Poverty Outreach of Selected Microfinance Institutions in the Philippines

We are pleased to share with you the final version of the Poverty Outreach Report. This report, which was commissioned by the Microfinance Council of the Philippines, Inc. (MCPI), the Mindanao Microfinance Council (MMC), Grameen Foundation and Oikocredit, examines the different aspects of poverty outreach among selected microfinance institutions (MFIs) in the Philippines based on data collected using the Progress out of Poverty Index® (PPI®). It considers three aspects of poverty outreach – concentration (percentage of clients that are poor), scale (number of poor clients) and penetration (percentage of poor households served in a given area). The report finds the following:

1. Poverty concentration of the sample of new clients reflects the ability of MFIs to recruit poor households. Poverty concentration tends to follow the provincial poverty incidence, but in the poorest provinces, increase in poverty concentration lags behind provincial poverty incidence. Based on the PPI data available from the MFIs, 5 out of 8 MFIs have poverty concentrations that are higher than the national poverty incidence.

2. The participating MFIs have presence in 70 of 80 provinces. In most provinces, clients with PPI data constitute an outreach of fewer than 3,000 poor clients, and in 4 provinces, over 10,000 poor clients. Two MFIs largely outnumber the rest in terms of scale, despite having relatively lower poverty concentration.

3. Penetration of poverty outreach gives a sense of the portion of poor households in a particular area that MFIs are able to reach. Given the difference in geographical focus of the MFIs participating in this report, penetration rates in each province where the participating MFIs operate range from about 0.06 percent to 20.20 percent of poor households.

4. Several factors affect poverty outreach, both within direct control of MFIs and beyond their control. Data suggests that MFIs’ choice of areas of operations and recruitment/targeting policies affect their poverty outreach. In conversations with MFIs, other factors were identified, and these may be explored in future research. Those within their control may include eligibility requirements and product design. Those that may be beyond their control include infrastructure, peace and order, and the lack of replicable business models to deliver a broader range products and services.

We hope that the findings in the report are relevant for your organization and can form part of your effort towards more effective poverty outreach.

Download Poverty Outreach of Selected Microfinance Institutions in the Philippines