Assessing the Poverty Outreach of Microfinance Institutions at Household and Regional Levels: A Case Study in Mexico

This study evaluates the outreach performance of Compartamos, a Mexican microfinance institution (MFI). The study:

• Assesses the relative poverty levels of clients at the regional and household levels;
• Evaluates the results of the poverty assessment at the household level in an overall framework comprising:
  • The poverty level of the operational area,
  • Institution mission,
  • Target group.
• Uses an operational indicator-based tool that includes a wide range of qualitative as well as quantitative variables that reflect different dimensions of poverty;
• Selects random samples of clients and non-clients in six regions of Mexico.

The study presents the following findings about Compartamos:

• Lacks depth of outreach;
• Has more branches in poor states, probably guided by the objective of reaching the poorest;
• Prefers locating branches in municipalities with high living standards, probably influenced by the availability of infrastructure, economic opportunities and higher population density;
• Has higher market-penetration in better-off areas;
• Has program beneficiaries as those that are mainly from the better-off segment of the population.

These findings indicate that Compartamos:

• Aims at reaching women living in conditions of disadvantage, but not necessarily the poorest among them;
• Serves a mixed clientele is in accordance with the focus on sustainability and growth;
• Breadth achieved by the MFI compensates for the lack of depth.

The study recommends that Compartamos should reinvest its profits to improve outreach to the poorest sections of the population.