Assessing the Poverty Outreach of Microfinance Institutions

About one fifth of the world population lives in extreme poverty. Development programs often aim at reaching the most disadvantaged population groups, but insufficient targeting can jeopardize these efforts, effectively excluding the poorest. It is therefore essential to assess the poverty level of program participants in order to get an estimate about the program's contribution to poverty alleviation. This study evaluates the case of a Mexican microfinance institution. Before proceeding with the analysis, the author provides a framework for the evaluation of outreach and sustainability of microfinance institutions. An indicator-based, multi-dimensional poverty index is used to assess the poverty level of households. At the regional level, a poverty mapping approach is followed to assign municipalities to different poverty groupings. Based on the different assessments, the MFI's outreach performance is compared to similar MFI's operating in other countries. The book is directed towards development practitioners, the donor community, as well as the academic audience interested in socio-economic development.