability, governance, management, staff and systems, a poverty assessment allows for a more holistic understanding of an MFI.
The Microfinance Poverty Assessment Tool provides accurate data on the poverty levels of MFI clients relative to people living in the same community. It uses a more standardized, globally applicable, and rigorous set of indicators than those used by conventional microfinance targeting tools. The tool employs principal component analysis to construct a multidimensional poverty index that allows the poverty outreach of MFIs to be compared within and across countries. Originally field tested in four countries on three continents, it has subsequently been applied by microfinance donors and MFI networks in numerous other countries.
Although the Microfinance Poverty Assessment Tool was designed for microfinance, the tool can also be used to measure the poverty levels of clients of other development programs.
“The survey collects data on internationally standardized indicators, but is adapted–with the staff of MFI–to take into account the local context. The combination of international standardization (allowing for comparison), with local adaptations (allowing for appropriate and useful indicators), is key to the success of the tool.”."
- Anton Simanowitz, Imp-Act Programme
Institute of Development Studies, University of Sussex, UK