In the Punjab section of Pakistan, just south of Islamabad, is the district of Chakwal—a focal point for an innovative community development effort based on poverty measurement. Since May 2010, no fewer than 68 villages surrounding Chakwal have been participating in a new initiative to help the poorest among them. The program, Plan Chakwal, supported by microfinance network Plan International, has been leading the way in using the Progress out of Poverty Index (PPI) to guide its community development work.

Led by Shabbir Hussain, Plan Chakwal’s livelihood coordinator, and Aziz Malik, Plan’s community development facilitator, Plan Chakwal over a three-month period (June, July and August, 2010) collected 18,003 PPI scorecards from the 68 villages, using a census approach. Because these villages have local community base organizations (CBOs) to follow through with community development work, they were chosen for PPI data collection.

As the Regional Microfinance Programme Specialist for Plan International in Asia, I have learned first-hand the top challenges faced by microfinance institutions in accepting—and implementing—the PPI as their poverty assessment tool. My observations led me to create the ten challenges I outline here.

1. Simplicity is difficult to accept. For some people it’s difficult to accept simple solutions. The PPI as a simple tool raises some barriers which makes its acceptance difficult.
   
   
2. Can poverty be measured with 10 questions? A lot of people have asked this question. The PPI uses 10 non-financial, verifiable indicators to measure poverty. It must be explained that these are proxy indicators with attached values and a poverty look-up table to score those values--to measure the likelihood of poverty each score indicates. In summary, the PPI consists of 10 proxy indicators with scores attached to values measured by poverty likelihood tables. So the PPI is NOT just 10 questions.
   
   
3. The gaps between PPI results and the results from an MFI’s own poverty measurement tool raise questions. Mostly MFIs are surprised to see the gap between PPI results and the results from their own poverty measurement tool. The PPI measures poverty for different poverty lines, e.g. national poverty line, food poverty line, US$1.25/day PPP, etc. Before an MFI compares PPI results with the results of its tool, it must find out where its poverty tool fits in terms of poverty line(s). Does the MFI’s poverty tool measure poverty for the national poverty line or US$1.25/day PPP? You need to compare apples with apples.
   
   
4. Strong ownership by the MFI for its own poverty measurement tool. Some MFIs are reluctant to abandon their own tools although they know that the responses to questions are inflated, and the results are not accurate due to the subjectivity and non-verifiable nature of the questions.
   
   
5. The PPI is developed from an old (2 or more years) national socio-economic survey. So people think that the PPI is not reflective of the current situation. But the old national survey is the latest available survey and, in the absence of new national survey, the PPI can’t be revised. Remember that the government is also using the results of the old national survey for its own purposes, which means it is still highly relevant.
   
   
6. The PPI doesn’t fit with all extreme situations. Just like any other tool. People like to think about extreme situations in general to demonstrate that the PPI doesn’t work in these extreme cases. But, like any other tool, the PPI is not perfect; there will always be exceptions (outliers). But such exceptions will always be a tiny percentage and it’s immaterial to worry too much about them. The impact of such extreme cases on the accuracy of the results will be almost none.
   
   
7. Top management and board lack understanding of the PPI. It’s key for top management and the board to develop an appropriate understanding of the PPI. The MFI should make a systematic effort to build this understanding; if they do not understand, they will not commit.
   
   
8. Social performance is just a talk and not the walk. The PPI supports MFIs in achieving their social missions. But in the case of some MFIs, achieving their social mission is limited to talk only without serious actions.
   
   
9. The MFI lacks the capacity to interpret PPI results. Often PPI results don’t match the expectations of the institutions. The MFI must be clear when it interprets the PPI results. For example, the MFI needs to break down a consolidated result like “30% of clients are below the national poverty line” into loan cycles as financial services may help reduce poverty of clients in higher loan cycles.
   
   
10. How does the PPI make a business case? There’s a need to develop evidence that shows how the PPI contributes to the reduction of over-indebtedness, increases profits, expands market share, etc. Research and case studies should demonstrate that the PPI is not limited to social performance only but is also vital for pure business, which it is.

Muhammad Awais is a guest blogger on the Progress Out of Poverty blog. As the Regional Microfinance  Programme Specialist for Plan International in Asia, Awais focuses on helping integrate social performance metrics into Plan International’s work. He brings a great perspective from the MFI practitioner as well as from the network level of how to integrate SPM tools like the PPI into operations. He is based in Bangkok.

Whenever I ask participants in a PPI training if they are interested in establishing a PPI peer learning network, everyone says yes. Then very few follow through.

The purpose of a peer learning network is to further develop MFIs’ understanding of the PPI through knowledge management and experience sharing. I have encouraged the establishment of PPI peer learning networks in three countries:

- Cambodia
- Pakistan
- Bangladesh

Mostly the networks consist of those who participated in the PPI Training of Trainers (ToT) workshops organized by Plan as well as those who have attended any other PPI-related activities and shown interest in joining the learning networks. For Cambodia, a Google group platform is used as the medium; for Pakistan and Bangladesh, a Yahoo group platform is used. In my opinion, the Pakistan PPI Peer Learning Network is the best case.

