Poverty Outreach of Selected Microfinance Institutions in the Philippines MCPI Conference, July 26, 2012

Poverty Outreach Report Commissioned by GF, MCPI, Oikocredit and MMC Written by Prof. Ron Chua, Ms. Chona Sebastian and Ms. Aya Silva

Key Themes Poverty Penetration amidst intense competition Poverty Concentration & Rural Poverty Scale & Concentration of Outreach

Poverty Penetration amidst intense competition MFI Penetration in Provinces with Highest Magnitude of Poverty

Poverty Penetration amidst intense competition Generally low penetration levels Yet every MFI claims intense competition on the ground How do we reconcile? Pockets of saturation, both geographic and socio- economic? – Do MFIs deliberately focus on the Entrepreneurial Poor? – Who is the Entrepreneurial Poor?

Poverty Concentration & Rural Poverty Concentration and Scale of MFIs Outreach

Poverty Concentration & Rural Poverty Although poverty concentration increases as MFIs serve poorer areas, the gap between poverty concentration and the provincial poverty incidence also widens Significant challenges to serving remote areas Yet many MFIs claim that because they are operating in poor areas, they must be serving poor households How effectively are MFIs targeting their clients? Do we have the right products for the rural poor?

Scale & Concentration of Outreach Scale Concentration

Scale & Concentration of Outreach MFIs that serve the most number of poor HHs have relatively lower poverty concentrations Yet MF sector tends to look at poverty concentration as the main indicator of good social performance Are scale and concentration mutually exclusive? – If an MFI wants to have both, what does it need to do?

Improving Poverty Outreach Measure outreach using poverty indexed instruments and target clients using clear cut-off scores Understand the needs and develop appropriate products and delivery systems for the non- entrepreneurial poor and rural, agricultural households Consider both poverty incidence and poverty magnitude when expanding operations

For More Information: Cristopher Lomboy Asia PPI Specialist