micro enterprise development for very poor people promising approaches from the field

8/8/2019 Micro Enterprise Development for Very Poor People Promising Approaches From the Field

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DRAFT [September 8, 2005]

Poverty Outreach Working Group

Microenterprise Development Services forVery Poor People:

Promising Approaches from the Field

INTRODUCTION

In 2000, the U.S. Congress passed the Microenterprise for Self-Reliance Act,1 whichmandates that one-half of all U.S. Agency for International Development (USAID)

microenterprise funds must benefit very poor people. The legislation defines the verypoor as people living on less than US$1 a day2 or those among the bottom 50 percent ofpeople living below a specific country's poverty line. This paper uses the same definitionof very poor, which essentially implies extreme poverty. The law also requires USAIDto develop and certify tools for assessing the poverty level of microenterprisebeneficiaries so that the agency can determine whether or not its development partnersare achieving the mandate of assisting the very poor.

The U.S. legislation was advanced by pro-poor microfinance advocates who soughttransparency concerning who the microfinance industry is really reaching. Theseadvocates, and certain microfinance practitioners, viewed the legislation as necessary

because most microenterprise development (MED) practitioners were not reaching verypoor people, despite mission statements and promotional materials that identified thesepeople as their target clients. The reality is that many microfinance organizations haveno idea of who they are reaching. Most microfinance clients today fall in a band aroundthe poverty line; the extreme poor are rarely reached. It it thus crucial that policymakers,donors and development practitioners have reliable information about the poverty levelsof the beneficiaries of development services in order to steer investments and programstoward targeted population segments they want to reach.

The current emphasis of the microfinance industry is on scaling up microfinance servicesto reach poor people on a mass scale. Given this background, the U.S. legislation was

developed as a safety measure to keep resources focused on very poor people, a segmentof the population that tends to be left behind in the quest for scale. Mainstreammicrofinance is beginning to be integrated into the formal financial system and the

1Microenterprise for Self-Reliance Act of 2000, Public Law number, Cardinal number Cong., cardinalnumber sess. (date session began). The act was amended in 2003 and 2004. The Amendment to theMicroenterprise for Self Reliance and International Corruption Act in 2003 requires that 50 percent of allUSAID microenterprise resources benefit the very poor. The legislation was further amended in 2004(Microenterprise Results and Accountability Act of 2004).2 Equal to US$1.08 per day in purchasing power parity (PPP) dollars at 1993 prices.

1
http://www.usaidmicro.org/pdfs/hR4073AmendMicroenterpriseAct2000.pdfhttp://www.usaidmicro.org/pdfs/hR4073AmendMicroenterpriseAct2000.pdfhttp://www.povertytools.org/documents/HR%203818%20RDS.pdfhttp://www.usaidmicro.org/pdfs/hR4073AmendMicroenterpriseAct2000.pdfhttp://www.usaidmicro.org/pdfs/hR4073AmendMicroenterpriseAct2000.pdfhttp://www.povertytools.org/documents/HR%203818%20RDS.pdf


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corresponding trend towards commercialization and financial sustainablility is drivingmicrofinance operations. As commercial banks downscale to serve large portions of themicrofinance market, the hope is that nongovernmental organizations (NGOs) willcontinue to innovate and create better ways to reach and serve very poor people, who canlater be integrated into mainstream microfinance and the formal financial system.

Although many practitioners and implementers opposed the U.S. legislation as restrictiveand costly, it has successfully brought the issue of knowing who your client is, and howbest to serve her or him to the forefront of microfinance discussions. Many organizationshave created poverty assessment tools and conducted client analyses over the last twoyears and have come to realize that they are not even close to reaching their intendedclients. The legislation has prompted many practitioners to think beyond povertyassessment and focus on the questions: Who is the client? How can we better reach andserve intended clients? If microfinance organizations better understand the needs andwants of their clients (in any income bracket), they will be more successful in designingappropriate products and services and retaining clients.

And thus we come to the question: can microfinance reach very poor people? The authorsof this paper believe the answer is yes, but recognize that doing so is not easy. Thepurpose of this paper is to highlight promising approaches to reaching and serving verypoor people with financial and non-financial services. Such programs do not look likethe majority of microfinance programs and are unlikely to achieve operationalsustainability as quickly as mainstream microfinance institutions now achieve it.Nevertheless, there has been great innovation in the developmentment of low-costdelivery mechanisms, products and services appropriate for very poor people. This paperwill examine some of the common elements that make such programs successful andrecommend areas for further research.

PART I. BACKGROUND

Definition and status of poverty

Traditionally, poverty has been conceptualized in terms of income, with the poor definedas those living below a given income level. Poverty can be also understood aspronounced deprivation in well-being.3 However, poverty is increasingly recognized as amultidimensional phenomenon that encompasses not simply low income, but also lack ofassets, skills, resources, opportunities, services and the power or voice to influencedecisions that affect an individuals daily life.4 Poverty also frequently overlaps with and

reinforces other types of social exclusion, such as those based on race, gender orethnicity.5 This more comprehensive understanding of poverty better captures how thepoor themselves define their situation.6

3 World Bank, World Development Report 2000/2001, page number?4 World Health Organization (WHO),Reaching the Poor, 2004, page number?5 Ibid.6 World Bank, World Development Report 2000/2001, page number?;and WHO,Reaching the Poor,2004, page number?

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The complex and multidimensional nature of poverty makes it a challenge to measure.For the sake of simplicity, an income-based measure of poverty is used most widely, as itpermits comparisons between regions and countries. The World Bank, for example,defines extreme poverty as an income of US$1 a day, seen as the minimum amountnecessary for survival. To calculate extreme poverty in an individual country, the dollar-

a-day measure is converted to local currency using the purchasing power parity (PPP)exchange rate, based on relative prices of consumption goods in each country. Based onsuch calculations, the World Bank estimated that 1.2 billion people were living inextreme poverty in 2003, roughly 23.3 percent of the population of all low- and middle-income countries.7 While the definition of very poor people used in this paper is based onincome, the programs explored in the following sections address many aspects of extremepoverty, not income levels alone.

Box 1. Acronyms used in this paper

ARC American Refugee CommitteeASA

BRACCFPR/TUP Challenging the Frontiers of Poverty Reduction/ Targeting the

Extreme Poor, a BRAC programCRS Catholic Relief ServicesFFH Freedom From Hunger IGVGD Income Generation for Vulnerable Groups Development, a

BRAC programILO International Labour OrganizationMED microenterprise developmentMFI microfinance institutionNABARD National Bank for Agriculture and Rural Development - Indias apex

bank for rural development

NGO nongovernmental organizationPACTPPP purchasing power paritySEF Small Enterprise FoundationSHG self-help groupTCP Tshomisano Credit Program, and SEF programTUP Trickle Up ProgramUSAID U.S. Agency for International DevelopmentWHO World Health Organization

Role of microfinance in serving very poor people

By providing small loans and savings facilities to people who are excluded fromcommercial financial services, microfinance has become a strategy for reducing poverty.Access to credit and deposit services is a way to provide the poor opportunities to take anactive role in their respective economies through entrepreneurship, building income,bargaining power and social empowerment among poor women and men.

