Case Study Research on MF/MED approaches for very poor people

Research Framework

Introduction

This document provides a framework for case study research led by SEEP Network’s
Poverty Outreach Working Group and funded by USAID. The research framework,
including methodology and survey format, relies heavily on a model used for similar
research developed by ILO on good and bad practices in microinsurance1. We are deeply
grateful to Craig Churchill, who allowed us to borrow from this framework and who
provided many useful comments and insights during the development of our research
design.

Purpose and Background

It is broadly acknowledged that microfinance and microenterprise development clients

today fall in a band around the poverty line, while the extreme poor are rarely reached.
Microfinance institutions and microenterprise development projects have often no idea
about the poverty level of their clients, even though many claim to reach the poorest or
the very poor. At the same time, policymakers and donors (including USAID,
Microcredit Summit, UN Millennium Development Goals) are requesting reliable
information about the poverty levels of the beneficiaries of development services in order
to steer investments and programs toward targeted population segments they want to
reach.

This research will define the “very poor” as people living on less than US $1/day2 or
those among the bottom 50 percent of people living below a specific country's poverty
line. This definition reflects the nature of the measurement tools to assess poverty
(USAID certified poverty tools), which provide a proxy for household poverty. This
results in certain limitations to our research which are discussed in a later section.

The purpose of this research is to support organizations that are committed to serving
very poor people by evaluating programs that work with very poor people and attempting
to glean effective practices to share with other organizations. Funded by a grant by
USAID’s MED office and in part by its members, the Poverty Outreach Working Group
(POWG) at the SEEP Network hopes to identify and examine any common elements
from these case studies that make these programs successful. In addition to revealing (or
at least helping to understand) the key ingredients required truly reaching very poor
people and servicing their needs successfully, this case study research aims to
recommend promising approaches for further exploration.

1
See Protecting the Poor. A microinsurance compendium.. Edited by Craig Churchill.
www.microinsurancecompendium.org
2
Equal to US $1.08/day in purchasing power parity (PPP) at 1993 prices.

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As part of this research 13 case studies3 will be conducted and documented by the
implementing organizations themselves or by an external consultant of their choice. The
case studies will follow a common methodology and outline. The majority of case
studies have been proposed by SEEP/POWG members and vetted with an international
advisory board of poverty experts including CGAP, USAID, the Ford Foundation, and
the MicroCredit Summit. The case studies range from relatively bare-bone microcredit
programs to multisectoral development strategies including a MF/MED component, from
market-led demand-driven enterprise development services to subsidized skill training
and marketing programs, from credit to savings to asset transfer products, and from one-
stop integrated service packages to partnerships between microfinance organizations and
social service providers.

Main Objectives:

1) To summarize existing evidence on pro-poor MF/MED programs and on very

poor target groups through an extensive literature review.

2) To describe a variety of MF/MED approaches that serve very poor people and to
elicit success factors and challenges for serving this population effectively. As
part of this objective we will try to provide:
a. Reasonably accurate poverty outreach data for the MF/MED case studies
by independently assessing poverty levels of their clients through use of
USAID certified poverty tools or (in case there is no such tool available)
the best tool available to that organization;
b. Successful examples of how MF/MED products and services are adapted
to clients’ poverty and vulnerability factors;
c. Analysis of the institutional factors that go in to making these programs
successful;
d. Documentation of innovative approaches to reduce transaction costs for
service delivery, including those in serving rural remote areas with less
population density.

3) To make recommendations for further research on effective ways of reaching and

serving very poor people by MF/MED. The analysis of these case studies will
highlight research areas that will need further exploration.

MF/MED Services for Very Poor People: Conceptual Framework

(Freely adapted after Churchill, Simanowitz, Hickson)

The fact that the very poor are barely reached by current microfinance and
microenterprise development programs suggests that there are significant differences
between poor and very poor people with respect to their ability to manage profitable
enterprises and take advantage of financial services on offer. The very poor have very
3
See Annex for a list of participating organizations and programs/countries.

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weak livelihoods, with unreliable income sources, little savings or assets, and weak
networks of people to assist them in times of trouble. While the case studies do not
attempt to investigate whether and to what degree these differences warrant different
services and products, one of the main objectives is to present different approaches aimed
at serving the very poor. Two distinct approaches can be distinguished: integrated
(comprehensive) versus minimalist. The former consists of providing non-financial
alongside financial services and stems from the belief that very poor households are not
capable of taking advantage of financial services without being able to meet their basic
needs. The latter approach provides only financial products and/or enterprise
development services to the very poor by adapting these services/products to their needs
and circumstances.

