Microfinancing Impact Assessment

1. 4th Azerbaijan Micro-finance Conference “Microfinance- 10 years of best Practice” Microfinancing Impact Assessment Ilkin Nazarov Baku, September 16-17th 2008

2. Structure Initiatives of AMFA Methodological approach of the study Key findings of Microfinancing Impact Assessment Survey Concluding remarks

3. Initiatives of AMFA • Microfinancing Impact Assessment and Social Indicators project (January – December, 2008) • Main components: • Quantitative assessment of microfinancing impact (Survey among 2006 clients of 12 MFIs) • Qualitative assessment of microfinancing impact (Discussions with 55 clients of 10 MFIs in 6 regions) • Assessment of social performances of MFIs (Survey among 10 MFIs)

4. OBJECTIVE Assessment of qualitative and quantitative impacts of microfinancing on individual, household, community and business levels. Assessment of social performances of MFIs in the context of outreach/targeting, adaptation of services, social capital and social responcibility

5. METHODOLOGICAL APPROACH • Methods: • Assessment of impacts based on the comparison of indicators on individual, household, community and business of new and longer-term clients (participating in the microfinancing program equal or more than 18 months)clients : i) country; ii) capital, other urban and rural areas; iii) regional distribution • Assessment of microfinancing quality aspects on the basis of discussion methods • Assessment of social performance on the basis of indicators on outreach/targeting, adaptation of services, social capital, social responsibility

6. FIELD OF RESEARCH

7. SAMPLING METHODOLOGY During the sampling on the basis of step-by-step cluster approach and in the way of random selection 2000 microfinncing clients (among which 1000 new and 1000 longer-term clients) were selected with consideration of the following parameters: Regional dissemination Share of the selected organization in the market Male - Female relativity IDPs Alternative list 20%

8. Issues investigated during the Survey 152 questions on the 14 directions were investigated during the survey: Household profile Monetary income of household Non-monetary income - crops and livestock Household expenditure Savings and investment Housing Assets Borrowing and lending Use of health services Education Access to markets, roads, administrative centers and other services Business/ entrepreneurial activities Microfinancing services Client profile

9. Distribution of respondents by gender& status

11. Regional distribution of respondents

12. Relations of respondents to HHs

13. Ages of respondents

14. Education of respondents

15. Marital status of new and longer-term clients

16. Occupation status of respondents

17. Unemployment level – 12,6% Economically Active Population – 55,6%

18. Sector of employment of respondents

19. Business knowledge/practice/skills of respondents

20. Participation level of HHs in the microfinance programs

21. Amount of microcredits Average – 1551 New clients – 1217 Longer-term clients – 1928 71% out of total microcredit repaying with business incomes (new-66; longer-term - 77%

22. Most disadvantages in the current microcredit programs

23. Most important constraints for the client’s business

24. INCOMES (per capita by month, in AZN) TOTAL Mean – 238,5 Median – 150 Minimum – 20 Maximum – 4420 By new clients Mean – 216,5 Median – 140 Minimum – 20 Maximum – 3605 By longer-term clients Mean – 263,4 Median – 163 Minimum – 21 Maximum - 4420

25. INCOMES

26. EXPENDITURES by CONSUMPTION (per capita by month, in AZN) TOTAL Mean - 145 Median - 116 Minimum – 30 Maximum - 1061 By new clients Mean – 138 Median – 111 Minimum – 30 Maximum - 755 By longer-term clients Mean – 145 Median - 121 Minimum - 31 Maximum - 972

27. Savings of Households

28. Savings of Households by new and longer-term clients

29. Dynamics of HHs’ savings over the last 12 months compared to the previous 12 months

30. Use the savings

31. Use of debit cards

32. Use of Credit cards

33. Use of Relative/friends, Government, Community member/neighbors, Religious organization, Employer, Individual money lenders to borrow money is very rare - 7%

34. BORROWING

35. BORROWING by new and longer-term clients

36. Lending over the last 12 months Longer-term HHs are more active

37. HOUSING Over than 90% of HHs are owning houses. This share is a little higher for longer-term clients. Over than 25% out of total HHs have made refurbishment since 2007: this indicator is also 4% higher for longer-term clients.

38. USE OF HEALTH SERVICES

39. USE OF HEALTH SERVICES

40. Main reasons for absence of education over the last 12 months and child labour It is a little higher for new clients

41. Annual Expenditures on Education (secondary)

42. CONCLUDING REMARKS As the preliminary calculations show, microfinancing impacts on the most indicators especially on the poverty reduction is approximately 5% Approximately 22% of the new clients involved into microfinancing programs are poor (70 AZN). Even if microfinancing does not have a significant impact to the improvement of client’s living standards, it ensures sustainability of their incomes. Mikromaliyyə insanların həyat səviyyəsinin yaxşılaşmasına sürətli təsir etməsə də onların gəlirlərinin dayanaqlığını təmin edir

43. THANK YOU FOR YOUR ATTENTION!