7 World Bank, Sustainable Development, 2003, page number?

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Although most MFIs aim to reach poor people, it has become increasingly apparent thatthey rarely serve very poor people. Most MFIs reach the upper poor in much greaternumbers than the very poor.8 The extent to which microfinance programs are able toreach the poorest of the poor remains an open debate.9 In fact, there is no generalagreement that, in order to have a real impact on poverty, microfinance should expressly

target very poor people.

Certain practitioners argue that it is important to have permanent operations based on awider geographic outreach, with quality financial products delivered by competitive,efficient microfinance institutions. This approach to breadth of outreach is based on along-term view of microfinance services and the belief that, in many cases, there is alimit to depth of outreach. This approach thus accepts a trade-off between sustainabilityand reaching very poor people. Other practitioners argue that microfinance should makereaching very poor people a priority because credit is a human right in the fight againsteconomic exclusion. This approach requires narrow targeting of very poor people.

Both breadth and depth of services are very important for the microfinance industry.What has become apparent, however, is that very poor people are unlikely to be servedby microfinance programs unless these programs are intentionally designed to reachthem. In order to design products and services for this target market, it is important tobetter understand the factors that contribute to the dire conditions of very poor people.

Challenges in serving very poor people

The challenges of reaching very poor people with microfinance services include physicaland economic barriers, lack of awareness, self-selection and self-exclusion, amongothers.

Physical barriers. In many settings, very poor people live in remote rural areas that haveno access to financial services. Reaching very poor people in remote rural areas meanshigher transactions costs for MFIs. Such areas are often characterized by poorinfrastructure, relatively low population density, low levels of literacy and relativelyundiversified economies. Many rural economic activities, moreover, have lowprofitability and/or are high in risk. Most outlets of microfinance programs in rural areasalso lack trained professionals, who are not properly supervised by head office.

Lack of awareness. Poverty limits educational opportunities and access to information.[note: need to expand this point or drop, its fairly obvious]

Economic barriers. Many microfinance programs use group-lending methodology clientsto attend a weekly or monthly meeting to access credit. The cost of transportation to thesemeetings, together with the opportunity cost of attendance (i.e., lost income due to timeaway from work) can present a barrier for very poor people to participate in microfinanceprograms. Alternatively, many individual lending or savings programs require clients to

8 Hickson,Reaching Extreme Poverty, 1999, page or chapter number.9 See, for example, Aguilar,Is Micro-Finance Reaching the Poor?, 1999.

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save a certain amount before they can access loans, which often excludes theparticipation of very poor people.

Self-selection. It is well known that solidarity groups in Grameen-style microfinanceprograms and village banks reject very poor members because they might be unable to

repay their loans and would thus jeopardize the creditworthiness of the entire group.

Self-exclusion. Even when very poor people are not actively excluded by a community,they often opt out of community-related projects because they are intimidated, believingthat the services offered by such projects is not suited to their needs.10

Sector risk. Very poor people are often dependent on subsistence farming as their mainsource of livelihood. Given the high risks of agricultural activities and the uniquerequirements of financing such activities (payback of loans, for instance, can only takeplace after the production period, which often lasts several months ), MFIs usually shyaway from lending to this sector.

Impact of chronic poverty. Living in absolute poverty for a prolonged time stronglyaffects a persons dignity and hope for the future, as well as his or her ability to takeinitiative and overcome stigma. Moreover, poor health (especially chronic diseases suchas malaria and HIV/AIDS) presents a major obstacle for conducting successfulmicroenterprise activities.

PART II. FINDINGSOF SELECTED INNOVATIVE APPROACHES

Overview of Existing Poverty-focused Microfinance Approaches

Increasing numbers of microfinance practitioners are stressing the importance of offeringa range of flexible quality financial services to meet the needs of the poor.11 Despite highrisk, high transaction costs and other challenges, several microfinance organizations,NGOs and multilateral agencies are already successfully providing microfinance servicesto very poor people. Most microfinance programs, however, have a long way to go tofind ways of reaching extremely poor households. To date, there has been inadequateexploration of financial products and low-cost service delivery mechanismsthat wouldallow MFIs to serve extremely poor households without compromising sustainabilityobjectives.12 This section of the paper documents successful experiences in reaching verypoor people and recommends promising approaches for further exploration. The findingsdiscussed here are based on a number of case studies (see table 1). While these examples

are only a small sample of poverty-focused initiatives, they represent a broad spectrum ofapproaches currently being employed by different actors in the microfinance field.Detailed case studies can be found in appendix 1.

10SEF Paper LOOK UP11Ibid.12 Hickson,Reaching Extreme Poverty, 1999, page number?

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Table 1 provides a snapshot of key features of selected microfinance programs thatexplicitly target very poor people. It should be emphasized that poverty levels of clientsin programs listed in table 1 are measured and reported by the organizations themselves,not by means of a universal and reasonably reliable poverty measurement tool (whetherbased on income or expenditures), such as that currently being tested by USAID. On the

other hand, several factors (e.g., targeting methodology and the selection of certainvulnerable groups, such as bonded laborers, dalits and people living with HIV/AIDS)suggest that most of these initiatives do indeed target very poor people. In the future, itmight be worthwhile to measure the poverty levels of clients served by these programsand to analyze how effectively and efficiently these programs serve very poor people, ifthey actually do. The emphasis of such research should be on identifying the factors thatcontribute to program success.Table 1. Examples of serving very poor people through microenterprise

development programs

Organization/

Project Name

Target Group Targeting Method Financial Service Non-Financial Ser

ARC, West Africa

Three Step IG Program

Very poor refugees,returnees

Vulnerabilityassessment

Grants followed by loansto solidarity hroups

- Business skill dev- Ongoing business - Refugee relief serv(nutrition, health, ed

ASA, India

Grama Vidiyal MicrocreditProgram

Poor and very poorwomen, Dalits

PWR and HousingIndex

Group-based microcredit(Grameen replication)Savings, pension andinsurance products

- Business developmservices- Gender sensitizatio- Capacity building- Advocacy and locgovernance

BRAC, Bangladesh

1. IGVGD

2. CFPR/TUP

Very poor women Active targetingbased on povertyindicators

1. Individual loans

2. Business asset grants

- Food grain assistan- Skill training in ingenerating activities- Healthcare service- Social empowerm

FFH, Africa, Asia, Latin

America

Village Banking

Poor and very poorwomen

Geographictargeting

Linkages with creditunions and rural banksGroup-based lending(village banking)

- Education: health,- Self-confidence- Enterprise and finamanagement

ILO, South Asia

South Asian program againstdebt bondage

Very poor bondedlaborers

Poverty indicatorsand vulnerability tobondage

Group-based savings andcredit

- Social empowerm- Functional literacy- Healthcare service- Skill training in ingenerating activities

SEF, South Africa

Tshomisano Credit ProgramVery poor Women Participatory

Wealth Ranking(PWR)

Group-based microcredit(Grameen replication)

- Business skill dev- Ongoing business

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TUP, Cambodia

W.O.M.E.N.Very poor people withHIV/AIDS

Active targetingbased on povertyindicators

Individual business seedcapital grantsSavings match

- Business skill devLearning conversati- Healthcare service- Health and sanitatawareness

