General Description
Geographic targeting refers to the strategy of setting up services in areas with high concentrations of poor and vulnerable people, and other excluded groups. This often implies working in remote areas with low levels of infrastructure and not served by conventional financial systems. Some areas that are avoided by regular microfinance institutions are targeted. While there are costs in setting up a remote branch, geographic targeting eliminates the time and expenses that a more thorough screening of individual clients would incur. Geographic targeting has proven to be a good method for generally ensuring that poorer and more vulnerable people receive access to services.
Examples of Geographic Targeting
State investments and even development interventions have conventionally been concentrated in urban and economically more affluent regions. Some of the early MFIs recognized this and saw a need to work in rural areas in order to fulfill their mission to serve poor people. Grameen Bank went so far as to include in their statute a provision that they would only provide services in rural areas. This was done to ensure that there would be no yielding to the natural pressure from within to work in urban centres with better-off clients where staff life would be more comfortable and transactions costs would be low. Many other MFIs working exclusively in rural areas have similarly opted for geographic targeting. Prodem, for example, has focused on working in rural areas once Banco Sol was formed.
There are other MFIs who have chosen to work in the poorest regions of their country. Financiera Compartamos in Mexico works in ten states and Mexico City. Four of these states are ranked amongst the poorest six of the thirty-two states in Mexico. Pro-Mujer's clientele are women in some of the poorest neighborhoods of La Paz, Bolivia.
Some MFIs work in hard-to-reach, difficult or remote areas. The Association Mennonite de Développement Economique (MEDA) provides services to poor people in the mountainous regions of Haiti. There is virtually no infrastructure there. The unreliable rainfall, poor soil, and continuing environmental degradation, force people to survive on subsistence farming.
Social exclusion, or the exclusion of groups because of their differences from the dominant social group, can exacerbate poverty. Social exclusion may be based on ethnicity, caste, language or even profession. Many MFIs have extended the notion of geographic targeting to a targeting of such excluded groups. AlSo, in Mexico, works in the state of Chiapas with the indigenous people. Chiapas has been the scene of endemic violence following the Zapatista uprising and the subsequent military repression. The Women Economic Empowerment Consort (WEEC) in Kenya has a special program to work with the Maasai, who have traditionally been a pastoral community. IDF had been the only MFI for many years to work with the tribal people of the Chittagong Hill Tracts in Bangladesh, who were caught between an armed insurrection and state-sponsored violence. Swayam Krishi Sangam (SKS) works with the Dalits (the "untouchables"), the lowest caste in India, in one of India's poorest states. Even now, in rural areas, higher caste people will not eat together or socialise with Dalits because the Dalits are considered impure.
Geographic targeting, including the targeting of socially excluded groups, has allowed for services to be provided in unserved areas and to unserved people. While it does not provide strong identification of the poorest within a region or population, it does address a primary concern of microfinance: meeting the financial needs of people who are not covered by conventional financial institutions. For many institutions this is a vital first step in achieving their mandate of serving the vulnerable and the very poor.