The Pakistan PPI Peer Learning Network was established with the consent of all PPI ToT participants in March. The network started with a very loose structure; for example, no coordinator was elected among the members, there was no action plan of the network, etc. When we reviewed the performance of the network in June, the members found that it did not meet their expectations. I shared the idea of electing a member as network coordinator (one willing to work without any financial or non-financial incentives) and to introduce some structure to the network. I suggested that, in order to strengthen the ownership of the PPI among its users, the network coordinator should be someone from an MFI. Rahmat Ullah from Akhuwat volunteered to take on the coordinator role with the full consent of all members. Akhuwat also cited the need for a refresher training on the PPI Intake Tool (a PPI data management system developed by Grameen Foundation). Rafia Naqvi rom Asasah agreed to provide the refresher training on the intake tool for Akhuwat.

The key task of the coordinator is to increase the mutual engagement of members. Mr. Rahmat, a man with a lot of energy, quickly initiated activities to get members more engaged. Most interesting was the identification of ten advantages that using the PPI gave to MFIs. The members’ engagement and contributions clearly grew after Mr. Rahmat took up the coordination role.

At that point, I realized that some formalization of the network had resulted in strengthening it. So during the 2nd Phase PPI planning meeting in September, I suggested that the network could come up with a realistic annual action plan. We all agreed to identify three key activities to be accomplished as part of action plan i.e. 1) Translate the PPI into Urdu (national language) so that all MFIs can use one single PPI; 2) Develop a PPI instructional manual in Urdu to be used by data collectors; 3) Have each MFI share a brief, quarterly progress report on PPI implementation, which will be consolidated into a single report.

So far the network has successfully translated the PPI into Urdu, thanks to Aziz Rehman from Plan Chakwal. An instruction manual has been developed and shared with the network, thanks to Asad Ullah Rashid from Akhuwat. I am anxiously awaiting the quarterly progress report.

The takeaway here is that a structured network can work better than a loose network. I will continue to follow the progress of the Pakistan PPI Peer Learning Network in order to share future learnings.

Muhammad Awais is a guest blogger on the Progress Out of Poverty blog. As the Regional Microfinance Advisor for Plan International in Asia, Awais focuses on helping integrate social performance metrics into Plan International’s work. He brings a great perspective from the MFI practitioner as well as from the network level of how to integrate SPM tools like the PPI into operations. He is based in Bangkok.

Plan International Asia has completed Progress out of Poverty Index™ (PPI™) pilots in two countries—Vietnam and Nepal —providing needed baseline poverty information to three key microfinance institutions seeking to implement the PPI.

Soon to come from Plan Asia are reports on PPI pilots in Cambodia, Pakistan and Bangladesh. By the end of this calendar year, Plan Asia projects 75,000 PPIs will have been collected, with five out of its nine target countries participating. Sri Lanka, India, Philippines and Indonesia PPI pilot reports are scheduled for 2011.

Following are brief reports on the first two countries to have completed PPI pilots.

Vietnam: At the time of its pilot survey, the Village Savings and Loan Program (VSLP) for Plan Vietnam was serving 1,196 poor minority women organized in 76 VSL groups in 41 villages and 7 communities of Dakrong district. Dakrong is one of the 63 poorest districts of Vietnam, with income based mainly on agriculture and livestock. Village agents carried out the surveys in March.

The poverty rate of the VSLP for different poverty lines is much higher in comparison with country-level poverty rates. For example, the poverty rate for the whole of Vietnam against the national poverty line is 13.6 percent, but it is 40.8 percent for VSLP clients. Against the poverty rate of $1.75 per day, the poverty rate for VSLP clients goes up to 74.8 percent.

VSLP management wants to reach a higher percentage of the poor than the PPI data revealed. As a result, the organization will develop an action plan to reach areas with the poorest populations, and it will focus on a second collection of data.

 Nepal: Two members of the Microfinance Association of Nepal (MIFAN), the Development Projects Service Center (DEPROSC) and the Nepal Rural Development Organization (NeRuDO), conducted PPI pilot surveys during June. Credit officers and field supervisors surveyed a total of 4,038 clients, all women.

The survey found that the selected branches of DEPROSC and NeRuDO have almost similar poverty rates against six poverty lines measured. And the consolidated distribution of clients by poverty levels is more or less reflective of Nepal’s poverty levels as whole (a PPI result of 21.1 percent below the national poverty line compared to 25.9 percent below the line for Nepal as a whole.

MIFAN seeks to implement the PPI with all of its member institutions, as part of a five-year Country Strategy Plan.

To learn more, the full reports are available on the Microfinance Gateway:

• MIFAN Nepal Report
• VSL Project Vietnam Report
  
  

Muhammad Awais is a guest blogger on the Progress Out of Poverty blog. As the Regional Microfinance Advisor for Plan International in Asia, Awais focuses on helping integrate social performance metrics into Plan International’s work. He brings a great perspective from the MFI practitioner as well as from the network level of how to integrate SPM tools like the PPI into operations. He is based in Bangkok.