PACT, OXFAM, FFH,

CARE, CRS, NABARDAsia and Africa Poor and very poorwomen Geographictargeting Savings-led MFSavings and lending Self-help groupsBank/MFI credit to SHGs

- Basic literacy

- Business skill devLearning conversati- Social Empowerm- Gender sensitizatio

Types of organizations

The examples of successful downreach highlighted in table 1 include both MFIs that aimfor financial sustainability, as well as multidisciplinary organizations other than MFIs.The two MFIs featured in this paper, Small Enterprise Foundation (SEF) in SouthAfrica and spell out (ASA) in India, use a Grameen model to provide loans to solidaritygroups of poor and very poor women. [GAAMAA, if you have data on financialsustainability for these mfis, please put the information here] In order to moreeffectively reach this target group, SEF established a separate program, the TshomisanoCredit Program (TCP). This program is designed to reach people living in the bottom 30percent below the national poverty line. Freedom From Hunger (FFH) uses anothergroup-based lending approachvillage bankingwhich it offers as a new product line toexisting rural banks and credit unions, enabling them to reach poorer clients. What setsthese three cases apart from mainstream microfinance providers is that each programoffers non-financial services in addition to its financial products. These additionalservices include education, skill training and confidence building.

The remaining case studies relate to organizations and projects that typically share a

broader mission of poverty alleviation and offer services that include microfinance ormicroenterprise development among many other activities. Since these organizations usean integrated approach to poverty alleviationusing microfinance as just one of apackage of servicestheir activities are less bound by the rigid financial sustainabilitycriteria that govern most MFIs. Spell out (BRAC), for example, a large, multifaceteddevelopment organization in Bangladesh, operates its broad rural credit program inaddition to two microenterprise programs that specifically target very poor people. ItsIncome Generation for Vulnerable Groups Development (IGVGD) program providesfood subsidies and intensive skills training to vulnerable women, as well as a standardpackage of microcredit, healthcare and social services. BRACs more recent program,Challenging the Frontiers of Poverty Reduction / Targeting the Extreme Poor

(CFPR/TUP), abandons loans altogether and offers enterprise asset grants instead to thesame target group. Trickle Up Program (TUP), an international developmentorganization, also assists very poor people with grants, in this case, to start or expandmicroenterprise activities. The organization also offers business training, relying on localpartner agencies to provide other development services, such as education, healthcare andsocial empowerment.

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The South Asian Project against Debt Bondage of the International Labour Organization(ILO) and the American Refugee Committees (ARC) programs in West Africa bothtarget uniquely vulnerable groups: bonded laborers (ILO) and refugees the Mano RiverBasin (ARC). These programs also employ a combination of financial and non-financialservices to lift extremely vulnerable people out of poverty through microenterpreneurial

activities. Finally, many organizations worldwide increasingly endorse savings (ratherthan credit-led microfinance) and the formation of small community groups to promoteself-managed microfinance services by the poor and very poor, especially in rural areas.These small savings and lending groups, sometimes known as self-help groups (SHGs),also serve as an entry point for non-financial poverty alleviation programs.

To target or not to target

Research studies have shown that most poor people have benefited from microfinanceprograms, but that narrow targeting is not necessarily a condition for reaching very poorpeople. Some large-scale, non-targeted schemes have, in fact, proven capable of reachingvery poor people.13Nevertheless, most initiatives that successfully serve very poor people

actively target this segment of the population. At minimum, most such programs tend toconcentrate their programs in geographic areas where there is a high incidence ofpoverty. FFHs introduction of village banking to existing credit unions and rural banks,as well as most savings-led microfinance initiatives, reach very poor people simply byworking in poor rural areas. Rather than exclusively reaching very poor people,geographic poverty targeting, which is also employed by ASA, tends to reach both poorand very poor clients.

Other initiatives utilize a more meticulous targeting method. SEF, for instance,introduced a visual poverty indicator test to identify very poor people, after it realizedthat its original microcredit program did not effectively include such customers. SEF

went on to createparticipatory wealth ranking(PWR), a poverty assessment techniquethat involves community members in identifying the poorest among them. BRAC wentthrough a similar evolution. Its IGVGD program first used a rather passive targetingmethod, extending services to food-insecure women who were selected by local electedrepresentatives. Its CFPR/TUP program later used geographic targeting, PWR andsurveys to identify the extreme poor.

Trickle Up Program employs a poverty assessment tool in the form of a five-questionsurvey, which scores the poverty level of potential program participants according tolocally determined criteria. In addition to using this tool, its Cambodian partner agency,W.O.M.E.N, works exclusively with people living with HIV/AIDS in the slums of the

capital Phnom Penh, a group that is by its very nature extremely vulnerable. Similarly,ILO (South Asia) and ARC (West Africa) target both very vulnerable groups of peopleand use active targeting tools to ensure that the poorest of the poor are included in theirprograms.

13Hickson,Reaching Extreme Poverty, 1999, page number?Ibid.

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Products and services

When it comes to providing very poor people with relevant and useful services, designingthe right product is as important as with any other market segment for the microfinanceindustry. The case studies show a wide variety of financial services available to very poor

people. In some cases, the same products are offered to poor and very poor clients alike.In such cases, an active targeting strategy is often necessary, as SEF learned fromexperience: only after it began implementing an active targeting method, it managed toreach the poorest sections of the communities it served. Especially when clients havemultiple options to choose from, the loan size, type of financial service, as well as thedelivery system can all affect to some degree the poverty level of the most likely users.SafeSave in Bangladesh for instance manages to attract extremely poor households, byallowing them to deposit very frequently very small and variable sums of cash, which isvery relevant to the needs of this section of the population. 14PUT IN REFERENCE!

Similarly, mandatory group meetings might be a price that only very poor people might

find worth paying to access savings or lending services. Both SEF and ASA use asolidarity group lending approach based on the Grameen model. They argue that verypoor people can pay back loans just like the better off middle poor. Instead of modifyingtheir core microcredit model for the poorest segment of their client population, bothorganizations opted for providing very poor people with additional services that aremeant to improve their livelihoods as well as their ability to pay back small loans. Infact, all initiatives reported in the case studies offer, each in a different degree, a range ofnon-financial services, discussed in more detail in a later section.

Other credit approaches build in repayment flexibility for loans extended to very poorpeople. Grameen Bank in Bangladesh, for instance, started a zero-interest credit program

with flexible repayment schedule for beggars.15 [PUT IN REFERENCE!] need to addsome additional information, either that these practices actually improve repayment

rates, or that they have helped the program have a positive impact.] Taking intoaccount the vulnerability and irregular cash flow of people at risk of debt bondage, theILO program also advocates a softer repayment culture, including timely repaymentrefunds, repayment holidays and tailored repayment schedules.16 [PUT INREFERENCE!][query: and the results are? Better repayment rates? Betterimpact?] The savings-led approach, on the other hand, recognizes that savings are oftenmore important for very poor clients than are loans. Members of savings groups all saveand as their pooled savings grow, individual members can take loans from the group fundat an interest rate set by group members themselves. Some savings-led models, such as

the NABARD-promoted SHG linkage model in India, for example, facilitate access tobank loans for strongly performing groups in order to expand the rather limited funds ofsuch groups.

