Peru: Developing Poverty Assessment Tools

This note describes the testing of poverty assessment tools for micro-enterprise practitioners. The note describes the two-step testing process as follows:

• The first phase involves tests of accuracy, with surveys to test the predictive capacity of a variety of poverty measurement indicators;
• The second phase involves tests of practicality, wherein local micro-enterprise practitioners apply selected tools to gather information about a variety of criteria, especially cost and the ease of implementation.

Testers utilize a composite questionnaire that includes indicators contributed by practitioners and other members of the micro-enterprise community.The note then describes the experience of the testing team in Peru, highlighting the following challenges of accurately measuring poverty in a politically unstable country encompassing diverse regions:

• Convincing banks to share their client information, and clients to describe their monetary transactions;
• Reluctance from Peruvians to answer survey questions regarding personal savings and lending;
• Diverse climactic and socio-cultural settings that require extensive survey adjustments.

The note also describes the following solutions that the testing team found to the problems:

• Moving the questions on lending and savings to the very end of the interview to capture information vital to designing and reporting on microfinance programs;
• Not asking for the names of remittance recipients to avoid humiliation and mistrust on the parts of respondents.

The note concludes that the team learnt important lessons that would aid in the development of accurate and cost-effective tools.