September 15, 2011 - Grameen Foundation India today announced that Indian microfinance institution (MFI) Grameen Koota, division of Grameen Financial Services Private Limited (GFSPL), is the first fully certified user of the Progress out of Poverty Index® (PPI®) in that country. PPI certification demonstrates that MFIs and other PPI users are using the tool correctly, and ensures the accuracy of its results for multiple stakeholders, including PPI users, technical assistance providers and such decision-makers as investors, donors and rating agencies.
Grameen Koota began using the PPI – an easy-to-use, country-specific poverty-assessment tool – to collect poverty data on its clients in December 2008, becoming the first Indian MFI to do so. Over the past two years, it has collected PPI scores from more than 450,000 clients. It typically collects data on each client annually when they first join the program or renew their loan. It also collects data from clients who leave the program.
The PPI has enabled Grameen Koota to measure poverty rates among new clients and those who have taken repeat loans. When PPI information was first collected from these clients, it demonstrated that poverty rates decreased as the loan cycles increased.
In addition, analyzing clients with more than one PPI enabled Grameen Koota to understand more precisely the poverty profiles changes of a group of clients regarding such variables as age, loan amount, purpose, region and non-financial product offerings, and associate these scores with national and international poverty-line data. This time-series data enables Grameen Koota to understand its clients’ movement across various poverty lines.
Grameen Koota has analyzed the PPI data for almost 62,500 clients who have at least two PPI scores, with interesting results. Poverty levels of clients with two PPIs have improved consistently across all poverty brackets for the duration of their loans: net 22% of the clients who were below the $1.25/day line in Purchasing Power Parity (PPP) – which adjusts for differences in the prices of goods and services between countries – and net 8.5% of the clients who were below the $2/day PPP line when PPI data was first gathered on them have moved above their respective poverty lines.
Grameen Koota plans to use this data to improve its clients’ experience with both financial and non-financial products. Such interventions could include improving product design for targeted clients, increasing outreach to poorer areas, and offering non-financial or other complementary products to poorer clients to facilitate faster movement across poverty lines.
“We commend Grameen Koota’s leadership and staff for their willingness to adopt new policies based on their PPI results, and for their continuous commitment to measure their social performance to inform decision making,” said Chandni Ohri, CEO of Grameen Foundation India.
“The vision of Grameen Koota is to help the poor move out of poverty,” said Suresh Krishna, Managing Director of Grameen Koota. “To do this, we need to track our clients’ progress over time. The Progress out of Poverty Index provides us the ability to do just that.”
About the Progress Out of Poverty Index(PPI)
The Progress out of Poverty Index is a country-specific assessment tool that helps institutions measure outreach to the poor, monitor changes in the economic well-being of clients and provide data that helps managers improve the effectiveness of programs and services. Building on the concept of Grameen Bank’s 10-Point System, the PPI was commissioned by Grameen Foundation in collaboration with the Consultative Group to Assist the Poor (CGAP), Ford Foundation and Microfinance Risk Management LLC. Launched in 2005, the PPI is now being used by more than 100 institutions worldwide. For more information, please visit progressoutofpoverty.org. For more information on PPI certification, please visit progressoutofpoverty.org/certification.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people lift themselves out of poverty by providing access to financing and management strategies to the local organizations that serve them. It also develops mobile phone-based solutions that address “information poverty” among the poor by providing tools, information and services in the fields of health, agriculture, financial services and livelihood creation. Founded in 1997, Grameen Foundation has offices in Washington, DC; Seattle, WA; Colombia; Ghana; Hong Kong; the Philippines; and Uganda. Microfinance pioneer Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, is a founding member of its Board of Directors, and now serves as director emeritus. For more information, please visit grameenfoundation.org.
About Grameen Foundation India
In line with its commitment to help alleviate poverty, Grameen Foundation established Grameen Foundation India (GFI) in 2010 as a wholly owned subsidiary.
GFI is a social business that strengthens double-bottom-line entities that serve the poor. GFI works to help such entities measure their social results, strengthen their human-resources practices and demonstrate sustainable models for serving the poorest. GFI is also exploring ways to leverage mobile phones to deliver information and other services to the poor and the poorest.