Within our research framework we propose to classify different non-financial (and non-
enterprise) services as follows:
- Basic needs services (food, water, health, shelter)
- Human capital strengthening: skills (vocational, business, literacy, financial
literacy), awareness, confidence
- Social capital formation: social mobilization, networks, negotiating power

The main area of research relates to microfinance (MF) approaches for very poor people,
and these include:
- Credit
- Savings
- Insurance
- Cash/Asset transfers
- Remittances & Money Transfers
- Housing
- Leasing

The other research focus is on microenterprise development (MED) approaches for very
poor people, including:
- Market support
- Inter-firm cooperation
- Firm-level upgrading
- Employment generation
- Other?

This framework serves two functions. First, it allows identifying which services, financial
and non-financial, are emphasized by various pro-poor MF/MED approaches. Second, it
will allow comparisons among case studies as to which product/service mix is targeted at
different types of very poor client populations.

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Research Hypotheses:

1) Deliberate and rigorous targeting is necessary to overcome the obstacles to reach

very poor people.
a. We expect organizations to find that they were not having the depth of
outreach that they thought they were having. From preliminary research
we have done with organizations that are highly committed to reaching
very poor people, most have been surprised to see that the percentage of
incoming clients who are very poor is lower than they thought.
b. If organizations which are highly committed to reaching very poor people
are surprised by their outreach, then we can surmise that programs that do
not focus on serving very poor people will also have a very low level of
outreach to this segment. Hence, to serve very poor people an
organization needs to be proactive in working with them.

2) Institutional vision and commitment are critical.

a. Upper management leadership and buy-in is necessary and is a key driver
to achieving depth of outreach.
b. Human resources development is critical to success – this includes
recruitment, training, supervision and incentives that build in commitment
and reward for serving very poor people.

3) Pro-poor product/services require a deliberate strategy of understanding and

responding to the needs of the very poor people.
a. Credit programs need to adjust product terms to client poverty level.
b. Savings rather than loans are more effective in building the assets of very
poor people.
c. For MF/MED services to be successful, basic needs (health and food
security especially) need to be addressed as well.
d. The very poor often need human capital (skill training, etc.) and social
capital strengthening as well.

4) Sustainability/subsidy.
a. The stronger the emphasis on an institution’s financial bottom-line, the
more challenging it becomes to reach very poor clients. At the same time,
some financially sustainable MFIs are able to reach very poor people.
b. Providing very poor people with MF/MED services often requires
subsidies. These subsidies might be in the form of grants to provide basic
needs services. MF and MED products/services might also require
subsidies in order for very poor people to afford the cost and risk of these
services, at least initially.

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Research Limitations:

1) Poverty assessment tool measures household income (expenditure based):

a. Does not take into account the multidimensional nature of poverty.
b. Does not reveal any intra-household differences in poverty.
c. Is not available for each case study.
2) Many programs or projects do not have the means to differentiate between their
poor and very poor clients. This diminishes the relevance of information related
to issues specific to very poor clients, and needs to be taken into account when
interpreting responses to survey questions.
3) While costs issues (of products/services) and poverty outreach can be reasonably
analyzed, available resources for the case studies do not allow to measure impact.

Survey Tools

The survey is broken into six sections:

1. Context (national and local)
2. Organizational Framework
3. Description of the very poor target group
4. Poverty Targeting and Assessment
5. Products and Services
6. Results

Data gathering and writing case studies

When gathering information, it is important to remember the two primary lenses that will
help shape the analysis:
1. How does the organization respond to the unique challenges of serving the very
poor? The real focus is on the micro aspect—what methods does the program or
project use to reach and serve the very poor?
2. To identify key lessons learned, it is important to continuously explore the
changes the institution has made to its products, policies, structure etc. to improve
its outreach to the very poor. Many of the sections of the case study may describe
how the service deliverer or its service has evolved over time.

Ideally, the data collection, analysis and write-up of the case study is done by a two-
person team, consisting of one insider (who is preferably involved in local
implementation and is familiar with the local context) and one outsider (external
consultant). Data-gathering is a three-phase process: before visiting, on-site, and follow-
up information and review.

Before visiting
Prior to the visit, the researcher(s) should obtain data for section 1 of the Survey, as well
as recent annual reports of the organization (local and international), previous

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assessments (internal and external) on the MF/MED approach, background information
on the organization, marketing materials, program implementation and training manuals.
If the program is sponsored and/or assisted by an INGO, it would be useful to interview
its program staff person most familiar with the local project or institution.

During the visit

During the course of the visit, the case study team will meet with persons at different
levels in the organization, including:
• senior managers
• field staff
• clients

In order to get the most relevant information, some survey questions are accompanied by
the suggested stakeholder to be interviewed: senior staff (S), field staff (F) and clients
(C).

While the sequence of interviews may vary depending on persons’ availability, generally
it is best to start with an overview from senior management. Often organizations like to
give an introductory presentation, which may indeed cover many of the research topics,
although perhaps superficially. Then it is useful to interview the management team, or
preferably individual managers, to explore specific content areas in detail.