14 XXX15 XXX16 XXX

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Finally, organizations like ARC and TUP offer program participants seed capital grants,which, although extended with certain conditions, do not have to be repaid. [query: andthe results are?] After the initial grant, ARC provides qualifying groups access to loans.TUP does not provide a follow-up stage, but the majority of its local partner agenciesfacilitate savings, while some allow successful TUP grantees to graduate to a loan

program. In Cambodia, TUP partner agency W.O.M.E.N encourages regular savingsafter an initial grant by matching the savings of program participants (households livingwith HIV/AIDS) for one year, up to a maximum of US$25.

The majority of the programs examined by this paper cases deliver financial services togroups rather than individuals. ASA and SEF utilize Grameen Bankinspired solidaritygroups, while FFH promotes village banking. Self-help groups in Asia and Africa[queries: any specific program? facilitate savings-led microfinance through member-owned groups. Finally, ARC in West Africa offers enterprise grants and loans to groupsof varying size, and the ILO project in South Asia delivers a range of financial services togroups of bonded laborers. TUP, plus the IGVGD and CFPR/TUP programs of BRAC,

are the only exceptions: they opt for direct service delivery to individuals. SafeSave inBangladesh also implements its microfinance program (flexible savings and loanproducts) to individuals, based on the belief that clients, no matter how poor they are,usually prefer individual service.17 Individual service delivery may be more appropriate,moreover, for clients who find it difficult to attend meetings or whose vulnerabilitymakes them subject to too much stress from group pressure. On the other hand, theadvantages of a group approach include reduced transaction costs, as well as a certaindegree of social pressure that helps manage and allocate funds effectively. The benefits ofgroup membershipincluding improved self-confidence and negotiation powercanalso be extremely important for the most vulnerable community members.

Non-financial development interventions

Few approaches to assisting very poor people rely on microfinance services alone. Inaddition to the financial services, most poverty-focused organizations organize, bythemselves or through strategic partnership with other institutions, non-financialinterventions to strengthen the livelihoods of very poor people. Almost all suchorganizations seem to believe that this target group lacks the experience to manage amicroenterprise and therefore offer some type of entrepreneurial and/or vocational skilldevelopment in addition to their core financial service. BRAC, for instance, promotescertain income-generating activities, such as poultry rearing, and teaches membersrelevant technical skills. Since it promotes certain business activities on a large scale, theIGVGD program also establishes appropriate marketing links for processing or selling

products. Such specialized business development services (BDS) seem to be theexception, however, for very poor people.

More common than BDS is the the provision of a social safety net to very poor people,such as the food grain subsidies and basic healthcare services offered by BRACs

17Rutherford,Helping Mickles Make Muckles,2004, page number?

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IGVGD program. Improved food security is often the most important change in the lifeof households that manage to increase their incomes. Very poor people also frequentlysuffer from chronic poor health. BRAC, ARC, the ILO bonded labor project, and TrickleUp partner W.O.M.E.N. all provide healthcare services as an important part of the safetynets through which they assist the poorest members of a community. In the case of

sickness of a breadwinner, very poor households risk the rapid loss of assets because theyface new expenses and lose part (or all) of their income. Village bank members ofFreedom from Hungers Credit with Education program similarly receive not only credit,but also awareness training and education on nutrition, sanitation and health issues.Similar health and nutrition education is often delivered via savings groups and self-helpgroups, assisted by organizations that promote savings-led microfinance models.

Social safety nets, skill training, healthcare, awareness-raising and empowerment are notcommon ingredients in minimalist microfinance, which limits service provision strictly tocredit and other financial products. The more vulnerable and poor the target group,however, the more such non-financial services seem to take a more prominent place in

what Hickson

calls a comprehensive approach to poverty alleviation.

18

This approach isbased on the belief that very poor households are essentially incapable of effectivelymanaging small businesses and therefore are unable to use financial services without firstparticipating in awareness and capacity-building programs.19 However, not allmicrofinance initiatives that target the very poor include comprehensive non-financialservices. SafeSave, for example, sticks to financial services only on the grounds thateven extremely poor clients are able to make good use of properly tailored financialservices without other support, and that provision of non-financial services is costly andof questionable benefit.20

The issue of how and by whom to deliver non-financial services is as important as thenature of these services. To understand the various poverty alleviation approaches thatintegrate microfinance into service delivery for the poor, it is important to understand theinstitutional framework of each organization that deals directly with very poor people.SEF, ASA and BRAC, for example, are all locally established institutions with a strongsocial mission, broad outreach, solid capacity and good access to donor funding. Theseorganizations are strongly motivated to assist very poor people with an appropriateservice package and have the capacity to deliver all aspects of an integrated package bythemselves. Freedom from Hungers alliance with local financial institutions results in adifferent task division. FFH partners (rural banks and credit unions) agree to add a newfinancial product (village banking) and adopt FFHs credit with education approach,which combines financial with non-financial services. Without a social mission or thecapacity to provide non-financial services, these banks must create and train a new cadreof field staff and adopt new management systems to effectively do business with verypoor women. In some cases, FFH consultants provide assistance with this.

18See Hickson,Reaching Extreme Poverty, 1999.19 Ibid., page number?20Ibid., page number?

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The majority of organizations in the remaining cases studies are relatively small, localnon-governmental agencies that generally use an integrated approach to development insmall-scale projects. Typically, they rely on partnerships with international organizationsor national donors, who only rarely provide them with the support required to provide anintegrated package of financial and social services to their most vulnerable target groups.

TUP, for instance, provides its partner agency W.O.M.E.N. with funds for seed capitalgrants, savings matches and overhead, while W.O.M.E.N. relies on another donor to fundits home healthcare and education programs. Similarly, most savings-promoting agenciestend to focus primarily on building sustainable savings and loans groups, while countingon local partner organizations to deliver essential services that very poor people need totake full advantage of financial programs.

All initiatives examined in the study indicate that very poor people often lack confidenceto engage in microenterprises or to cope with the responsibilities that come with a loan.Lack of self-confidence is often the reason why very poor people exclude themselvesfrom microfinance programs in the first place. Even when there is no loan to be repaid,

many poor people, especially women, are often initially afraid of the new responsibilitiesand new activities that are expected from them. Participating in group meetings, leavingones house to sell a product, negotiating prices or managing cash flows can be veryintimidating to anyone who has never run a business.

Confidence building and womens empowerment are therefore high on the agenda ofmicrofinance projects that have a strong poverty focus. The staff of the TCP program atSEF, for example, empowers and motivates the poorest community members to join theproject, trains and supports them (many have no business experience) throughout thebusiness cycle and facilitate group learning rather than teach. When FFH and CRSjointly developed Learning Conversations, they likewise sought to provide groups aproblem-solving process rather than ready-made solutions. Learning Conversations aresimple 30-minute group discussions about a story or activity that resembles real issuesfaced by group members. Such conversations enable people to identify issuesthemselves, reflect on causes and consequences, consider solutions and commit to action.

