1. Contrasting Methodologies Used to Expand the Outreach of Financial Services to the Rural Poor: Lessons from Mexico’s PATMIR Experience Julia Paxton, Ph.D. International Conference on Rural Finance Research: Moving Results into Policy and Practice FAO: Rome, Italy March 2007

2. PATMIR: expanding financial services in rural areas of Mexico 3 Consulting firms 3 Consulting firms WOCCU, DID, DGRV 3 Methodologies 3 Methodologies Strengthen, Expand, New

3. NUMBER OF INSTITUTIONS ACCORDING TO METHODOLOGY BY CONSULTANT

4. OUTREACH KEY POINTS KEY POINTS 1. BETTER CLIENT INFORMATION IS NEEDED IF OUTREACH IS A GOAL 2. BETTER OUTREACH MEASURES ARE NEEDED

5. AVERAGE LOAN AND DEPOSIT SIZE BY METHODOLOGY (US$1 = 10.6 Mexican pesos) Dec. 2006

6. DEPTH OF OUTREACH INDEX DOI

7. Poverty Outreach Index (PO) where n = population size x = income of the ith household below the poverty line q = number of households below the poverty line z = poverty line = researcher designated weight

8. AVERAGE PO INDEX BY CONSULTING FIRM AND BY METHODOLOGY

9. GEOGRAPHIC ANALYSIS DID NEW: SERFIR

10. GUERRERO: DGRV NEW and STRENGTHENING TLAPANALTOMIN SULJAA ZIHUATLAN

11. PATMIR Sustainability

14. SO WHICH METHODOLOGY WINS? I wish it were that simple! General trends: New institutions have great outreach and lower arrears but are costly Existing institutions have better sustainability measures but can be slow to change and have portfolio quality problems

15. BUT…. New institutions are becoming more sustainable Existing institutions can and do reach the poor in addition to their other clients and when motivated, can modify their methodology to expand outreach

16. OUTREACH AND SUSTAINABILITY -0.50 0.00 0.50 1.00 1.50 2.00 2.50 SDIDOIPO Index

17. OUTREACH AND SUSTAINABILITY -0.50 0.00 0.50 1.00 1.50 2.00 2.50 SDIDOIPO Index NewStrengthen Expand

18. TRADE-OFFS

19. Trade-offs between outreach and subsidy dependence

20. GEOGRAPHIC COVERAGE CORRELATIONS

21. HOW FAR OUT CAN YOU GO? Rules of thumb from the field 25 km radius depending on roads No more than one hour of loan officer travel Average of 10 – 20 minute travel time for client Going into areas with an integrated rural development strategy is helpful

22. THANK YOU!!!