Grameen Foundation India last week 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 – Progress out of Poverty
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.