The Guatemala PPI – a retrospective of 5 years of use in Friendship Bridge >

By: Caitlin Scott, Social Performance Manager, Friendship Bridge

In the rural areas of Guatemala where poverty is the highest, women survive through self-employment such as weaving, small-scale farming, or selling food in local markets. Without sufficient capital and training to grow their businesses, these women often struggle to make ends meet and create a better future for their families. Friendship Bridge serves exclusively women through a Microcredit Plus program that includes credit, education, and health services.

We started utilizing the Guatemala PPI in 2011, and our use of it consistently improves our understanding of our operations, our clients and how we believe our Microcredit Plus program affects them. The insights we gained from the PPI have led to an emphasis on poverty penetration, addition of new programs, and solidifying of our theory of change and Client Continuum strategy. Since 2011, we have benefited from the excellent technical support and training for the PPI, and we are impressed with how our PPI data regularly complements and is validated by other surveys we use in the field.

Serving Our Target Market

Before we began using the PPI, we spoke more generally about the level of poverty of our client base, based on anecdotal information. By using the PPI, we were able to go beyond anecdotes and confirm that we were reaching our intended population.

The PPI also allowed us to understand the poverty distribution of our clients compared to the poverty rates in the areas we serve. Our PPI data shows we have high poverty penetration compared to the local poverty rate, and an IFC study revealed we had a high poverty penetration rate relative to other Latin American and Caribbean MFIs. In Guatemala, ethnic and geographic marginalization are highly correlated with poverty.  Our PPI data for new clients shows we are reaching a poor population, which we recently corroborated through a separate methodology measuring ethnic affiliation and geographic isolation.  The results aligned perfectly with the PPI data. Because of our confidence in the PPI, we use it to determine areas for expansion, ensuring we reach our target market.

Understanding Our Client Base

Using the PPI to segment data has allowed us to understand client needs, preferences, and context. For example, when segmenting client data by poverty level revealed that clients in the agriculture and artisan sectors were likely living in higher poverty, we created programs that leverage credit and training specific to the unique needs in these sectors.  Our agriculture program provides a credit product appropriate to planting and harvesting seasons, alongside technical agriculture training; and our artisan program provides training on costing, quality, sourcing, and consistency combined with links to external markets.

We use the PPI score to segment data provided in credit applications and in the PPI itself (see graphic below) to provide a nuanced understanding of clients and their contexts.

Segmenting data from other surveys by PPI score, we learned that clients living in poorer situations:

• Are more food insecure,
• Are more reliant on their husbands to repay their loans,
• Have less participation in decision-making around their own health and the use of business income, and
• Are less likely to access preventive health services or to conduct marketing or business administration activities.

The above shows remarkable synergy of the PPI with other survey instruments, which provides us with more confidence in our data.

Gaining Insight into Theory of Change and Client Continuum Strategy

In 2011, Friendship Bridge offered only a village bank loan with Non-Formal Education sessions. We knew that clients wanted and needed access to different services, so we used PPI data to help guide our diversification strategy. Today, we call this our Client Continuum Strategy, which we view through the metaphor of a tree. The roots of the tree represent the products and services available to clients, and the leaves represent the outcomes we expect clients to experience as they move along the Continuum from Dreamer to Entrepreneur to Leader.

Since 2011, we have increased our offerings – adding 5 credit products and 5 services. We have found that the use of additional products and services is associated with a decrease in poverty likelihood, and that clients living in better economic situations are more optimistic about the future and their personal abilities to succeed. This helps us understand how poverty interrelates with women’s empowerment.

Providing Evidence of Impact

Since we began using the PPI, we have observed a significant, positive association between poverty level likelihood and number of loan cycles, which led us to believe that the longer a client is in our program, the more likely she is to improve her poverty status. As a result, we have focused strategies on increasing client retention, such as starting a women’s preventive health program.

Also of note is that Guatemala is one of only two countries in the Western Hemisphere that has experienced increased poverty over the last decade. We used the PPI to see how our data compared to this national trend. Using rate of change over a three-year period by region, we found generally the likelihood of a client being in poverty dropped faster than the regional trend. These outcomes indicate that we are on the right path to reducing client vulnerability.

We look forward to the new insights we will gain from the updated Guatemala PPI in the coming months! Congratulations to the PPI on moving to IPA, which will ensure the data quality that have made it so useful continues over the coming years.