Assessing the Relative Poverty of Microfinance Clients

The CGAP Poverty Assessment Tool provides transparency on the depth of poverty outreach of MFIs. It provides rigorous data on the levels of poverty of clients relative to people within the same community through the construction of a multidimensional poverty index that allows for comparisons between MFIs and across countries. It has been primarily designed for donors and investors who would require a more standardized, globally applicable and rigorous set of indicators to make poverty-focused funding decisions. The tool involves a survey of 200 randomly selected clients and 300 non clients, takes about four months to complete and costs around $10,000. Field tests were successfully completed in four countries. The Poverty Assessment Tool should be used in conjunction with other appraisal tools (such as the CGAP Appraisal Format) to ensure a holistic understanding of MFIs.