Cost-effective Targeting: Two Tools to Identify the Poor

Publication Date: 1999
Published by: SEF - Small Enterprise Foundation
Document Type: Book

The Housing Index and participatory wealth ranking

Presents methodologies developed within the CASHPOR (Credit and Savings for the Hard-Core Poor) Network in Asia and at SEF (Small Enterprise Foundation) in South Africa to cost -effectively identify the poor

Suggests that poverty targeting has been discouraged as difficult and costly. But the methods presented here, developed through field experience, are both practical and cost-effective. Argues that the cost of not targeting, in wasted resources and repayment problems, can be much higher

CASHPOR Network over the years has developed a house index (HI) as a rapid and cost-effective method to identify the poor. This index has been adapted to the house styles of all the countries in Asia where the network programmes are operating. Its results are checked and refined through a simple asset test applied during the recruitment of qualified members. This system is operational in 22 MFIs reaching 300,000 poor women in Asia

SEF reaches 7,000 microentrepreneurs in the northern province of South Africa. Its poverty focused programme has implemented the methodology of participatory wealth ranking and developed it through field practice until it has become a highly accurate, and cost-effective, method of identifying the poor

Concludes that:

• the above two methods by which the poor and the poorest can be identified, and the non-poor excluded, are cost-effective, accurate and tested
• the cost of targeting must be added to the operating costs of an MFI. But as it must attain institutional financial sustainability, the cost of targeting the poor must be minimised