When Oikocredit joined forces in 2007 with Grameen Foundation, it became the first social investor to support the use of the Progress Out of Poverty Index (PPI). For the next two years, Oikocredit sponsored—and participated in—PPI pilot training for microfinance institutions (MFIs) in three countries: the Philippines, Peru and Ecuador. Then,early this year, Oikocredit doubled the number of its targeted countries to six—adding Senegal, Mali and Cambodia. The result is significant growth of PPI users in these critical countries.
“With this increased roll-out of the PPI, we can assist our partners in monitoring the effects of their loans and operations,” said Oikocredit director of Social Performance and Financial Analysis, Ben Simmes. “It means Oikocredit can be certain our financing is reaching the right people, and making a genuine difference in the lives of the poor.”
With Oikocredit’s support, Peru has become a key proving ground for the PPI. Oikocredit has seven partners in Peru currently using the PPI: PRISMA, Manuela Ramos, Pro Mujer Peru, ADRA Peru, FINCA Peru, Fondescuro, and NGO Alternativa, with an additional partner, Edaprospo, in the pilot process. There are three more in their pipeline for this year.
PRISMA was the first MFI in Peru to complete its pilot and analyze the results. PRISMA has used those results to help shape program products and services, focusing on the rural poor women whose poverty levels were verified by the PPI. PRISMA Director Diego Fernandez seeks to reach even more deeply into this community through the use of village banking or regular, local meetings for small groups of clients, usually 12 to 15 in number. “Village banking strengthens social networks,” Fernandez says. It is the best way to educate and motivate clients because they can learn from and support each other, he says. This year, PRISMA will encourage its loan officers to grow these village banks in an effort to reach more rural women more effectively.
For PRISMA, expanding its use of the PPI has been a process. Its pilot study in 2008 focused on a representative sample of clients from two branches: Huancayo and Pampas. In 2009, the MFI sampled clients in all of its 17 branches, and added a new cohort: new clients. In its 2010 survey, PRISMA will go back to those new clients from 2009 and track their progress, even among possible drop-outs, to determine their current poverty levels. In this way, PRISMA has been building its use of the PPI. By next year, the MFI anticipates surveying all clients.
PRISMA’s early PPI results have attracted new investors to the MFI. By being able to demonstrate that it is reaching rural poor clients, PRISMA has found a range of social investors who are interested in supporting and encouraging this outreach through loans with favorable conditions. Since the first results were posted, at least six investors reduced loan rates or proposed preferential terms for their loans. This funding will enable PRISMA to target its microfinance loans to even more poor people living in hard-to-reach rural areas.
Oikocredit has released its first Social Performance report, detailing its commitment to making a positive difference in the lives of the poor through access to financial services. The report shows the progression and results of Oikocredit’s many years evaluating social performance. It was presented June 10 at Oikocredit’s Annual General Meeting in Foz do Iguaçu, Brazil. For more information, visit Oikocredit's press section at, http://www.oikocredit.org/en/news-events/press/press-releases.