Online Portal Helps AKAM Consolidate Client Poverty Data Across its Network >


Written by the AKAM Market Insights Team

For more than 60 years, various agencies of the Aga Khan Development Network (AKDN) have offered microfinance services through integrated development programmes and self-standing microfinance institutions. In 2005, these programmes were brought together under the Aga Khan Agency for Microfinance (AKAM). AKAM is present in Afghanistan, Kyrgyz Republic, Pakistan, Tajikistan, Egypt, Syria, Burkina Faso, Côte d'Ivoire, Mali, and Madagascar. The underlying objectives of AKAM are to reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion. AKAM does this by delivering a full range of cost-effective, client-centered financial products and services to poor and low-income households and small businesses.  As of 2015, AKAM served more than 600,000 savings and credit clients with $230 million in loans outstanding.

A significant part of AKAM’s lending activities are directed to social sectors, including housing, education and health. These loans have a direct impact on clients as they meet their day-to-day needs, and allow AKAM to have an impact on the quality of life of the poor.

Loans for income generating activities represent the largest proportion of loans provided by AKAM entities. These loans cover a large spectrum of sectors such as livestock, planting, trading and production.  They are designed to reflect the cash-flows from these sectors, and to fit clients’ needs as closely as possible.

In addition to its main microfinance activities, AKAM supports small and medium enterprises (SME) to create jobs or stimulate increased economic activity. 

Photo Credit: AKDN

1. When did your organization start using the PPI, and why? What was the need you were hoping to address? 

AKAM adopted the PPI across its network in 2014 to assess poverty outreach and changes in its clients’ poverty levels over time. AKAM decided to use the PPI because it is a simple way to measure our poverty outreach based on the likelihoods that our client households have expenditures below a given poverty line. This data can then be used to monitor poverty outreach and changes in poverty levels of clients over time. The 10 questions link well to AKDN’s Quality of Life (QoL) framework as the questions cover aspects of the QoL domains.

2. How does your organization use the PPI? To measure poverty outreach? To improve social performance (targeting or product/service design)? To track changes?

Nine of the ten AKAM entities are using the PPI. They are all currently using the PPI to measure their poverty outreach. They also use the PPI to segment the client base by poverty level, identify needs and characteristics that are unique to each segment, and use that information to design products and services that are appropriate. Some of the MFIs use the PPI to track the change in the poverty levels of their clients across multiple loan cycles and they may use PPI to actually target or select clients in the future.  AKAM collects data from the MFIs periodically to analyze its overall poverty outreach across these countries. 

3. Does your organization collect PPI data directly from households, or do you get PPI data reported to you from partners/investees?

All of the organizations capture PPI data through their in-person interactions with their clients.

4. What did PPI data tell you that you didn’t already know? What actions has your organization taken as a result of what you've learned from the PPI data? For example, have you made changes to your product offerings, your client base, or your business model? Or chosen to invest or partner with organizations differently?

Overall, having PPI data from multiple institutions has allowed AKAM to report on poverty outreach across its network. 

Collection of PPI data has assisted AKAM’s MFIs to monitor the poverty status of clients, enhance its understanding of clients’ financial needs, the type of products and services that suit their status and needs. Besides this, it has enabled them to analyze loan repayments and introduction of new products by clients’ poverty levels and determine the effectiveness of its existing offerings. Moreover, using PPI has allowed us to measure the time it takes different client segments to graduate from poverty, and gain insights on what might facilitate their move out of poverty faster. 

5. Is the PPI helping you to achieve your goals? What impact do you think PPI has had on your organization and/or its beneficiaries? How many people do you think have benefited from your organization’s use of the PPI?

PPI data has been useful in identifying the clients that are most likely to be poor or vulnerable to poverty. By integrating this objective poverty data into the banks’ product development process, we are much better positioned to offer more useful financial services in high potential/priority geographies. Overall, PPI helps us to observe whether our mission to serve vulnerable people is being achieved and we now have an understanding of our client base, which is extremely important.

6. Describe the logistics of collecting and using the PPI at your organization. This could include what data collection platform you use, who does the data collection, whether data is collected via sample or census, how many households you collect PPI data on, whether data collection is integrated into operations, how frequently data is collected, who does the data analysis, and whether the PPI is used as part of a broader monitoring and evaluation strategy.

The process at each of AKAM’s MFIs is essentially the same. The ten PPI questions are part of the standard loan application, included on the first page of the financial analysis of the borrower. Loan Officers (LOs) collect PPI data during the client home visit, prior to each loan disbursement. They then enter it into the Monitoring, Evaluation, and Learning Database (MELD).

