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News & Events 2006

USAID Update on Use of Poverty Tools for FY 2007

November 2, 2006

To USAID Missions and Microenterprise Development Partners:

This letter is to update you on USAID's progress in designing and implementing the poverty assessment tools in compliance with the Microenterprise Results and Accountability Act of 2004.

As directed by this Act, USAID has developed and tested two international tools that are easy to use, cost-effective and as accurate as broad-context tools can be. The amendment's original intent, which USAID shared, was that at least two basic tools should be developed to measure the poverty status of clients of all USAID-assisted microenterprise programs around the world. In fact, local and regional variations are such that the accuracy of the tools varies widely across the dozens of countries in which USAID funds microenterprise programs. The international tools would have to be calibrated to each country, however, and even this would not significantly improve their accuracy.

Therefore, in order to increase the accuracy of the measurement tools, the Agency, in close collaboration with the practitioner community, is developing and certifying country-level tools that will be more sensitive to local and regional variations and thus will better measure clients’"poverty status." Country-level tools are currently in place for ten countries, which represent about 20 percent of microenterprise development funding. This number could increase slightly in the coming month or two. Countries for which country-level tools are available will implement those tools in FY 2007. In the coming year, country-level tools will be developed for additional countries where USAID has significant levels of microenterprise funding. These additional country-level tools will be ready for implementation in FY 2008. In countries where country level tools will not be available until 2008, USAID Missions will direct their partners to use the loan proxy.

Although country-level tools will be more accurate than the international tools and thus would be preferable in all countries in which USAID funds microenterprise activities, under certain conditions, development or implementation of country-level tools is not possible or cost-effective.

Development of country-level tools requires national household data. In some cases, this is available from governments; in others, it is available from the World Bank. For countries where this data is not available from either source, it must be collected in order to develop the tool.

In areas where the collection of household data is precluded because of active conflict and high security risks, and/or areas where logistical conditions (such as highly mobile populations) are not conducive to household data collection, implementing institutions will continue to use the established loan size proxy to measure their clients’"poverty status."

In countries where a USAID mission's total microenterprise funding is less than $1 million, and for implementing institutions that receive less than $100,000 in microenterprise funding, the costs of developing a country-level tool or implementing any survey tool are excessive in comparison to the overall size of the program. In these situations, implementing institutions will also continue to use the loan size proxy.

After consultation with the microenterprise development community, USAID has decided to allow practitioners flexibility in deciding whether to apply the country-level poverty measurement tools to incoming clients, current clients or both. 
In FY 06, the Agency has allocated $1 million for training, establishing a “"Help Desk"” to answer questions about implementing the tools and to perform audits to ensure the accuracy of the tools as they are applied by implementing institutions.

USAID will begin training microenterprise practitioners and implementers on the poverty measurement tools in January 2007. The first training will be in Washington, D.C. for all network and consulting firm partners who will be able to provide guidance and assistance to their field partners. In the following months, at least two regional Training of Trainers events will be held, allowing field-based networks, consultants and direct implementers to be trained and extend the knowledge to other field-based partners.

Further guidance will be provided as experience with the poverty measurement tools and reporting continues. Especially in this first year of implementation, all parties have much to learn from each other about the ease of use, accuracy, reporting and results of these tools. The office of Microenterprise Development looks forward to a continued open dialogue on poverty measurement tools and to improving practice in understanding our market, clients and beneficiaries.

For questions or clarification, please contact the Help Desk at pathelp@iris.umd.edu or Evelyn Stark at estark@usaid.gov .

Sincerely,
Tim Mahoney
Director
Office of Poverty Reduction


October/November 2006 Update

During October 2006 the IRIS team finished formulating the survey questions and layout for each of the 12 country-specific tools under development. In addition to the survey questionnaires, IRIS created the data entry templates and accompanying sub-routines for calculating the percentage of very poor clients. All twelve country-specific poverty assessment tools and data entry templates were submitted to USAID for the certification process, along with the final report for the project.

The original Developing Poverty Assessment Tools project (PAT I) officially ended on October 31, 2006. To continue this important work, the IRIS Center was contracted by USAID via two separate funding mechanisms. Under AMAP (PAT II), IRIS will develop additional country-level tools to be submitted for certification, and will also provide a Help Desk specifically targeted to those organizations required to implement a poverty assessment tool in order to satisfy USAID reporting requirements. As part of the FIELD-LWA project, IRIS will provide regional trainings on the use of the PATs. These trainings will take place in Washington, DC, Africa, Asia and Latin America. More information on these trainings will be posted as it becomes available.

