Microfinance and Poverty: Developing Systems for Monitoring Depth of Poverty Outreach and Impact

The report draws upon the experience of microfinance practitioners from 20 microfinance institutions (MFIs) world-wide. It also summarizes key issues that need to be addressed to improve the transparency and effectiveness in measuring the poverty outreach and impact of microfinance using various poverty measurement tools. The report focuses on:

• Presenting the need for flexible and consistent measurement tools that can be adapted by the different MFIs to suit their needs and aims,
• Producing information that is reliable and comparable enough to be reported to external stakeholders,
• Analyzing issues in measuring poverty outreach and impacts, observing that clarity must be reached in assessment, screening, targeting and monitoring of poverty issues.

The report further argues for simple, flexible and consistent reporting standards for poverty assessment and acknowledges the challenges in doing so. It provides insights into various approaches and definitions used by MFIs for poverty assessment and identifies linking local standards for poverty assessment to national and international standards, as the real challenge. The paper concludes by saying that:

• Progress has been made in conceptualizing social performance goals focusing particularly on assessing poverty outreach and impact, and finding ways to monitor and assess changes.
• Further work needs to be done to balance the need for MFIs to develop contextualized systems that serve their specific objectives with the need for externally credible information. This will allow for comparisons to be made between organizations and contexts.