MFI Is Already Using PPI Findings to Enhance Services for Poor Rural Women
March 15, 2011 - Grameen Foundation today announced that PRISMA Microfinance of Peru is the first fully certified user of the Progress out of Poverty Index™ (PPI™). MF PRISMA piloted the PPI at two branches in 2008, and in 2009 began using it across the entire organization to target the poorest clients and track changes in their poverty levels. From a sample of clients who were new in 2009, 85 percent were surveyed a second time in 2010, demonstrating that 2.6 percent of the clients in the sample had crossed the national poverty line in one year’s time.
MF PRISMA was the first microfinance institution (MFI) to have its use of the PPI validated in all three categories of certification: basic, advanced and tracking over time. Its new status as a certified user will also be recognized on the Microfinance Information Exchange (MIX), the primary source for published financial and social performance data about MFIs.
MF PRISMA’s experience in using the PPI is documented in a new report released today by Grameen Foundation, The PPI at PRISMA Microfinance: Using the PPI to Target and Service Rural Poor Women. It demonstrates the organization‘s continuing success in reaching its target clients and discusses its strategies for enhancing the services it provides. The report is available at http://www.progressoutofpoverty.org/prisma-case-study.
“To be truly effective and transformative, microfinance institutions must not only measure their social performance, but also use those findings to make meaningful changes in their operations that will benefit their clients,” said Alberto Solano, Grameen Foundation’s regional CEO for Latin America and the Caribbean. “We commend MF PRISMA’s leadership and staff for their willingness to adopt new policies based on their PPI results.”
“MF PRISMA’s experience confirms that the PPI is a valid, integral and flexible tool that reflects reality and helps management make more informed decisions,” said Diego Fernandez-Concha, director of MF PRISMA Microfinance. “We are committed to serving Peru’s poorest people and our PPI data reinforces that we are reaching our target populations.”
The PPI results have re-shaped MF PRISMA’s approach and operations and have also enabled the organization to demonstrate its social mission to investors and others. Data for 2009 and 2010 showed that MF PRISMA’s rural clients, who accounted for 47 percent of the MFI’s portfolio in 2010, were the poorest. The results also showed that new female clients were poorer than the men. In response, MF PRISMA redoubled its efforts to reach more women in rural areas, to fulfill its mission of serving the poorest. The findings also showed that the village banking model – which involves regular group meetings – worked best for this group. Accordingly, MF PRISMA – with a mandate from its board – plans to increase its overall portfolio of village banking clients from 46 percent to 70 percent, largely through incentives for its loan officers.
Over the past year, MF PRISMA has also received preferred lending terms from seven major investors because its PPI results demonstrated that it was targeting the poorest people in Peru.
“MF PRISMA is one of the best models of PPI implementations in Peru,” said Yolirruth Nunez, Regional Social Performance Management and Capacity Building Coordinator for Oikocredit’s programs in Peru and Ecuador. She was also pleased that other MFIs using the PPI, some of them “rising stars,” would be able to learn some lessons from MF PRISMA’s experience. Oikocredit is one of the leading advocates for social measurement in microfinance and has been a strong Grameen Foundation ally in promoting its use across Latin America.
As part of its ongoing commitment to transparency and robust reporting, MF PRISMA will continue to focus on deepening and institutionalizing its analysis of PPI results.
The Progress out of Poverty Index is a country-specific assessment tool that helps institutions measure outreach to the poor, monitor changes in economic well-being of clients and provide data that helps managers improve the effectiveness of programs and services. Building on the concept of Grameen Bank’s 10-Point System, the PPI was commissioned by Grameen Foundation in collaboration with Consultative Group to Assist the Poor (CGAP), Ford Foundation and Microfinance Risk Management LLC. Launched in 2005, the PPI is now being used by 89 institutions worldwide. For more information, please visit progressoutofpoverty.org.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people lift themselves out of poverty by providing access to financing, technology solutions and management strategies to the local organizations that serve them. It also develops mobile phone-based solutions that address “information poverty” among the poor by providing tools, information and services in the fields of health, agriculture, financial services and livelihood creation. Founded in 1997, Grameen Foundation has offices in Washington, DC; Seattle, WA; Colombia; Ghana; Hong Kong; the Philippines; and Uganda. Microfinance pioneer Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, is a founding member of its Board of Directors, and now serves as director emeritus. For more information, please visit grameenfoundation.org.