The ILO bonded labor prevention projects, as well as other microfinance initiatives witha strong poverty focus, often educate their clients about human and labor rights. Self-help group members [query: of any specific case study?] discuss issues of familyplanning, womens rights and domestic violence and often take joint action to improvetheir situation. Several organizations offer functional literacy and numeracy classes thatenable women to understand and sign their own savings and loan passbooks. Forexample, PACTs original Womens Empowerment Program in Nepal (later improvedand replicated in other countries as the WORTH program), concentrates on savings andliteracy as the most important ways to empower women and help them build sustainable,self-managed savings groups.

Leadership

Involving very poor people in microfinance programs requires visionary leadership and acommitment of substantial resources. Each of the initiatives featured in this paper

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resulted from a strong social mission and a willingness on the part of upper managementto innovate. While buy-in from top management is essential, this commitment needs tobe accompanied by an institutional culture dedicated to providing continued microfinanceservices to very poor people. In order to reach very poor people and provide them high-quality financial services in a cost-effective way, an organization needs appropriate

management practices and incentive systems. In addition to monitoring financialperformance, several microfinance organizations with a social mission have begun tomonitor their social performance as well. Social performance management formicrofinance organizations that seek to serve very poor people includes monitoringpoverty outreach, impact and cost-effectiveness.

SEF in South Africa and ASA in India both have management information systems(MIS) that track financial and social impact, including client poverty, food, housing andeducation levels. The information obtained from their monitoring systems is then used,among other purposes, to make operational adjustments and improve financial productsfor very poor people.21Both ASA and SEF report that at one time, their impact

monitoring systems alerted them to the fact that they were not reaching very poor peopleto the extent intended and consequently adjusted their programs.

PART III. EMERGING QUESTIONSAND INNOVATIONS

The programs examined in this paper are testimony to the fact that very poor people canbe reached successfully, if microfinance providers make a deliberate attempt to targetthem and offer services that suit their distinctive needs. Most microfinance practitionersagree that financial services alone are not sufficientin fact, they are oftencounterproductiveto lift very poor people out of poverty. There is less agreement onwhat kinds of complementary services should be offered to this target group in

addition to financial services. What can be concluded is that programs generally needto explicitly target very poor people and provide them a wider range of flexible servicesif they are to successfully serve this target market. In order not to lose sight ofsustainability, innovative approaches that lower the cost and mitigate the risk of servingvery poor people are recommended. The following two issuestargeting versus a marketapproach and minimalist versus integrated microfinanceshould in particular beexplored further.

Targeting versus market approach

(discussion about targeting vs. not targeting directly)

Minimalist versus integrated microfinance

What is the role of MED for very poor people and which services are most suited for

them? There are programs that are described as protectional in that they focus on

21XXX Seecite author, title, publisher, place & year of publication, then cite URL.http://www.ids.ac.uk/impact/africa/sef_case_study.html[editors note: also need to citea source for ASA]

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expenditure smoothing, asset protection and risk management. Others are described as

promotional, in that the focus is on income generation, asset building, and creating viable

microenterprises. Very poor people often need to focus on protectional activities before

they can move to promotional activities.

Protectional activities require non-credit microfinance services, such as insurance andsavings to reduce vulnerability and build a minimal financial base. This is oftencombined with training to build skills and confidence. Promotional activities areappropriate when there is a preexisting level of ongoing economic activity,entrepreneurial talent, and managerial talent. This is not the case in an immediate postemergency environment, for the chronically destitute, or where illness keeps people fromproductive activities.22

Whether savings or credit services are more effective in serving the financial needs ofvery poor people also remains open to discussion. Both savings and credit services canprovide the means for very poor people to access a lump-sum of cash, but do so in

fundamentally different ways. Credit provides the money up front and has the potential tocreate a positive income stream, if a borrower knows how to invest the money in anactivity that generates an immediate and regular revenue stream that covers at least theloan repayments. For this reason, credit is extremely risky for very poor people, whotypically have no income. Savings are much less risky, but such people must save a longtime to build a sufficiently large amount of cash to invest in a microenterprise becausethey have little excess cash. Still, many argue that even very poor people can and willsave if they have the opportunity to do so, and that, above all, they need a safe place todeposit their cash and a flexible savings service.

Instead of resolving whether savings or credit is the most important financial service for

the very poor, they should ideally have access to both. It is therefore not surprising thatmicrocredit organizations are seeking ways to provide voluntary savings accounts(instead of the savings required to access a loan) to their borrowers, despite issues of costeffectiveness and legal restrictions. Self-managed savings groups can increase theirmembers access to credit by linking with banks or organizing themselves intofederations. The long-term sustainability and cost-effectiveness of small savings andcredit groups, as opposed to larger microcredit institutions, will ultimately play adeciding role in identifying which approach works best in specific circumstances.

Hickson distinguishes between an approach that modifies the client (by preparing her orhim to better utilize financial services through training, education and/or social action)

and a more demand-led approach that modifies the financial services (tailoring them toclient needs).23 To be effective, assistance to very poor people may need to combine bothapproaches. The precise role and extent of non-financial services in an integratedapproach remains unclear, however, and depends in large part on the circumstances andbackground of the very poor people being targeted. Poor nutrition and ill health clearlyaffect the majority of this target group, who, without a minimal social safety net, face

22 CGAP Note 20 XXX23Hickson,Reaching Extreme Poverty, 1999, page number?

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almost insurmountable challenges in taking advantage of financial services or generatingincomes. Even though skills training seems to be offered universally by microfinanceinitiatives that target very poor people, the type of training offered varies fromorganization to organization, ranging from motivation and confidence building toentrepreneurial and specialized vocational training. As noted earlier, the Learning

Conversations of FFH and CRS represent an alternative approach, which minimizesformal training programs and instead promotes group learning and the capacity andconfidence of very poor people to solve their own problems. The issue of training isfurther complicated by the fact that impact assessments of training programs are difficultand rarely done.

Subsidy versus sustainability

When providing financial services to very poor people the question should not be, Whenare subsidies appropriate?, rather it should be, How does an institution most effectivelyuse subsidies to serve very poor people? Generally speaking, providing products andservices to the poor and the poorest, be they financial or non-financial, is more costly

than providing the same products and services to the middle class and the wealthy, whichreason, among others, has inhibited most private sector industries from entering the BOPmarketthe bottom or base of the pyramid24. Historically, this is why the financialindustry has excluded billions of poor and very poor people from the benefits of financialproducts and services.

