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Targeting Tools
Microfinance is generally about providing financial
services to poor people, those who lack access to prevailing
formal financial institutions. Many microfinance institutions,
by working in rural areas or in poor urban neighborhoods, by providing
small loans for activities that low income groups would normally
engage in, by imposing specific conditions of borrowing such as
seeking small regular repayments, ensure that the poor are served
and the wealthy are excluded. However, many MFIs point out that
without a more proactive identification of the poor, and especially
the very poor and the more vulnerable, they would continue being
systematically excluded from financial services. Hence the development
of targeting tools and their use by MFIs focused on increasing
the depth of outreach. The following are important targeting tools
available to the industry.
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The
Housing Index
An index using the structure of the house and
sometimes the compound to differentiate between
economic levels of households and identify those who are poor.
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Participatory
Wealth Ranking (PWR)
A ranking by community members of the
relative poverty or wealth of households utilising
perceptions and criteria defined by community members themselves.
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The
Means Test
A list of a small number of indicators collected through simplified
household poverty surveys that are combined to create an index to give a
reliable assessment of the poverty level of an individual household.
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Geographic
Targeting
Providing financial services to poor, vulnerable and excluded people
through working in remote, unserved areas.
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Documents