After an initial round of interviews with managers, it is recommended to next meet with
clients to understand their perspective on the institution and its services. Interviews with
the field staff, who are in between clients and managers, provide an opportunity to then
learn about practical challenges and provide a crosscheck on various information. It is
useful to end the week with follow-up interviews with managers to fill in any gaps and to
seek clarification on issues that arise from conversations with clients and field staff.

To optimize cross-comparison of the case studies, the survey format is quite rigid.
However, some of the questions may not be relevant for certain MF/MED approaches,
while additional questions might be needed to probe particularly interesting issues in
more detail.

Follow-up and Review

Once a first draft of the case study is completed, the research team is likely to recognize
some additional gaps or places where notes and memories are not particularly clear. In
these instances, they should conduct follow up interviews. Once the final draft is
completed, the case study team should have it reviewed by at least one other case study
team within the POWG (this is the peer review we refer to in the timeline) to receive
possible suggestions to clarify or provide additional information. Once finalized, the case
study should be shared with the program implementers or institution for their feedback
and approval.

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Some Rules in Writing the Case Study
Following the outline in the final submitted papers is critical. The outline is intended to
be sufficiently inclusive to accommodate the idiosyncrasies of the different models,
products, and local issues. Thus, there may be some items on the outline that are not
relevant for a particular case. These items should simply be marked as N/A. This will
help to maintain the integrity of the numbering on the rest of the outline.

For some organizations, there may be interesting lessons or experiences that are
important to include, but do not fit into any of the case study headings. This information
can either be included at the end of a relevant set of sub-sections, so as to not alter the
Outline sequencing, or be included as an explanatory box.

To give the case study a bit more life, it may also be useful to include three or four client
case studies as boxes. These client stories should be chosen carefully to provide useful
insights related to client satisfaction and possible suggestions for improvement of
services and products.

For all references in local currency, also include in brackets the US$ PPP, based on the
rate listed in Table 1. Don Sillers of USAID has data for calculating US$PPP and this is
listed on http://www.povertytools.org/faq.htm#FAQ1/4

In some cases, particular requested data may be unavailable or difficult to obtain. It is the
responsibility of the case study team to make a cost / benefit assessment of obtaining
such information. In cases where particular information is deemed too difficult to obtain,
these points should be skipped. It is intended that this option will not be abused and that a
sincere effort will be made to collect all data requested.

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Proposed Outline for Final Publication

INTRODUCTION
Study Objectives

PART I. Background and Literature Review

Chapter 1. Critical Differences between the Poor and Very Poor
Chapter 2. Challenges in reaching very poor people
Chapter 3. Overview of existing MF and MED approaches in very poor markets
Chapter 4. Conceptual Framework

PART 2. Research Framework

Chapter 5. Research Hypotheses
Chapter 6. Case Study Selection
Chapter 7. Research Limitations
Chapter 8. Methodology and Survey Tools

PART 3. Findings*
Chapter 9. Microfinance Products and Services
Chapter 10. Microenterprise Development Services
Chapter 11. Poverty Selection versus Product Targeting
Chapter 12. Role of services other than MF/MED
1) Basic Needs
2) Social Capital
3) Human Capital
Chapter 13. Organizational Development
1) Recruitment and Training
2) Compensation and Incentives
3) Institutional culture
4) Leadership
Chapter 14. Design, M&E, learning
Chapter 15. Cost, Efficiency, Sustainability
Chapter 16. Delivery models (or institutional options)
(such as multi-sectoral NGOs, partnerships, separation of for-profit
activities from non-profit, etc.)
Chapter 17. Performance/Outcomes Measurement

PART 4. Conclusions
Chapter XX. Strategies for downreach, impact and cost-efficiency
Chapter XX. Recommendations for further research

*
To be revised after data collection

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Annex 1: Case Studies

Implementing Partners

Case studies chosen to participate in the POWG research:

The 9 Microfinance Programs:

Africa

1. Réseau des Caisses Populaires du Burkina (RCPB) – CREDIT

UNION Burkina Faso
2. Small Enterprise Foundation’s (SEF) Tshomisano Credit
Program (TCP), South Africa
3. CARE Rwanda – (completed - CARE financed case study)

MENA
4. ABA, Egypt evaluating the poverty initiative work

Asia
5. ASA, India
6. PACT WORTH, Nepal
7. Nirdhan, Nepal – (Completed - Save the Children financed case
study)

Latin America
8. Pro Mujer, Peru
9. Friendship Bridge, Guatemala

The 2 combination Enterprise Development/Microfinance:

Africa
10. Trickle Up, Mali
Asia
11. Christian Childrens’ Fund, India

The 2 Market/Enterprise Development programs:

Africa
12. Kenya BDS, Kenya (proposed by USAID and SEEP MDWG
-- pending approval of Kenya BDS)
Asia
13. MEDA Women’s Embroiders, Pakistan