1. Conducting Client Assessment Research: A Look Into FINCA’s E-Methodology 7 th Annual MicroEnterprise Conference BYU, Provo, UT 11-13 March 2004

2. FINCA at a Glance  Village Banking methodology—400 programs  17,000 FINCA VBs worldwide  700,000 clients served since 1984  24 controlled affiliates in 4 continents  Repayment rate—97%  Operational self-sufficiency—108%  Consolidated financials  Financial assets—50 million dollars

3. Client Assessment Monitoring  Client Assessment:  “The process of using poverty information to assess levels and changes in clients’ poverty status for the purpose of measuring program impact, monitoring organization or client performance, or conducting market research” (Woller, 2003).  Assessment tools: CGAP’s Poverty Assessment Tool (PAT) Practitioner developed poverty assessment tools; FINCA Int’l, Acción, Freedom from Hunger, Opportunity Int’l AIMS & SEEP Assessment Tools; 5 different tools Practitioner developed impact assessment tools in collaboration with the Imp-Act program

4. Why Client Assessment?  To be true to mission  To know and understand client’s wants & needs  To improve products & services  To show the economic & social benefits received by clients  To justify donor and investor (SRI’s) resources  USAID Legislation- at least fifty percent of resources invested in microenterprise development need to targeted to the "very poor" (defined as those living on less than a dollar a day or the bottom half of those living below the national poverty line)

5. What is Poverty & How is it Measured?  Poverty is a multidimensional phenomenon. As such, it requires an holistic approach in defining and measuring it.  Some approaches to measuring poverty include:  Money-metric approach: use of household income or expenditure data.  Basic needs approach: access to necessities such as food, shelter, schooling, health services, potable water & sanitation facilities.  Human capability approach: “emphasis placed on people’s abilities and opportunities to enjoy long, healthy lives, to be literate and to participate freely in their society.”(Lok-Dessallien)

6. FINCA’s Client Assessment Tool (FCAT)  FINCA’s client assessment tool is a synthesizing of all the approaches, integrated into handheld technology:  Money-metric  Basic Needs  Human Capability FCAT

7. One Tool, Two Ways to Measure Poverty & Social Benefits:  Daily per Capita Expenditure (DPCE):  DPCE = Total monthly household expenditures/ household size/30 days  Total monthly expenditures = Food School Health Home Utilities Transportation Fuel Clothing Other

8. Expenditure Questions  Food: Ask the respondent: “What do you normally spend each week for food to support your household?” Next, take this answer and multiply by four to get a monthly estimate.  School: Since this is a difficult question to answer based on a weekly or monthly estimate, ask the respondent: “What do you normally spend each year for the education of children in your household, including school enrollment fees, books, uniforms and other school supplies?” Next, take the answer and divide by twelve to get a monthly estimate.  Utilities: These costs normally include monthly payments for electricity, water, sanitation, telephone, and in some cases (especially NIS clients) heating costs.

9. Monthly Household Expenditures  Data taken from client interview in Zambia, July 2003

10. One Tool, Two Ways to Measure Poverty & Social Benefits:  Daily per Capita Expenditure (DPCE):  DPCE = Total monthly household expenditures/ household size/30 days  Total monthly expenditures = Food School Health Home Utilities Transportation Fuel Clothing Other  Social Metrics:  8 different areas related to poverty: Food Security Education Healthcare Housing Social Capital Empowerment Literacy Vulnerabilities  Each area is scored based on a corresponding question with four possible answers.  All areas are then totaled to create a poverty/social metrics index.

12. Social Metrics Questions  Food Security: The respondent is asked: “Which of the following statements best describes the food eaten in your household?” (1) We always have enough food and the kinds we want to eat; (2) We always have enough food but not always the food we want to eat; (3) We sometimes do not have enough to eat; or (4) We almost never have enough to eat.  Social Capital- Community Participation: The respondent is asked: “Which of the following statements best describes your own situation?” (1) I’m very involved in community activities; (2) I am somewhat active in my community; (3) I’m rarely involved in community activities; or (4) I never get involved in community activities.  Literacy: The respondent is asked: “Which of the following statements best describes your own situation?” (1) I can read, write and perform basic math; (2) I can perform 2 of the 3; (3) I can perform 1 of the 3; or (4) I am not able to perform any of them.

13. Creating a Poverty/Social Metrics Index

14. To Establish Poverty Level of Client:  DPCE is measured against country specific poverty lines:  Official poverty line in Zambia = 3404 Kwacha/day  A client with DPCE of 2515 Kwacha would be considered poor  Poverty/Social Metrics Index is measured against social metrics cut-offs:  8-15 = non poor  16-23 = poor  24-32 = very poor

15. Other Social Indicators  CGAP is proposing the tracking of simple, low-cost, user- friendly social indicators that will provide useful information on the progress of clients along different dimensions of the Millennium Development Goals (MDGs)  FINCA is planning to add the following indicators:  Access to health care services: access to messages on preventive care/ referrals access to clean water immunization/pre-natal care use of modern medical facility  Schooling: primary school attendance (% of eligible children) secondary school attendance (% of eligible children)

16. Other Client Assessment Modules  Other modules can easily be added to the handheld to gain an even deeper understanding of clients:  Client exit surveys  Client satisfaction surveys  Market research surveys: Education Business Use of loans

17. FINCA’s Social Performance Measurement & Management System  Social performance management:  Social performance levels and functions: HQ (research team) and Hubs (delegated authority) Affiliate social performance director Regional/branch social performance monitors  Client assessment monitoring system: handheld FCAT integrated with MIS (SIEM)  Use of the feedback loop to improve quality of products and services that clients value

18. Country Director Director of Programs Social Performance Director Region al S.P. Monito r Regional Supervisor s Regional Supervisor s Credit Officers Credit Officers VB Manag. Staff Hub HQ Board Clients Line of command Line of communication

19. Investing in Capacity to Measure Double Bottom Line  Financial Bottom Line:  Requires a financial director, accountants & other finance staff  Standardized financial performance indicators  Social Bottom Line:  Requires a social performance director & other social performance staff  Standardized social performance indicators  Double Bottom Line:  More appropriate products & services  Happier and more satisfied clients  Increased client retention rates  Higher profit margins  Increased investment from SRI’s & others  Poverty alleviation