Poverty assesment

Update on Depth & Impact Research

With financial support from CGAP and the Ford Foundation funded Imp-Act Program, Prizma contracted a research firm to carry out a poverty assessment of its clients in 2002. This assessment was the first of its kind in Bosnia-Herzegovina and the CEE-NIS more generally and marked an important initiative given limited research thus far to understand the character and extent of poverty in the region.

Findings
CGAP’s poverty assessment tool (PAT) was used to assess the poverty level of clients relative to non-clients in the same community while a national omnibus survey was used to assess poverty more generally across the Country. Among some of the key findings are the following:

· Poverty is widespread across Bosnia-Herzegovina.

· Poverty is particularly prevalent among ethnic minorities in each community, returnees and refugees, women, the elderly (pensioners), people in rural areas, and in many communities of the Federation and most of the Serb Republic.

· The character of poverty in the Country is complex, encompassing ‘new poor’, as well those with few assets and little or no education who are more typical of the millions of poor across the globe.

· While some regions have a greater concentration of poor people, given the ethnic and rural character of poverty in most communities, there are dramatic differences in poverty both between regions and within each region.

· Aspects of someone’s shelter, which have proven critical indicators of poverty in the developing world, are only modestly correlated with poverty in many communities of Bosnia-Herzegovina, affirming that poverty and vulnerability is common among those with an important asset base but very limited and intermittent sources of income.

Part of a Broader Research Agenda
Findings from the poverty assessment are helping move Prizma along a continuum comprised of three critical objectives: (1) determining the relative and absolute poverty level of clients; (2) strengthening targeting of and service to poor and low-income clients; and (3) measuring change in the lives of these people over time. First, the poverty assessment indicated that 64% of new Prizma clients are among the ‘moderate poor’ and ‘poorest’ terciles in every community Prizma serves, affirming that the Institution is reaching its mission-defined target group.

Second, employing qualitative and quantitative methods, Prizma has sought to better understand who is poor in the post-war and transitional setting of Bosnia-Herzegovina. The poverty assessment highlighted areas of the country where poverty is most prevalent and, thus, areas and ways in which Prizma can strengthen its targeting. Such information has also helped the Institution refine its strategic position and re-engineer its performance management system—appraisal, reward, and communication—to more closely align employee interests and reward with greater depth of outreach, improved service quality, and the financial health of the Organization overall.

Third, working closely with the MFC and members of the ‘Microfinance for the Very Poor’ working group under Imp-Act, Prizma is now developing an impact monitoring system that will enable the Institution to report on poverty reach based on robust and meaningful indicators rather than on average outstanding balance as a % of GNP per capita—a tired industry convention that has proven an easy but wholly inadequate means of gauging an institution’s depth of outreach.

Looking Ahead
Prizma’s steps in the coming 6-12 months include narrowing a strong pool of indicators drawn from qualitative participatory field research (PRA), the CGAP poverty assessment, and recent external research in Bosnia-Herzegovina, including a Living Standards Measurement Survey (LSMS), to a select few robust indicators. Prizma will then define ranges for these indicators, which should enable the Institution to (a) assess the relative poverty status of clients; (b) link indicators to the Country’s poverty line to determine clients’ absolute poverty status in the national context; and (c) link indicators to the $1/day (purchasing power parity) measure, to determine clients’ absolute poverty status comparable in an international context. While such figures on their own will not reflect the complex and multidimensional nature of poverty, which is critical, they promise to enable Prizma to understand and demonstrate more clearly and on a regular basis the extent to which it is fulfilling its social mission.