On November 2, 2006, USAID issued an update on the use of the poverty assessment tools. This update can be found at News and Events 2006 page.

Other tasks by the IRIS team included contacting national statistical agencies to obtain the data needed to develop the new tools, updating the PAT implementation manual to be used by practitioners, and working with USAID in designing the next phase of the project.


August/September 2006 Update

On August 8-10, 2006, IRIS hosted a Speaker's Corner on Poverty Assessment Tools. The e-conference focused on the practicality of Poverty Assessment Tools, practitioners'’ current experience in measuring poverty, the utility of poverty tools for practitioners, and how the tools can be implemented in practice. For more information on the Speaker's Corner, go to: http://www.microlinks.org/ev.php?ID=12247_201&ID2=DO_COMMUNITY

On August 30, 2006, an announcement of the USAID Tool Certification Process was issued by the Microenterprise Development Office of USAID. Those institutions with country-level tools to be submitted for possible certification were given the certification guidelines and asked to submit their tools by September 30, 2006. Following the completion of the first round of tool certification, the criteria will be posted on www.povertytools.org and on www.microlinks.org . Poverty Tools certification will be on a rolling basis thereafter. For the full announcement, see: News and Events 2004 page.

Using the findings from the field test for practicality, IRIS continued to revise its national-level tools.  After impractical indicators were dropped, the IRIS team ran regressions to re-constitute the 12 national-level, poverty assessment tools. After excluding the impractical indicators, the data analysts on the IRIS team ran statistical regressions for the eight LSMS and four field test countries to determine which indicators were both accurate and practical. The list of indicators selected for each of the 12 countries was submitted to USAID on September 16, 2006. The team then began to formulate the survey questions and layout for each country-specific tool. In addition to the survey questionnaires, IRIS began to create the data entry templates and accompanying sub-routines for calculating the percentage of very poor clients. By the end of October, all twelve country-specific poverty assessment tools and data entry templates will be completed and submitted to USAID for the certification process.

On September 16, 2006, the IRIS team sent to USAID its draft Final Report for review. The final version is due at the end of the project, on October 31, 2006.


June/July 2006 Update

After receiving reports from the grantees involved in the practicality testing, IRIS synthesized the findings into a Practicality Report for USAID. The report focuses on practicality concerns in regards to two main areas: the tool implementation process and determining appropriate poverty indicators.  Judgments on practicality were made using input from grantees' opinions and observations, notes taken in the field by IRIS employees, and commentary contributed by other observers (such as members of the SEEP Poverty Outreach Working Group-POWG).  Issues discussed include survey methodology, sampling, participant and staff incentives, costs, data entry procedures and considerations in selecting suitable indicators. The testing identified potential complications in various aspects of the implementation process and indicators that revealed respondents’ vulnerabilities, which could provoke them to provide inaccurate answers. 

After excluding the impractical indicators, the data analysts on the IRIS team began running statistical regressions for the eight LSMS and four field test countries to determine which indicators were both accurate and practical. Once this round of analysis is completed, the team will then decide upon proper formulation for each survey question. By the end of October, all twelve country-specific poverty assessment tools will be completed and submitted to USAID for the certification process.

The letter to the microenterprise community clarifying some of the misconceptions about the congressional legislation was further disseminated via listservs and websites.

On July 27th, 2006, Jacqueline Schafer from the Bureau for Economic Growth Agriculture and Trade at USAID testified before the House Subcommittee on Africa, Global Human Rights and International Operations regarding USAID's progress in implementing the Microenterprise Results and Accountability Act of 2004.  In regards to the development of poverty assessment tools, Ms. Schafer stated that USAID completed work on the development of at least two new tools to measure the poverty status of clients of USAID-assisted microenterprise institutions and it was currently collaborating with partners to develop country-specific tools that may achieve greater accuracy.  To read the full text of Ms. Schafer's testimony, click on the following link: http://www.microlinks.org/ev_en.php?ID=8899_201&ID2=DO_TOPIC.