In an attempt to solve this problem the microfinance industry was created, however, thecosts to serve the poor didnt go away. New lending methodologies (group lending)helped cut costs, yet it would be awhile before even a handful was considered financiallysustainable. In fact, according to Armendariz de Aghion and Morduch, much of themicrofinance movement continues to take advantage of subsidies, with only sixty-six of

124 institutions surveyed by the Microbanking Bulletin reporting they were financiallysustainable and just eighteen of forty-nine of microlenders focusing on the low endreporting the same. Armendariz de Aghion and Morduch argue that, in principle, there isnothing inherently wrong with using subsidies and even go as far as promoting the use ofsmart subsidiescarefully designed interventions that seek to minimize distortions,mistargeting, and inefficiencies while maximizing social benefits.25

One form of a smart subsidy is to subsidize those clients, very poor people, who are notyet ready to borrow from microlenders at market interest rates but who, with time, willbe able to benefit from microfinance products that dont require subsidization. This typeof smart subsidy can be either (1) outright grants, in the form of cash to purchase

business assets (as promoted by Trickle Up and ARC) or productive assets themselves,such as livestock (as promoted by BRACs CFPR/TUP program) or (2) subsidized loans,where the client pays below market interests rates until it is ready to assume the full costsof the loan. The use of IDAs, Individual Development Accountsa common anti-poverty strategy in the developed world where client savings are matchedis another

24 Prahalad, 2004.25 Armendariz de Aghion & Morduch, 2005.

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possible smart subsidy that has great potential to develop and prepare very poor people toaccess unsubsidized microfinance services at a later period.

Another way to subsidize the products and services of very poor clients is through the useof cross-subsidization strategiesusing profits from larger loans to offset losses on

smaller loans.26

However, those institutions that attempt to implement this strategyshould only do so if they are profitably serving their larger clients at competitive interestrates. That is, if they raise interest rates on larger loans to cross-subsidize their smallerloans they have the potential of losing their top customers from competitors with the lureof cheaper interest rates. The benefit of this strategy, especially in very competitivemarkets, is that the MFI is developing a new potential client base that they can profitablyserve in the future. Nevertheless, MFIs should be careful that their pool of subsidizedvery poor clients doesnt grow too fast because they face the inability to serve them withthe limited subsidies received from larger loans.

Finally, institutions such as ASA, SEF and FFH offer financial services to very poor

people in the form of credit under basically the same terms as for their less poor clientele.However, they recognize that very poor people are extremely risk adverse, and respondby providing them with free non-financial services, such as business training andbusiness development services. This is yet another way to subsidize very poor clients asthey move up the development ladder.

It is important to recognize that serving very poor people can be a costly undertaking;nevertheless, those programs focused on social transformation should remember thatsmart subsidies may be the most effective way to ensure outreach and affordability fortheir poorest clients.27 There are appropriate places for subsidies in the microfinanceindustry and the use of smart subsidies to serve very poor people might possibly be oneof the most important and appropriate forms.

Sustainability versus cost effectiveness

[editors note: I recommend that you dedicate this section to a detailed analysis of

the cost-effectiveness and sustainability of the various programs in table 1. To this

point, the discussion has been conducted at a conceptual level, without any hard

facts. Microfinance specialists will want to know, at the very least, how many people

these programs serve, cost per customer, volume of loans and/or other financial

services, PAR, sustainability (operational or financial) rates, impact information

(like how many clients graduate to more standard MF programs, etc.). The paper

needs such a detailed analysis to be more credible]

26 Ibid.27 Ibid.

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PART IV. RECOMMENDATIONSFORTHE WAY FORWARD

Focus on Innovation

Research and development is a critical component of any successful business. In anincreasingly competitive world market, it is absolutely necessary for companies to investin R & D so that they can continuously develop innovative and creative products to retaintheir customers. Client-driven businessesthose that innovate and develop productsbased on changing needs and demands of clientsare those that tend to have the leastamount of client desertion and are in turn the most profitable.

In order to successfully serve very poor people with unique needs and circumstance MFIsmust be client-driven with a willingness to invest in R & D. However, in general themicrofinance industry, according to Cohen, is the last product-driven industry in theworld.28 There are many reasons this may be the case but one big reason must certainlystem from the fact that, historically, microfinance products came in one size and shapeand that clients accepted them because there was nothing else. Many MFIs over the yearscontinued with this one size fits all approach because there was no need to dodifferently. However, as the industry has become more competitive, especially in moremature markets such as South East Asia and Central America, MFIs have been forced tobe more innovated and responsive to client needs to stay in business.

This response to competition with innovation and creativity is the same approach thatmust be taken when attempting to provide attractive and effective products and servicesto very poor people. When it comes to serving very poor clients the one size doesnt fit

anymore. In reality this one size doesnt fit most clients in the market. Only through R& D and innovation can the microfinance industry effectively serve every marketsegmentthe extreme poor, the moderate poor, the vulnerable non-poor, the non-poorand the wealthy.

For an MFI with limited resources and personnel it is very tempting to disregard R & Dand focus solely on performancethe bottom line. However, institutions that dontbalance growth and profitability with R & D will eventually notbe able to performsuccessfully because they wont have the necessary new products and services that willretain their clientele. Therefore, it is critical that MFIs integrate R & D into their corebusiness to remain competitive. Furthermore, an MFI that is willing to invest in

developing products and services that specifically meet the needs of very poor people, inaddition to their mainstream clients, may have a competitive advantage over other MFIsin the end because they will have already developed a clientele base that will grow withtheir institution over time.

Redefine performance benchmarks for programs focused on down reach

28 Cohen,Market Research for Microfinance: Detecting the Needs Beyond the Numbers. Cohen,Monique. Caribbean Roundtable. Microfin. 2003.

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The MED industry is now driven by a strong financial performance culture and expectshigh financial performance standards which makes it difficult for NGOs to experiment indownreach. If groups that are lending to very poor people are held to the samebenchmarks as those working with moderately poor people, they wont measure up.

In recent years, the social performance movement has been gaining momentum in theindustry partly for this very reason. Organizations should be judged on their performanceboth against their financial goals and their social goals.

We could consider redefining financial performance benchmarks for programs that workwith very poor people or we can consider evaluating the performance of an organizationagainst other organizations that are lending to the same level of clientele.

Reorganizing the financial reporting information would give donors and funders a betterpicture of performance within peer categories.

1. Piloting innovative approaches (or supporting pilots), etc

(this needs more brainstorming)Suggestions for program innovation, what kind of pilots would we like to see? All

POWG members submitting ideas)

This might be as much an issue of innovation with delivery as it is with new

products

Hickson's statement29" The survey data highlight the importance poor households place on

flexible financial services. The extent to which poor households seek this flexibility is not

often appreciated by MFIs, or if it is, these demands are usually dismissed as unrealistic

and impractical. This possibly belies a lack of understanding of the dynamics of povertyand the opportunities that exist for the provision of financial services to the extremely

poor. To date there has been inadequate exploration of 1) financial products and 2)low-

cost service delivery mechanisms that would allow MFIs to include extremely poor

households without compromising their sustainability objectives.

Products and Services

Innovative savings services

- flexible savings (as SafeSave, Stuart Rutherford)

-

matched savings IDAs JAN Contacting MARK SCHREINER TOEXPLORE THIS WITH POWG

- contractual savings (ILO debt bondage paper recommends offering this

type of savings, in which the client commits to regularly depositing a fixed

amount for a specified period of time to reach a pre-determined goal. After

the maturity date, the client can withdraw the entire amount plus interest

earned. Early withdrawal is prohibited or penalized. Contractual products

29 Hickson, 1999

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help depositors accumulate funds to meet specific expected needs. Savings

match: similar to contractual savings, but extra incentive and faster

accumulation)

- Safe place to save: lockboxes, etc.

