Poverty Measurement in Microfinance: Interview with Cris Lomboy, PPI Implementer in the Phiilippines
Oikocredit USA National Director Sharlene Brown interviewed Cris Lomboy, the Asia Regional PPI Specialist for Grameen Foundation, to understand how an organization implements and ultimately utilizes the PPI in its processes.
SB: What are the key steps an institution takes to begin the implementation of PPI?
CL: The cycle starts with the institution expressing interest about the [PPI] tool. But, they must also show commitment to use of the tool – almost all institutions will express interest, but, from what I’ve seen from the field, only those who have really defined their social performance goals can be successful and committed users of the PPI.
SB: If you look at the beginning of the process – the expressed interest – how do organizations learn about PPI or how does GF market it so that organizations are able to learn about the tool?
CL: When Grameen Foundation started marketing the tool, we were going out and conducting a lot of training to help institutions gain knowledge about the PPI. Nowadays, we present at industry conferences and demonstrate its strategic and practical use. We encourage participants to either join our Peer Learning Network (PLN), visit our website, or inquire with other networks, like Oikocredit, that have experience providing support. Although there are few PLNs, these networks have actually been strong advocates, supporters, and promoters of the PPI. Our hope is to get more institutions to gather together regularly so that we can both learn from each other.
SB: When we go from expressed interest to an organization being trained – what are the mechanisms for MFIs and other users to be trained?
CL: There are several ways to access PPI training. Interested institutions can request for us to conduct a training for them, but we can only accommodate a few of these requests given the number of activities we’re involved in. We try to find ways to consolidate the training of several institutions so that we can reach scale. Our main strategy here is to work with networks of institutions that have several partners or investees – like Oikocredit – to train and provide follow up technical assistance to their own members or investees on PPI. We build internal capacity among Network partners so that they can transfer the knowledge to their partners. In our experience this is a sustainable approach and the incentive between the partner and the network is aligned due to mutual interest.
But these approaches are still limited, and Grameen Foundation is exploring ways to expand its training support – we’re creating an online learning platform to support different users and their varying needs. The groundwork for these initiatives is underway and we hope to make it available for all very soon.
SB: What does it mean when an MFI pilots the PPI? What is involved in the pilot process?
CL: Piloting the PPI means that the MFI is implementing the knowledge and skills learned during the training. They are expected to collect a few hundred samples (the number will depend on their resources) and along the way document their experience to identify key challenges that will hinder full implementation. They are likewise expected to develop solutions to identified challenge to enable them to move to PPI implementation or roll-out. We provide the MFI users the PPI Standards of Use to help them evaluate their compliance to recommended good practices based on GF and its partners’ experience.
Also at this stage, the MFI should be able to process and analyze the data they have collected and produce a simple report that will show their poverty outreach that includes scale, concentration and penetration. GF has produced a Poverty Outreach Report (POR) that they can follow to produce such analysis.
SB: What does it mean to move from pilot to implementation stage for a PPI user?
CL: The MFI is now ready to roll out the PPI in all its branches. They will be collecting the PPI regularly and in most cases they collect the PPI every loan application or renewal. The PPI should likewise be integrated in the user’s management systems like human resource (including continuous staff training on PPI), operations (embedding the PPI form / scorecard in their application form and administering it during credit and background investigations), MIS (they should be able to store and process data as well as create reports), etc.
In the implementation stage, the PPI user is able to prepare reports for different stakeholders of the institution and link client data and portfolio information (loan, savings, repayment) with the PPI data to gain better business intelligence. They can also create a more definitive Poverty Outreach Report that they can use to make informed decisions on such issues as client targeting and recruitment, product improvement, and possible poverty movement.
SB: Finally there’s the Certified PPI User – what does that mean?
CL: PPI Certification is a process of assisting the MFI to assess its PPI usage and whether they are complying with the suggested good practices by GF. The Standards of Use is the primary document that we refer to in doing the Certification. The Standards are divided into Basic, Advanced, and Tracking over time and there are several indicators under each category. The minimum standard we can issue is the Basic and it means that all the requirements needed to have a high quality PPI processes is met by the MFI.
The results of the PPI Certification are shared with interested institutions – notably the MIX Market where MFIs can now submit both financial and social performance data. The certificate improves the credibility of the information submitted by the MFI to the MIX Market and similar organizations. It actually improves the efficiency in the microfinance ecosystem because it reduces the information validation process.
SB: Can you provide a profile of an organization that chooses to implement a PPI – what are the most important characteristics?
CL: The organization must have a social commitment at the leadership-level of the organization, a strong core of people who are very committed to working in poor communities and who have a strong social development background. This means that they have developed this kind organizational ideology and philosophy and supported it operationally with appropriate training and systems.
We’re starting to see some of the key institutions in the region entering the phase of integration. We’re very excited because we’re seeing that they’re able to integrate social performance and financial performance data. The next challenge is [using the data to] make changes – especially when it comes to product development and product designs. A key to achieving this level of data use is to have a functional management information system (MIS) that enables integration of PPI with other portfolio data.