Courtesy of FAI
Can
the poorest be reached with finance? “Ultra poor” members of society
face a series of constraints and deprivations that distinguish them
from the general poor. Limited social networks, chronic malnutrition,
and reliance on patronage systems characterize a socioeconomic class
that is hard to “bank.” Research now indicates that most microfinance
institutions serve poor and lower-income customers, but not the
poorest. A new FAI Framing Note
on “Targeting the Ultra Poor” discusses why the most disadvantaged
citizens are missed by a system intended to serve the poor, reviews
pilot programs that target the ultra poor in Bangladesh, India, and
Haiti, and offers a preliminary assessment of the impacts these
programs are having.
In this video, Jonathan Morduch discusses BRAC’s pilot initiative for reaching the ultra poor, the Income Generation for Vulnerable Groups Development (IGVGD), and the SKS Ultra Poor Program (UPP), both of which have been replicated all over the world. Bandhan, an MFI in India, launched its Chartering into Unventured Frontiers – Targeting the Hard Core Poor (CUF – THP) in 2006. Fonkoze in Haiti offers a two-tiered programming system: Chemen Lavi Miyo (CLM), the first step, is a two-year program for individuals who lack productive assets.
Will
these programs work? The Ford Foundation and CGAP have been conducting
rigorous evaluations of these programs. “The ideas are very powerful,”
Morduch says, "the question becomes, are the interventions powerful
too, and will they stick?"