Provision of financial services, microcredit and savings facilities, by Moris Rasik (MR) to poor, rural women in the central and western sub-districts of Timor Leste, has been associated with significant poverty-reduction among the mature clients, i.e. those that have taken four or more loans over the past three to four years. Slightly, more than half (52%) have seen their poverty status reduced from very poor to moderately poor or from very poor to non poor (7%). Verification against other indicators of poverty shows that the very poor are more likely to have experienced a period of food deficit in the past year, to have seen their income stay the same or decline and not to have any savings, or to have seen them decline.

The study found that there is a 38% difference between the mature clients and the new clients, in terms of their current poverty status, with 56% of the mature clients being currently, either moderately poor (49%) or non poor (7%), compared to only 18% of the new clients. As this difference cannot be due to any environmental effect, as both groups would have been affected more or less equally by it, we can attribute it to the access that the mature clients have enjoyed to microfinance from Moris Rasik. That means that 38% of the 52% poverty-reduction among mature clients, or about threequarters, has been due to their access to microfinance from Moris Rasik, and 18% to the environmental effect.

In depth interviews on their loan use strategies with 14 successful mature clients from all three sub-districts indicated that most had used most of their Moris Rasik loan capital to expand existing itinerant trading activities among local markets, with a few starting such activities, and later to build and stock fixed kiosks, usually in or near their
homes. The most recent loans taken from Moris Rasik had been used primarily to add to and diversify the stock of these kiosks according to local, seasonal demand and competition. Most of the women said that they make decisions on loan use together with their husbands, with the latter being more involved on the recent, larger loans; but three women had increased their participation on loanuse decision making over the period they had been in Moris Rasik. Business profits were not re-invested directly, but used mainly to buy gold and small farm animals, both of which can be seen to be fairly liquid and safe forms of saving, in the present context of rising prices.

How the Moris Rasik loan capital was invested was more important in determining poverty-reduction. Looking at the income-generating activity that had received the largest amount of investment of Moris Rasik loan funds in each household, building and stocking a kiosk was the most successful, with threequarters (76%) of those with this as their main investment having experienced poverty-reduction, as compared to 52% of mature clients overall. Mature clients with this as their main investment accounted for a third of those that experienced poverty-reduction. This confirms for the whole sample, the main finding of the in-depth interviews in Chapter 4.

Having a kiosk as the base of a variety of trading activities, including itinerant visits to markets in surrounding towns, was a successful investment strategy for Moris Rasik loan funds, with two-thirds of those combining these activities with animal husbandry experiencing poverty reduction.

Of the few mature clients, all were combining the trading activities with some commercial cultivation of paddy or coffee. The most effective loan use strategy for poverty reduction, however, was a combination of commercial cultivation or fisheries, with some trading (kiosk or itinerant) or animal husbandry, with almost seven-out-often (69%) of mature clients using this strategy experiencing poverty-reduction. Together they accounted for 36% of all mature clients whose poverty was reduced. In general, the financial services provided
by Moris Rasik reduced poverty by enabling poor households to diversify their sources of income and to add income earners, usually an adult son, through the creation or expansion of self-employment. Access to the financial services provided by Moris Rasik, has enabled the mature clients to invest in productive assets, which has resulted in sustainable increased income.

A comparison of the average score on the productive assets scale of the two groups shows that mature clients at 1.63 hold double the assets of new clients, at 0.79. Comparison of the average score of mature clients on productive assets at the time they entered Moris Rasik, which was 0.52, shows that most of their current productive assets have been purchased since they started borrowing from MR. This is a major contribution of Moris Rasik in rural Timor Leste with its high incidence of poverty, and low level of economic activity, with rare opportunities for wage employment.