out of four or 76.8% of SML's mature clients have experienced
significant reduction in their poverty over the past four
years. This is the most dramatic result to come out of an
impact assessment of SHARE Microfin Ltd. (SML), a micro finance
company operating in Andhra Pradesh, India.
coordinated this impact assessment, using the AIMS as adapted
in its work with PHILNET, the Philippine network of Grameen
Bank Adapters, and tested at ASHI in May, 2001. AIMS are practitioner-led
tools for impact assessment. Fifteen senior SML staff took
three weeks out from their normal schedule to adapt the tools
to their clients, learn the skills of neutral interviewing,
collect data from over 300 mature clients, new clients and
ex-clients, and then analyze the results.
found that nearly four out of ten (38.4%) SML clients had
moved right out of poverty, despite being only between three
and four years in the program. Another 22% had experienced
no significant change in their poverty status.
SML team tracked changes in poverty by using four indicators-the
house index, sources of income, ownership of productive assets
and the household dependency burden. Since SHARE collects
information on all these indicators for each client at entry,
it was possible to track changes that took place from the
time of joining until the time of the survey.
impact assessment team looked at three widely separated branches,
and found the same levels of poverty movement in all of them.
What came strongly out of the data was that the great majority
of SML clients had been very poor at entry. That means they
were mainly dependent on coolie work, owned few or no assets,
had few income earners supporting many dependents and lived
in small houses built of temporary materials. Now only 7%
are in that position. Most of the movement has been into the
moderately poor category, with the addition of at least one
enterprise to the family's sources of income acquiring assets
like oxen or buffalo or a sewing machine, and extending or
repairing the house. But more than a third have escaped poverty
by acquiring assets worth more than Rs 10,000 (US$200) - often
several large animals, machinery shops, buildings or land,
building large and permanent houses; and finally liberating
themselves form daily labour for the local landlord by becoming
the way out of poverty for this family
all of Ediga's enterprises have been successful-she bought
two goats in her first year with SHARE loan and a later investment
in paddy and chilies, which was wiped out completely by heavy
rains. But Ediga has always had two or three businesses going
at once, so she could recoup her losses and carry on. In addition,
besides her husband's arrack shop, her two sons have both
started working the past few years, giving this family a resilience
which has brought them well out of the poverty group.
next year she spread her risks even more. She started buying
chilies and paddy when the price was low and storing them
until prices rose. She made good profits. She put some of
her profits into a music machine for the shop and medical
expenses for one of her sons.
her third year, Ediga borrowed a total of Rs 13,000 (US$270)
in general and seasonal loans. She continued her shop and
stocking businesses. But she also used Rs 4,000 (US$82) to
improve the land the family owned so that she could cultivate
paddy and chilies on it. This was the year that Andhra suffered
heavy rains in the usually dry month of December and both
her crops were destroyed. The improved land remained however,
and she is planting it again, hoping for better luck this
is fairly typical of the families in this study who have come
out of poverty through having several income earners and investing
in multiple activities. In the risky rural world of Andhra
with cyclones, floods, disease and theft as constant threats
to precarious incomes, hedging your bets the way Ediga has
done, is a reliable strategy for escaping from poverty.
important path out of poverty for these mature clients has
been the purchase and care of milch buffalo, with the loans
provide by SML. At least two milch buffaloes were necessary.
Half of those clients who have two or more milch buffaloes
are no longer poor, as compared to only 30% of those with
one milch buffalo and 33% of those with no buffalo.
those mature clients with three or more earners in their household,
84% of them had experienced significant poverty reduction
and more than half are no longer poor, compared to only 17%
of those households with only one income earner, their poverty
compared to only 47% of households with one source of income.
Although raising buffalo for milk is a dominant activity in
the first year of borrowing, by their third and fourth year,
these SHARE clients demonstrated no less than 17 different
combinations of sources of household income, with none being
clearly dominant. It seems that in the context of rural India,
spreading your risks amongst several enterprises and types
of work is a better strategy for escaping poverty than growing
the conclusion is that there are many possible paths out of
poverty, provided a poor household can get access to SML's
micro-finance services, and provided that these are used to
add income earners to the household and to diversify its sources
of income. The assessment report will be published later this
year and can be obtained through either CASHPOR or SHARE
from Credit for the Poor, Vol 30, April 2001.