Innovative lending services

- Flexible repayment options (see ILO study)

- Combined or stepped grant-loan approach

Targeting geographic outcasts? DRC, Somalia, Southern Sudan, Liberia, etc. the

places where no one wants to do MED ---- target areas for strategic alliances with

social protection groups..

Innovation in product delivery

village banking and mentoring idea from Patrick Crompton

strategic alliances with social protection groups Hashemi

- between financial and non-financial service providers- between those who target very poor people and those who provide services forless vulnerable poor (graduation to microcredit and other sustainablemicrofinance services)

franchises of local institutions/organizations in remote areas with existing

member-owned institutions (profit not taken out)

post-office accounts, gas stations

Technology The use of information and communication technology (ICT) to

help impoverished people gain access to information required to improve their

lives is proving to be a powerful tool in many sectors, and will hopefully be

applied on an even larger scale in the future.30 The deployment of ICT in

delivering services can increase efficiency by reducing transaction costs, which

are usually higher when servicing very poor people people. Many low-cost

innovative delivery mechanisms commonly take advantage of ICT, such as ..

[editors note: need concrete examples that show cost reductions despite the

difficulties of deploying new technology]

o Innovative use of technology: e.g., providing ATMs, palm pilots, cell

phones, kiosks in rural areas for people to access info and services, etc.

30 Price,Reaching the Poor, 2001, page number?

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o interesting cases from FINCA affiliates in terms of using technology and

improved cost-effectiveness

3. Issues for further exploration

Further research on selected case studies

It has become apparent from the review of the literature and selected case studies thatthere is limited understanding about what makes MED programs successful in reachingand serving very poor people. This lack of understanding is partly due to the fact thatthere has been no systematic effort to identify programs that are successfully serving verypoor people and analyze how they address the perceived challenges of reaching thistarget group. If MED is to remain as an effective poverty alleviation strategy, it is thusimperative to increase our understanding by identifying successful poverty-focused MEDprograms and analyzing what makes them successful in serving very poor people. Thiscan be done by measuring the client poverty profiles of selected MED programs that havea poverty focus and analyzing the critical factors that contribute to their success and/orfailure.

We have begun to conduct this research with the case studies used in this paper. This hasbeen a first step. We recommend delving further in to each of these case studies and toidentify others to be representative of all the regions and methodologies.

The POWG is developing a research advisory board for the purposes of this project andto explore case studies further. See Annex X for more information.

(GAAMAA input:) I would suggest that we propose to develop a framework to analyzeselected case studies and increase the understanding about what makesinstitutions/programs successful in reaching and serving very poor people efficiently,

effectively and sustainably. The following framework offers the criteria for success aswell as allows for industry learning, to identify and analyze the key elements for success.

Framework for analyzing poverty-focused MED programs

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Fundamental research questions about the tweaking of existing methodologies to betterserve very poor people in rural areas.

Focus on research and support for field initiatives to push microfinance farther into therural areas, because that is where the very poor often are located (highest proportions inrelation to local population). Even without targeting, mf pushed out to the rural areaswill be more likely to serve poorer people.

The challenge is to offer rural services sustainably, which may be the pre-eminentadvantage of group-based lending; it enables the service provider to extend and sustainthe supply, whereas alternative delivery strategies may not. That advantage (if real)probably comes from the greater efficiency of lending one loan per group to jointly-liable, self-managing groups. Better controlled research is needed to decide whethergroup-based lending is more or less efficient than individual lending, especially for verypoor, women and rural areas (people not able or willing to come to a central point ofservice). This seems to me a crucial design issue that needs to be settled by some goodresearch.

Related to this question is what loan terms and conditions give clients the greatestopportunity to use their loans in part for agricultural investment. Village bank loans inrural areas get used for multiple purposes (regardless of stated intentions at loandisbursement), including for agriculture (crops and/or livestock). And the agriculturaluses of parts of loans reveal a resourcefulness and determination to force loan terms(designed almost specifically to exclude agagricultural uses) to serve agriculturalpurposes. Some carefully controlled research is required to sort out the better

Key elements:

Targeting mechanismsMethodologyFinancial services

Non-financial services

These are, in a sense, the

following questions:

How are these organizations

or projects fostering success?

Models? Leadership,

innovations, impact

monitoring, targeting,

information technology?

Criteria for determining successin reaching very poor people:

Depth of outreachImpact of outreachQuality of outreach

- Cost of outreach

These are, in a sense, the

following questions:

Who? Poverty level at entrance?

Impact? Poverty level after

some time in program?

What services? Non-financial

versus financial? Provided by

MFO and strategic partner? If

any? Cost?

Quality of services asperceived by clients (client

satisfaction)?

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combinations of terms and conditions to accommodate rural loan use strategies of thevery poor.

Rather than give up on group-based lending because urban populations with other optionsprefer individual lending and rather than give up on group-based lending because it is not

well-designed for rural economies, we might discover that rural lending (to the very poorwho live there) means group lending. I think we have to answer these questions withsome good evidence from the field: does group-based lending allow us to pushmicrofinance farther out to the more rural areas? If so, why? Can group-based lendingbe tweaked to accommodate the realities of rural economies? What are some successfulcombinations of loan terms and conditions?

Non-financial services?

Regardless of being rural or urban: do the very poor need non-financial services to leadbetter lives? The answer seems obviously yes, but the specific questions are: do the

very poor need non-financial services to participate in and benefit from financialservices? More important for sustainability and scale, do the microfinance providersneed to provide or link to non-financial services in order to be sustainable in theirfinancial services to the poor? The case studies here preliminarily suggest thatmicrofinance providers are much more likely to be committed to providing non-financialservices if they have evidence that clients are more likely to repay on time and be loyalcustomers when they get non-financial as well as financial services. But we dont havethis evidence about client recruitment costs, retention rates, repayment and arrears in anycontrolled comparison of microfinance with vs. without non-financial services. What arethe added benefits of adding non-financial services to mf for both the clients (in theircurrency of success) and for the mf providers (in their currency for success). Thisrequires the with vs. without experiment. Dean Karlan of Princeton is currentlyworking on this topic.

Understanding client behaviorIt is important to understand the behavior of very poorpeople if MED programs are to help very poor people to move out of poverty? Wewould like to investigate what factors influence clients crossing over the poverty line?

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The reference section needs to include references to the papers that form the basis

for the case studies and that are also referred to in the body of the text.

Make sure to also refer to additional papers within each casestudy folder!!!

ADB (Asian Development Bank). 2005. ADB Activities in Nepal: Reaching the Poor.ADB, Manila, Philippines. http: www. adb.org/NRM/reaching_the_poor.asp.Accessed April 2005.

Aguilar, V.G. 1999. Is Micro-Finance Reaching the Poor? An Overview of PovertyTargeting Methods (ADA Dialogue). Appui au Dveloppement (ADA), Luxembourg.

Ani, Carlos. 2002. Research and Innovation Agenda of the INCOME Project.Development Bulletin, no. 57 (February): 814.

Ashe, Jeffrey, and Lisa Parrott. 2003. PACTs Womens Empowerment Program: ASavings and Literacy Led Alternative to Financial Institution Building.Journal ofMicrofinancevolume number, series no. (spring):start pageend page.