USAID Announces Tool Certification Process

USAID's office of Microenterprise Development announces that it is seeking country level poverty tools for certification. The Certification Criteria will be released on September 6th to those institutions who will be submitting country level tools for certification. Please contact Evelyn Stark before September 6 in order to receive the certification criteria. Tools will be reviewed by a certification team by September 30, 2006 and applicants notified immediately thereafter.  Please note: following this initial round of tool certification, the criteria will be posted on www.povertytools.org and on www.microlinks.org . Poverty Tools certification will be on a rolling basis thereafter.  USAID reserves the right to revise certification criteria and processes as the poverty measurement field evolves.


Practitioner Update

Read the letter to practitioners by Alex Counts, Susy Cheston, Joanne Carter, and Kate McKee about the progress and outlook for the implementation of poverty assessment tools. Read the minutes of the latest practitioner update, organized on May 11, 2006, by the Poverty Outreach Working Group of the SEEP Network.


April/May 2006 Update

The “"Tools Team" set up by representatives of the microenterprise community in February to assist USAID in defining tool certification criteria met on April 6. Team members included practitioners and experts in survey methodology, and their input and feedback will be used by USAID in the development of the certification criteria. The “"Buzz Team" crafted a letter to the microenterprise community that clarifies some of the misconceptions about the Congressional legislation calling for poverty measurement tools. The writers of the letter represent three sectors of the microenterprise development community: U.S.-based practitioner networks, U.S.-based microenterprise development advocates, and USAID. The letter can be accessed here. Concurrently, the “"Congressional Team"” has been crafting a letter to present to Congress, with the intention of updating Congress on the status of the project and more clearly defining some of the requirements stipulated in the legislation.

In April 2006, a member of the IRIS team visited three practicality grantee organizations in Cambodia , India and Sri Lanka. The purpose of the visits was to interview the implementation team from each organization and get detailed feedback about the process. During this time period, most of the 14 organizations testing the draft poverty assessment tools in the field submitted their final report to IRIS. The draft Practicality Report, summarizing the findings from the practicality testing, will be presented by IRIS to USAID in mid-June.

The SEEP Poverty Outreach Working Group (POWG) met on May 11th to hear an update on the Developing Poverty Assessment Tools Project. The update focused primarily on the preliminary results from the practicality testing. The main points of that update were:

  • International or multi-country poverty tools are not accurate enough, so country-specific tools must be developed and updated every 3-7 years (depending on economic growth).
  • Three methodologies were tested for practicality. Intake is easiest, but should only be done after client knows she or he is getting a loan or other service. Ongoing Monitoring can be convenient, but privacy during interview must be ensured if done after or during group meetings. Household Survey is more reliable for some indicators, due to direct observation, but logistically much more difficult and costly.
  • Incentives are very important—for the management, staff and clients—to ensure that poverty assessment data is collected efficiently and accurately.
  • It is important to conduct the interview in private, without any observers, to limit external bias.
  • There are tradeoffs to using external interviewers: can eliminate some of the staff bias, but interviewers will not know the program or clients, which can make them less effective as interviewers. In any case, project management needs to be done by current staff.
  • Sufficiently-trained staff is needed to carry out sampling and data processing tasks.
  • Procedural manual is not enough. A help desk is needed to assist those implementing the tools.
  • Introduction of the survey is extremely important to build rapport with clients.
  • Surveys tested in the field took around 8-12 minutes, on average.
  • Read the minutes of the meeting here.

February/March 2006 Update

In February 2006, a member of the IRIS team visited three practicality grantee organizations in Kenya and Tanzania , and in April another team member will visit three other grantees in Cambodia, Sri Lanka and India. The purpose of the visits is to interview the implementation team from each organization and get detailed feedback about the process. During this time period, most of the 14 organizations testing the draft poverty assessment tools in the field will have completed their implementation, and many have already submitted the first draft of their final report to IRIS.

The construction and testing of two international tools to determine the accuracy implications of trying to use the same tool in many countries was completed. The results show that country-specific tools tend to be much more accurate than the international tools (read the results [PDF:107KB]. On that basis, IRIS concluded that attempting to use the same tool in various countries yields unacceptable accuracy results—even if these countries have comparable income levels. Thus, IRIS recommended that a poverty assessment tool be developed, tested and regularly updated for each specific country receiving USAID ME funding.

The implications of these findings on tool creation and the necessary next steps were discussed by members of the Microenterprise community at a meeting on February 15, 2006 (read the overview [PDF:27KB] of the meeting).

The next meeting of SEEP POWG is tentatively being scheduled for May in order to update the Microenterprise community on the status of the Developing Poverty Assessment Tools project, including preliminary results from the practicality tests and progress toward tool development.

 

 

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