Oikocredit USA National Director Sharlene Brown sat down with Steve to learn some of the motivations behind and benefits to poverty measurement and the PPI specifically. Prior to her role at Oikocredit USA, Sharlene was a Senior Program Officer for GF in charge of implementing and training on the PPI.
Sharlene Brown: What is the motivation for the poverty measurement initiative in the [microfinance] sector?
Steve Wright: Measurement of poverty is absolutely critical because the underlying principle of microfinance is that it serves the poor. Poverty measurement is a necessary prerequisite [because] you must know whether your clients are poor, and then whether your products are being consumed by the poor. There’s no value judgment in the PPI – it’s simply essential business intelligence for any organization focusing on poverty alleviation.
SB: What has been Grameen Foundation’s vision for PPI adoption by organizations in the field? And, has that vision been realized?
SW: The vision is that for any organization focused on poverty alleviation, we want to make it possible for them to use it. [We want] to lower the cost and raise the ease of use.
Has it been accomplished? Not yet. It’s about scale. We’ve become the industry standard in microfinance, but we have a long way to go yet in the greater development sector. … We are adding approximately 5 new PPI users per month, [and] we’re confident we will add at least another 60 users this year. We’ll have at least 210 organizations using PPI by next April.
SB: What does it take for an organization to be a successful user of the PPI?
SW: The organization has to be focused on poverty alleviation – that’s critical. PPI is a carrot, not a stick. You can’t make someone measure poverty – it has to be viewed as an investment by the organization, as information that is critical to accomplishing their mission. You have to, as an organization, intend to alleviate poverty. Without that intent, the PPI will be viewed as a cost as opposed to an investment. In addition to the intent to alleviate poverty, the most successful users of PPI are those with engaged leaders who are interested in measuring their success relative to their ability to reach and to serve the poor.
The logistical trick is primarily technology. How do you integrate the data effectively into your internal databases? More importantly, how will you use this data to provide insight? Leaders need to be able to answer, “in each region, what is my poverty outreach? How does my poverty outreach compare to national poverty incidence? How are my products being used by the poor?”
SB: One of the points I tried to make in our recent webinar on poverty measurement is that PPI can be used by organizations outside of the microfinance sector. Can you give an example of such an organization?
SW: Last time I checked, 70% of our users are MFI practitioners; that means 30% are a combination of intermediaries or non-microfinance practitioners. That’s really exciting for us – [there has been] a 10% increase [in non-MF practitioner users] over the last 6 months.
One particular example is Good World Solutions. They’re a technical assistance organization in the fair trade space, working in India and Latin America. They perform PPI surveys for fair trade supply chains in order to understand, for example, how poverty has changed over time in a particular factory. It’s very interesting! This is how big corporations with factories overseas should handle their operations – measure and be brutally honest about the level of poverty and then commit to reducing that poverty through employment.
SB: Are you seeing any trends or interesting discoveries about what it really takes to move clients out of poverty?
SW: All we’re doing is measuring. What takes people out of poverty? How long does it take? PPI data can be used as input to answer those questions but they are not explicitly PPI questions. That said, [Grameen Foundation’s] Financial Services group has seen some very exciting work around sequencing financial products trying to answer the question, “what is unique about the very poor and what products can be designed specifically for them?” Savings, insurance, livelihood support and conditional cash transfers are all part of the product mix. What the PPI can do in this context is confirm the poverty levels of the clients that are consuming these different products to ensure targeting and uptake are effective.
SB: What are the benefits to investors – individuals and organizations investing in microfinance via a vehicle like Oikocredit – offered by the PPI?
SW: If you’re investing in a microfinance investment vehicle [like Oikocredit] and you’re doing that because you believe that microfinance is a poverty alleviation intervention, then you need to know if the organizations you are investing in are serving the poor. The PPI [allows investors to carry out] due diligence: are the organizations they’re investing in serving the poor? How does the organization know that? PPI is one very good way.
Steve Wright is the Director of the Social Performance Management Center (SPMC) at the Grameen Foundation. Prior to joining us, Steve was the Director of Innovation and Technology at the Salesforce Foundation. Steve has also been a high school administrator and teacher as well as being a Peace Corps volunteer in Micronesia. He is based in Oakland, CA.