The Progress Out of Poverty Index: A Detailed Analysis of MFI Implementation

This paper provides an in-depth analysis of the implementation and utilization of the Progress Out of Poverty Index (PPI) by MFIs in Latin America. The analysis is based on interviews with five MFIs in Peru and Ecuador that have adopted the PPI as well as interviews with a range of other relevant institutions including rating agencies, social investors, and the PPI designer. Key points include:

• PPI is a high quality poverty measurement tool that has the potential to provide significant value both to the individual MFIs who adopt it and to the MFI sector in general;
• Substantial homogeneity exists in the basic objectives of PPI use across MFIs;
• Significant heterogeneity exists in use of the PPI beyond the basics;
• Significant variability exists among MFIs in the method of implementing the PPI;
• Most institutions, in general, feel confident in the potential accuracy of the PPI;
• Human capital level of the MFI is an important determinant of the degree to which the MFI can take advantage of the potential benefits of the PPI.

The paper concludes by recommending that regional aggregating and network support institutions be strengthened. Also, promoting increased communication and consultation with national governments, and expanding reporting options of the PPI will serve well.