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ACCION’s Poverty Assessments Framework

ACCION’s Poverty Assessments Framework. Overview. Multipart Poverty Assessment Project First phase involves analysis of MIS systems data of several partner and comparison of that data against national household survey data

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ACCION’s Poverty Assessments Framework

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  1. ACCION’s Poverty Assessments Framework

  2. Overview • Multipart Poverty Assessment Project • First phase involves analysis of MIS systems data of several partner and comparison of that data against national household survey data • The later phases carry out additional survey research and qualitative studies • The final aim is to incorporate findings on client profiles into ACCION’s market to reach farther downmarket.

  3. Phase 1: Objectives • Objectives: Key Questions • How does poverty distribution of ACCION affiliates clients compare with the poverty distribution of the country’s overall population? • How do demographic and socio-economic characteristics of ACCION affiliates clients compare with the overall population> • What are the borrowing patterns of poorer clients? How are loan size, amount, loan maturity, number of previous loans, and repayment status related to poverty level?

  4. Phase 1: Sample • The following institutions are included in the research: • BancoSol (Bolivia) • Banco Solidario (Ecuador) • Genesis (Guatemala) • Mibanco (Peru) • Sogesol (Haiti)

  5. Poverty Assessment Indicators • Most common methods of measuring poverty: • “Standard of Living” • Consumption is a proxy for welfare • Healthcare • Educataion • Housing • Measuring welfare directly • Some factors • Health outcomes • Educational Attainmement • Quality of Housing • Broader Definition of Poverty: Add on social empowerment and political freedom (Sen and Narayan)

  6. Poverty Assessment Indicators • ACCION’s Plan • Use the “standard of living” measurement • Measure consumption • Income • Expenditure • May collect qualitative information later on… • Two other frameworks have been used: • CGAP Model • USAID AIMS Project

  7. Poverty Assessment Indicators • CGAP Model • Calculate “poverty index” • Variables: Household demographics, economic activities, clothing, food security, housing, assets • Component Analysis Principle • Weighs individual components based on which are most effective in predicting poverty in a given AREA • Measures poverty in a relative rather than absolute basis. • National Population is divided in thirds based on household poverty index scores, and MFI poverty scores are compares to these three income groups

  8. Poverty Assessment Indicators • CGAP Model • Pros • Multiple measures of poverty into single indicator • Uniquely based on local conditions and local poverty inicators • Cons • Relative measurement. So it does not allow for cross-regional or cross-country analysis.

  9. AIMS method • Focuses specifically on how microfinance services interact in the lives of the clients • Surveying overall impact • Clients Use of Loans • Profitability • Savings • Client Satisfaction • Empoerment • Household is the center of the analysis

  10. AIMS method • Focuses specifically on how microfinance services interact in the lives of the clients • Surveying overall impact • Clients Use of Loans • Profitability • Savings • Client Satisfaction • Empoerment • Household is the center of the analysis • Focuses on the impact of microfinance • ACCION’s framework focuses on the poverty level of clients relative to the overall population

  11. Poverty Lines • Poverty Lines • Distinguish between “poor” and “non-poor” by testing individuals ability to purchase basic food and non-food necessities. • May be absolute or relative • Absolute: Represent real fixed costs of a set of basic food and non-food goods • Relative: Change over time and are based on median income or expenditure • Relative poverty lines are more common in developed world. • Ergo, Accion uses absolute poverty lines

  12. Poverty Lines • Calculating Poverty Lines • “Cost of Basic Needs” Approach • Food Stuffs • Represent the real cost of a consumption basket (bucket) unique to a country/region • For example, in Honduras, there would be a lot of beans in the consumption basket. • Basket is then priced using the market prices of the goods in the basket • Non-Food Necessities • Based on survey data (no itemized buckets/baskets) • Uses broad assumptions about the percentage of a poor household’s expenditure represented by necessities.

  13. Poverty Lines • Using Poverty Lines • Once established, they are often fixed for several years at a time and adjusted for inflation. • Updated survey data is used to calculate the poverty level based on houshold income or expenditures and assessing whether it is sufficient to afford consumption basket • Poverty lines are calculated by entities such as: • Governments • World Bank’s Living Standard Measurement Study (LSMS) • United Nations • Inter-American Development Bank • They are most useful for within-country comparisons, since the food basket is country specific.

  14. Poverty Lines • International Poverty Line • The World Bank created an IPL in its 1990 World Development Report. • Has gained popular/political recognition • Based on a fixed basket that is not unique to specific countries • Then, uses purchasing power parity to calculate the poverty line in several countries • The IPL is the median of the 10 poorest countries • Big Problem: Does not measure changes in baskets of goods across countries

  15. Poverty Lines • International Poverty Line • The World Bank created an IPL in its 1990 World Development Report. • Has gained popular/political recognition • Based on a fixed basket that is not unique to specific countries but is a “basket of commodities that is roughly similar across the world” • Then, uses purchasing power parity to calculate the poverty line in several countries • The IPL is the median of the 10 poorest countries • Big Problem: Does not measure changes in baskets of goods across countries. • Does not take into account economic and social conditions that are unique to individual countries • World Bank recommends using country specific poverty lines

  16. Poverty Indicators • Poverty Indicators: Tools to measure poverty in reference to poverty lines. • Because poverty lines are consumption based, the most common “standard of living” indicators are expenditure and income (adjusted for savings). • These are proxies for consumption. • Expenditure is usually preferred poverty indicator. • Not as volatile as income due to seasonality of income from agriculture and agriculture-related enterprises. • Societies with large rural populations, a large proportion of poor household income is non-monetary and then is not calculated in income. • Income tends to be under-reported in surveys.

  17. Poverty Indicators • Poverty Indicators and ACCION • Expenditures may not be applicable to ACCION’s poverty assessment framework. • Population of ACCION’s clients • Nature of the data (MIS systems capture income, not expenditure) • Other Poverty Indicators • Social Indicators measure welfare more directly • Health • Education • Housing • Vulnerability • But, not used by ACCION in this framework • Poverty is usually measured at the household level, even though this is not the best (Deaton 1997)

  18. ACCION’s Framework • Starts out with many core questions that explore the relationship between poverty levels, economic levels, economic activity, and credit history. • Collects data to address these questions from MIS systems of ACCION and affiliated organizations • Must consider the data availability and cost of execution.

  19. Data Comparison • Several Sources of Data • National Level Data • LSMS Surveys (Living Standard Measurement Study) • Sponsored by World Bank working with National Statistics Institutes • Good breadth and depth of information • Asks about specific expenditures and sums them up for aggregate expenditures, rather than just asking for total expenditures • Problem: Income information is not as in depth as expenditure information • LSMS is the primary source of national household data. Haiti is not a part of LSMS, so ACCION is ontaining information from the government of Haiti.

  20. Analysis • Poverty Level • To answer questions about poverty, ACCION will look at median income and expenditure of the entire population and compare it with those of ACCION’s clients. • It will compute poverty incidence based on national poverty lines and the World Bank IPL. • Poverty Profile • Looks at demographic variables • Compares large number of socio-economic characteristics for the poor and non-poor across ACCION clients • Distribution Functions • CDFS • Poverty Distributions

  21. Analysis • ACCION calculates distribution functions for: • Overall population and ACCION population • Female clients and overall female population • Female-headed households • Households with more than 5 members • Urban and rural households • ACCION clients

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