The MELD database is a business intelligence application which allows each MFI to capture and analyze client data to better understand and meet client needs by improving product offerings. The information is stored on a secure web portal.  The database was designed to provide a consolidated view of each MFI’s portfolio trends (both loan and deposit customers) and track changes in 'Quality of Life' of the clients. The database is directly linked to the Core Banking system, which does not have this analytical capability.

The system calculates the poverty likelihood for each client, which can be downloaded in Excel and analyzed further.  A Research and Product Development Associate at the Head Office performs this analysis and reports periodically to management on poverty rates per branch, product and other variables captured by the system including:

  1. Client personal information (a few fields are directly taken from the data available in Core Banking system)
  2. Education and literacy levels
  3. Income sources.

7. Describe the data analysis you conduct on PPI results and, if applicable, how you aggregate data from multiple investees/partners. Do you offer technical or other support to investees/partners on their use of PPI?

Technical support on implementing the PPI and development of the MELD database that stores and tracks client PPI scores has been provided to the individual MFIs by AKAM. AKAM reports annually on its client poverty outreach by country. We have used the PPI to segment clients in our client experience assessment and hope to be able to report on change in poverty levels of clients over time.  Based on these results, we will determine the next steps.

8. Discuss the difficulties you faced (or still face!) when using the PPI. How are you solving them?

The primary challenges AKAM and its partner MFIs have had with PPI include:

  1. Out-of-date scorecards, i.e. the PPI for Egypt is based on 2004 national survey data, have generated some concerns about data validity and accuracy related to age of the country’s PPI.
  2. Questions on the efficacy of using PPI to assess changes in poverty levels.
  3. Collection of PPI data from savings clients (who may not have as close a relationship with the staff as credit clients) has sometimes been perceived by them to be 'offensive' because of the nature of certain questions. FMFB savings officers changed their procedures and no longer collect PPI from every depositor, but only those who are happily willing to answer the PPI questions. 

9. Has the way your organization has used the PPI evolved, or does your organization have plans for it to evolve in the future? If so, why and how?

As an example, First Microfinance Bank Afghanistan is currently in the process of developing a new, more sophisticated and high resolution 'Client Outcome Management System', segmenting data by client characteristics, product features, and branches. This system’s analytical framework will leverage PPI data as one of a number of client-level indicators to track socio-economic impact in a more meaningful way for our institution, allowing us to align our products and services with client needs.

At the network level, AKAM is moving towards a digital strategy. We are struggling with how and when to collect PPI data when the financial transactions are only conducted via mobile phones. For now, we plan to collect PPI only where we still have a physical footprint for payment (and data) collection, but not yet where we are moving to purely digital financial services.

More about AKAM MFIs:

Thanks to the following AKAM MFIs for contributing to this post:

First Microfinance Foundation Egypt (FMFE) is committed to increasing financial inclusion and alleviating poverty by boosting socio-economic development within low-income communities. FMFE’s mission is closely tied to AKAM’s mission to affect demonstrable, measurable and lasting improvement of the quality of life of its clients by delivering appropriate financial services to diminish their vulnerability and enable financial, economic and social inclusion. The Foundation aims at providing easy access to a wide range of financial products and services in rural and urban areas to support clients in joining the mainstream financial system, becoming self-reliant and contributing to the improvement of their living standards.

In Kyrgyzstan, the Aga Khan Microfinance Programme was established in 2003 and formalized as First MicroFinance Company Kyrgyzstan (FMCC) in 2006. The sole shareholder is AKAM. First MicroFinance Company Kyrgyzstan operates 10 branches in Osh region and 3 in Naryn region with 208 staff members. The company’s mission is to provide easily accessible financial services to promote employment, facilitate entrepreneurship development and social mobilization of the population. Target clients include low-income, rural populations, primarily living in mountainous regions.

Founded in 2004, The First MicroFinance Bank, Afghanistan is part of AKAM. FMFB-A's vision is to be recognized as the leading microfinance services provider contributing to poverty alleviation and economic development through the provision of sustainable financial services primarily targeting micro/small businesses and households. The bank provides credit and deposit products to a wide range of clients including micro, small and medium enterprises along with commercial banking and international remittance services. FMFB-A’s values-based banking agenda focuses on providing affordable financial services that promote entrepreneurship, agriculture, incremental housing and clean energy in Afghanistan.