Grameen Foundation’s Progress out of Poverty Index (PPI) is both a management and a measurement tool. It allows microfinance institutions (MFIs) to better determine their clients’ needs, which programs are most effective, how quickly clients leave poverty, and what helps them to move out of poverty faster.
The PPI, which builds on previous efforts to measure and manage MFI social performance, provides an accurate and practical approach for MFIs to measure how and why their clients’ living conditions change over time. It helps MFIs:
- Define and adhere to their mission.
- Divide their clients into distinct poverty bands (very poor, moderately poor, and non-poor).
- Improve programs, products, and delivery of services.
- Increase their competitive edge, profitability, and ability to retain clients by responding more quickly and effectively to changes in their communities and by showing documented results.
- Provide timely and accurate information to socially responsible investors who may want to provide financial resources to their programs.
The PPI is a unique composite of easy-to-collect, country-specific, non-financial indicators such as family size, the number of children attending school, the type of housing, and what the family typically eats. In each country, it draws information from either that country’s national household survey (e.g. Mexico’s INEGI database or Pakistan’s Integrated Household Survey), or the country-specific World Bank Living Standards Measurement Survey, depending upon which dataset has the most complete information. This index then serves as a baseline from which client progress is measured. By using benchmarks and standards of measurement that produce reliable information, managers can build client profiles and track how they change over time.
Posts