“What is your main source of drinking water?” “Does your household own a refrigerator or freezer?” “A motorcycle, scooter, car or other vehicle?” The questions in the Pakistan PPI are simple, but it’s hard to get answers for a variety of reasons, according to Javed Baig, Joint Director, OCT.

The poor clients are reluctant to give names, ages and national ID numbers of their females, especially of young females in their households. The male data collectors cannot cross the drawing room (guest entertainment room) to enter the home to verify the answers.

Women can enter client homes, but they have to get to them first. Females cannot travel alone on public transportation among villages. And providing private transportation increases the cost of data collection. Male collectors can collect data after sunset, which is necessary during wheat harvesting season in order to find clients at home. But women are not allowed by their families and social norms to work at night.

These are among the challenges facing the Microfinance Organization Network of Pakistan (MON-Pak), a network of microfinance organizations established by OPP-OCT and spanning four provinces: Sindh, Punjab, Balochistan and Azad Jamu, and Kashmir. Plan International supports MON-Pak’s efforts to implement the PPI among its members, most of them in Sindh, where the PPI is administered in Sindhi.

Many households also are confused by other surveys being conducted as well as the PPI. In some of the same villages, private and governmental organizations have asked questions similar to those in the PPI. The recent Benazir Income Support Program, a governmental social protection program, is one. In addition, some clients wonder why MFIs are asking the same questions which were being asked in the loan appraisal, and why the PPI responses can’t be taken from that information. Since the population census collected similar data at household levels, clients wonder why MFIs are asking these questions when they are not census collectors. And clients fear that giving information about their assets and income will make them subject to taxes.

Finally, after answering questions, clients expect to see results. In this way, the PPI survey itself can raise expectations. Clients sometimes look for cash or in-kind support to help solve the problems they have described. Women in particular have asked the data collectors to help with their children’s education, drinking water, and the non-availability of toilets.

MON-Pak is working to address these challenges by building confidence in the PPI among clienst, restricting data collection by females until sunlight and explaining to clients how the PPI differs from other surveys.

Muhammad Awais is a guest blogger on the Progress Out of Poverty blog. As the Regional Microfinance Advisor for Plan International in Asia, Awais focuses on helping integrate social performance metrics into Plan International’s work. He brings a great perspective from the MFI practitioner as well as from the network level of how to integrate SPM tools like the PPI into operations. He is based in Bangkok.

More than three dozen village agents from seven different communities were gathered at a training hall in Dakrong district in Quang Tri, Vietnam when I arrived there in February. Along with four project officers, the group would spend three days learning about the Progress Out of Poverty Index™ (PPI™).

This training was a first in many ways. Plan Vietnam was launching the PPI with the first Village Savings and Loan Program (VSLP) to use the tool in Vietnam. Started in 2009, Plan Vietnam’s Village Savings and Loan Program was providing financial services to more than 1,100 households in 36 villages after just seven months. Plan was keen to know the poverty levels of the program members and to track changes in these levels before expanding the program to other districts.

Another first: the program is managed by the Women’s Association of Vietnam, an quasi-governmental institution rather than an MFI. And the village agents are residents of the villages where the program operates, rather than loan officers traveling from an institution’s headquarters. For these village agents, the idea of tracking changes in poverty levels was a new concept. The challenge of the training was to help the agents, mostly women with little education and literacy, to understand and use the PPI.

I was doubtful if the agents could understand how to use the PPI to calculate poverty rates, or the number of members below a given poverty line. After having some conversation with the group, I quickly realized that I needed to make the whole training simpler. Tam Le Hoi, the VSLP project leader, and I decided to put more emphasis on hands-on exercises. The simplicity of the PPI itself, and its credible origins, did the rest.

For example, once they learned that the PPI was constructed from the 2006 Vietnamese Household Living Standards Survey done the Government of Vietnam and not something made by Plan International or Grameen Foundation, the participants became confident in the tool. The PPI’s ten simple, non-financial questions and easy-to-calculate score were obvious, and the participants quickly understood them. The specific lookup table on how to calculate poverty likelihood also proved successful as participants were able to calculate the poverty likelihoods and soon after analyze results.

I am confident that the PPI can be successfully implemented through these village agents in Plan Vietnam in Dangkrong and potentially in new districts because of its simplicity and country-specific nature. Plan will also advocate that the Women’s Association use the PPI for other programs, such as their Safety Net Program. As part of a Safety Net Program, a government or another institution provides direct support such as livestock or rice in a poverty-stricken area; the PPI could be used to pinpoint the poorest households in the targeted community – this would be another first.

Muhammad Awais is a guest blogger on the Progress Out of Poverty blog. As the Regional Microfinance Advisor for Plan International in Asia, Awais focuses on helping integrate social performance metrics into Plan International’s work. He brings a great perspective from the MFI practitioner as well as from the network level of how to integrate SPM tools like the PPI into operations. He is based in Bangkok.