Athmer, Gabrille. Year? Challenging the CGAP Microfinance Discourse: AnAlternative Institutional Approach in Rural Africa. Where published or written?

Interesting article that uses CARE Mozambiques savings-led mF as an alternative toCGAPs promoted credit-led approach. Also has lots of stuff for areas of debate

Churchill, Craig, Madeline Hirschland and Judith Painter. 2003? New Directions inPoverty Finance. Where published? By whom? start pageend page.

(I havent read this one, but apparently chapter 3 has some information on poverty-focused microfinance. Specifically, it talks about institutional culture and humanresource management as two important tools to achieve their social mission)

Datta, Dipankar. 2004? Microcredit in Rural Bangladesh. Is it Reaching the Poorest?Journal of Microfinance 6, no. 1 (month? season?):start pageend page.

Dhonte, R. 2004.Banking with the Poorest. London: Alternative Finance.

Eversole, R. 2000. Beyond Microcredit: The Trickle Up Program. Small EnterpriseDevelopment11, no. 1 (month? season?): 4558.

Grant, William, and Hugh Allen. 2003. CAREs Mata Masu Dbara (MMD) Program inNiger: Successful Financial Intermediation in the Rural Sahel.Journal ofMicrofinance volume no., series no. (season?):start pageend page.

Emrul Hasan, Mohammed. 2003. Implications of Financial Innovations for the Poorestof the Poor in the Rural Area: Experience from Northern Bangladesh.Journal ofMicrofinance 5, no. 2 (winter).

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Emrul Hasan, Mohammed, and Monique Iglebaek. 2004. Microfinance with Un-reachedPeople in the Rural Area: Experience and Learning; PLAN, Bangladesh. Paperpresented at the Asia Pacific Region Microcredit Summit Meeting of Councils,February 18, 2004, Dhaka, Bangladesh.

Hashemi, S. 2001. Linking Microfinance and Safety Net Programs to Include thePoorest. The Hardcore Poor and Why Conventional Microfinance Fails Them.CGAP Focus Note, no. 21. Consultative Group to Assist the Poor, Washington, DC.Also available at http://www.cgap.org[insufficient URL, need full URL of wherearticle is located].

Hickson, Robert. 1999. Reaching Extreme Poverty: Financial Services for Very PoorPeople. Office of Development Studies, Bureau for Development Policy, UnitedNations Development Programme, New York. [confirm this is a paper and not abook. Also confirm that it is a DRAFT]

. Year? Financial Services for Very Poor PeopleThinking Outside the Box.Small Enterprise Development12, no. 2: start pageend page. [please verify thatthis is correct]

Hirschland, Madeline. 2001. Voluntary Savings Services: A Closer Look. CommonInterest2, no. 1 (month?):start pageend page. Center for Micro-Finance in Nepal,Kathmandu?, Nepal.

. 2003. Savings Operations for Very Small or Remote Depositors: SomeStrategies. Institute of Development Studies, University of Sussex, Sussex, UnitedKingdom. URL? [editors note: believe this was also posted on the MicrofinanceGateway]

Maes, Jan, and Malika Basu. 2005. Building Economic Self-Reliance: Extreme Povertyand Sustainable Microenterprise Development; Trickle Ups Microenterprise SeedCapital for the Extreme Poor in Rural India. Unpublished.

Mathie, Alison. 2002. Including the Excluded: Lessons Learned from the Poverty-targeting Strategies used by Microfinance Providers.Development Bulletin, no. 57(February):1722.

Matin, Imran. 2003. Targeted Development Programmes for the Extreme Poor:Experiences from BRAC Experiments. BRAC (formerly Bangladesh RuralAdvancement Committee), Dhaka, Bangladesh.

Matin, Imran, David Hulme and Stuart Rutherford. 1999. Financial Services for the Poorand Poorest: Deepening Understanding to Improve Provision. Finance andDevelopment Research Programme, Working Paper Series Paper, no. 9.

[spell out] IDPM, University of Manchester, United Kingdom.

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Matin, Imran, and Sarah Walker. 2004. Exploring Changes in the Lives of the UltraPoor: An Exploratory Study on CFPR/TUP Members. CFPR-TUP Working PaperSeries, no. 4. BRAC Research and Evaluation Division, BRAC, Dhaka?,Bangladesh.

Moser, Caroline. 1998. The Asset Vulnerability Framework: Reassessing Urban PovertyReduction Strategies. World Development26, no. 1 (month? season?): 119.

Palaniswamy, V. 2005. The Complementary Use of Loans and Grants. Trickle UpProgram, City, Country.

Parker, J. 2001. Linking Microfinance and Safety Net Programs to Include the Poorest.Where does Microfinance Fit? CGAP Focus Note, no. 20. Consultative Group toAssist the Poor (CGAP), Washington, DC. Also available at www.cgap.org[insufficient URL: need full URL that locates the article]

Pretes, Michael. 2002. Grant-based Approaches to Microfinance.DevelopmentBulletin, no. 57 (February): 1202.

Price, P. 2001. Reaching the Poor.ADB Review 34, no. 1:start pageend page. ADB,Manila, Philippines. http://www.adb.org/Documents/Periodicals/ADBReview/2002/vol34 1/web watch.asp. Accessed when?

Rutherford, S. 2004.Helping Mickles Make Muckles: Designing Suitable Swaps for thePoor. London, UK: Alternative Finance.

Seibel, H., and S. Khadka. 2002. SHG Banking: A Financial Technology for Very PoorMicroentrerpreneurs. Savings and DevelopmentXXVI, no. 2:start pageend page.

Simanowitz, Anton. 2001. Imp-Act Guidelines No. 4. Imp-Act, City, Country.http://URL. Accessed when?

. Year? Microfinance for the Poorest: A Review of Issues and Ideas forContribution of Imp-Act. Publisher? Unpublished?

WHO (World Health Organization). 2004.Reaching the Poor: Challenges for TBProgrammes in the Western Pacific Region. Manila, Philippines: WHO.

WHO and World Bank. 2001. Dying for Change: Poor Peoples Experience of Healthand Ill-Health. Geneva: WHO.

Wilson, Kim. 2003. The New Microfinance: An Essay on the Self-Help Movement inIndia.Journal of Microfinancevolume no., series no. (spring).

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World Bank. 2001. World Development Report 2000/2001: Attacking Poverty.Washington, DC: World Bank.

. 2003.Sustainable Development in a Dynamic World. Washington, DC: WorldBank.

Wright, Graham A.N., Deborah Kasente, Germina Ssemogerere and Leonard Mutesasira.1999. Vulnerability, Risks, Assets And EmpowermentThe Impact OfMicrofinance On Poverty Alleviation. MicroSave Africa, Nairobi, Kenya? http://

http://www.undp.org/sum/MicroSave/ftp_downloads/UWFTstudyFinal.pdf. Accessedwhen?
http://www.undp.org/sum/MicroSave/ftp_downloads/UWFTstudyFinal.pdfhttp://www.undp.org/sum/MicroSave/ftp_downloads/UWFTstudyFinal.pdf