Modificaciones de las intensidades inferior y superior en las que aparece el batimiento

This section explores the concepts and established indicators for measuring poverty, what determines poverty reduction, and whether the specific contribution of microfinance to poverty reduction in a given population can be measured. Measuring poverty reduction on a specific population after a certain period of targeted intervention is far from simple. The

discourse on what constitutes poverty has been going on for decades and definition varies from one region to another and so does the context and thresholds (Desai & Potter, 2002). Concepts of poverty reduction applicable to microfinance

Due to the multidimensional nature of poverty, the concepts that seek to explain and measure it are varied. Poverty is conceived as either absolute (lack of income to provide necessities) or relative (failure to attain capabilities necessary for sustaining a good life) (Adato, et al., 2006; Sen, 1984). Individuals in absolute poverty live below minimum,

socially acceptable living conditions based on established minimum nutritional requirements and other essential goods (Burra, et al., 2005). Relative poverty compares the lowest

segments of a population with upper segments measured in income quintiles. Development discourse associates poverty with concepts of inequality, vulnerabilities, and various forms of exclusion (social, financial and recently digital) (Ehrenpreis, 2006; Sen, 1984).

As microfinance is just one of several tools for addressing some of the dimensions of poverty, not all concepts used to define poverty are relevant to how the impact of microfinance on poverty can be measured.

Nevertheless, a contextual exploration of other concepts of measuring poverty is useful in establishing the relevant indicators. Indicators for measuring poverty are underpinned by the specific concepts adopted in defining poverty (Ehrenpreis, 2006). Poverty is also understood in terms of its perceived causes, such as physiological and sociological (Sen, 1984). The former view asserts that people are poor because they lack income, food, clothing, and shelter and underpins both the income and basic needs concepts of poverty (Abbott, 1993; Ehrenpreis, 2006).

Strategies to reduce this type of poverty focus on increasing the income/consumption of the poor through employment creation or entrepreneurism and enabling them to satisfy their basic needs, such as health and education through targeted services. The ideas of poverty

being caused by sociological deprivations are rooted in underlying structural inequities and inherent disadvantages such as cultural, gender or class disparities (Ehrenpreis, 2006; Abbott, 1993). They are rooted in the observations that even when resources are flowing into sectors dominated by the poor, structural impediments may still prevent the poor from taking full advantage. These ideas come from the view that availability does not necessarily imply access as various constraints hamper ability of the poor to access available services (Ehrenpreis, 2006).

However, the human capability analysis of poverty focuses on expanding people’s

opportunities based on the assertion that poverty is not merely in the impoverished state in which the person actually lives (Abbott, 1993).

The view takes the position that the lack of real opportunity due to social constraints as well as personal circumstances lead to lack of valuable and a valued life, which is critical to microfinance (Ehrenpreis, 2006). In practice, this translates into an emphasis on

empowering the poor, facilitating their participation in society, and enabling them to move upward on the socioeconomic ladder as evident in most NGO based microfinance initiatives (Fowler & Panetta, 2011). These are central to the human capability approach to poverty reduction.

Although microfinance as a tool for poverty alleviation cannot be applied to every poverty dimension, it is applicable in addressing the income and basic needs, human capabilities and some aspects of vulnerability.

Microfinance for Poverty Alleviation Institutions (MF-PAIs) can help reduce poverty in one or more of the following ways:

1) Improve household income and help meet basic needs of a poor client through the provision of productive loan services-

and fight their way out of poverty. This opens up an opportunity for raising income but for the majority of poor people, credit only is like a drop in the ocean. Without additional

support, many engage in unprofitable or risky ventures where they lose all the initial capital in some cases.

2) Reduce vulnerability through the provision of consumer loans to smoothing short-term consumption needs and financial shocks.

MF-PAI can help poor individuals with a regular income avoid devastating financial crisis by providing emergence consumer loans.

Most poor people have no savings and therefore are vulnerable to financial shocks which in most cases will require a long time to recover from. However, traditionally, developmental MFIs such as the MF-PAI offered only production loans resulting in some clients who desperately needed consumer loans to cover such essential expenditure such as school fees for children, diverting loans for that purpose instead.

3) Reduce vulnerability through the provision of micro-insurance services

MF-PA can, in addition to loan services provide affordable insurance for their clients to reduce their vulnerability to financial shocks. Research shows that although several MFIs offer insurance services to their clients, the majority provide the service as security

measure against default not as a tool to help the individual’s vulnerability

4) Provide services that build human capabilities as part of the loan services to empower the poor economically and socially so they can be effective not only in utilising the loans but also in their lives in general.

Skills training and development among the MFI clients has a positive correlation to quality portfolio and good repayment rates. Where loans are provided without relevant client training and other support services, it is either the target group in the non-poor or debt problems and high default rates usually emerge followed by bad debt recovery practices in

most cases.

In practice, evidence suggests that the first option presented above is the most preferred to poverty reduction model through microfinance, which only seeks to address one poverty dimension (Income poverty). This minimalist approach to microfinance where interventions are limited to addressing household income needs is unfortunately a dominant model among most MFIs around the world.

This is usually followed by impact assessments that are traditionally carried out based on baseline and end-line household surveys on both treatment/client group and a comparison group composed of individuals of similar characteristics. However, this often does not take into account a myriad of other variables individuals will be exposed to which could as well explain the differences between the two periods.

Therefore, microfinance for poverty alleviation should seek to address at least three poverty dimensions of (i) income/basic consumption, (ii) vulnerability and (iii) human capabilities of every individual client they meet. However, even when the MF-PAI tick all the three boxes as discussed above, they can only make a contribution to each dimension as one of several factors influencing that individual’s life at that given point. Key indicators therefore should enable us to estimate potential contribution based on both the “means” and “ends” or ”inputs” and “goals” (Ehrenpreis, 2006). As evident in the above discussion, there strong conceptual connections between microfinance and poverty alleviation school of thought. Sections Review of background of microfinance and poverty alleviation aspirations below explores these connections further into the historical background of microfinance evolution as it relates to poverty alleviation aspirations.