A Poverty Assessment of the Small Enterprise Foundation on Behalf of CGAP

Evaluating a poverty targetted program in Northern Province, South Africa

59 pages

This is a report of the findings of a poverty assessment conducted for CGAP, an international service provider to MFIs, and the Small Enterprise Foundation (SEF), a MFI operating in the Northern Province of South Africa.

The poverty assessment is a simple, low-cost operational tool designed to assess the poverty status of clients supported by microloans compared to a representative sample of non-clients. This poverty assessment conducted in SEF was an experiment to test the applicability of this instrument to conditions in South Africa.The report sought to address four issues:

Explore the depth of poverty outreach of SEF's membership in relation to a representative sample of non-SEF clients;
Compare the poverty profiles of the TCP, the targeted microcredit program and MCP, the non-targeted micro-credit program;
Explore the levels of well-being of SEF's clients in relation to regional and national poverty data;
Provide critical input about the applicability of this instrument to conditions in South Africa.

The Northern Province is one of the poorest provinces in South Africa. Two of the three survey areas were found to be in the poorest regions within the Northern Province. SEF clients are therefore located in some of the poorest areas in South Africa. The paper concludes that:

Poverty targeted program, TCP, showed a significantly greater depth of poverty outreach;
In contrast, the non-targeted scheme, MCP, showed limited poverty outreach;
Results of this study confirm that poverty alleviation programS need to be accompanied by a targeting strategy and a program structure appropriate to the needs of the poor;
Poverty targeting strategy appears to be a central component in ensuring that the most vulnerable people are drawn into a poverty alleviation program.