Please describe the goal of your initiative; outline what you are trying to achieve
The challenge is to eliminate poverty; not alleviate it, but eliminate it. This "traffic light" approach has the potential to revolutionize how organizations and governments attack poverty due to the following innovations: i) it recognizes that poverty affects different families in different ways and, hence, that poverty elimination requires individualized solutions; ii) program beneficiaries are the architects of and protagonists in their own personalized anti-poverty programs; iii) the approach leverages village banking programs and the group support and peer pressure they provide; iv) it doesn't burden government budgets; the resources needed to address families' poverty-related problems are generated by the program beneficiaries themselves.
Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)
The lack of affordable financial products tailored to the needs of underserved and excluded communities,, Other (Please describe below).
If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
Lack of information about client needs and means of empowering clients to use microfinance to overcome poverty.
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?
Fundación Paraguaya is using this “traffic light” tool as part of the innovative poverty elimination program which we run through our women’s village banking program. In village banking, we serve 37,000 low-income women an estimated 52% of whom live in extreme poverty. They are organized into xxxx village banks in urban and rural areas, including xx banks in indigenous communities. Since 2008, we have run progressively larger pilots of our “traffic light” tool. In 2011, the pilot included 10,000 low-income women. Thanks to the tool, which gave disadvantaged women new insight into their poverty-related problems and the FP, detailed, low-cost information on how best to assist each family, 6400 families were able to overcome poverty, as measured by family income above the national poverty line.
Could your solution work in other geographies or regions? If so, where?
Yes! This solution would work for any MFI anywhere in the world whose approach was client-centered and whose mission went beyond “financial inclusion” to include poverty elimination. In this regard, the “traffic light” survey can be easily adapted in order to show clients pictures of situations of extreme poverty, poverty and non-poverty that are representative of how these situations look in their particular countries/regions. By the same token, the information revealed by the tool would give any MFI anywhere in the world the kind of detailed, family-by-family data it needs – at an affordable cost to the MFI – to develop and provide the types of products and services that will be most effective in enabling their clients in underserved and impoverished communities to overcome poverty.
If your solution is dramatically successful, how will things be different in 10 years?
In 10 years, this solution will be have been adopted by other women’s village banking programs and other governments around the world. Not only will beneficiaries have financial services, but they will have overcome, or be on a clear path to overcoming, poverty.
The following is a conservative estimate of the solution’s 10-year impact, assuming that each beneficiary family has 5 family members:
-- 5 MFIs of about the same size as the FP in 10 years (100,000 women village banking clients each) will apply our solution (5 x 5 x 100,000 = 2,500,000)
-- 5 governments will apply our solution to 100,000 families each (5 x 5 x 100,000 = 2,500,000)
Total impact: 5,000,000 people out of poverty.
What will have had to have changed to make this happen?
To make this happen, MFIs’ mounting interest in eliminating poverty, rather than just providing financial inclusion, will have to continue to grow. We believe that competitive pressures will encourage MFI’s to move in this direction, since clients will seek programs that offer them the services that best serve their needs.
At the same time, Fundacion Paraguaya will need to provide strong evidence that our solution works. For this reason, we have applied for financing to conduct an impact evaluation of our “traffic light” approach. We believe our funding prospects are good, since many donors realize the social, environmental and security imperatives for finding effective solutions to world poverty.
What has been the impact of your solution to date?
Our 2011 pilot enabled 6400 families (32,000 people) to overcome poverty, increasing family income to above the national poverty line.
At the same time, we have developed a number of additional products and services to assist clients and their families in addressing the poverty-related problems identified by their respective “traffic lights.” These include: home improvement microloans; microcredits to “legalize” businesses and establish ownership of land and other assets; microfranchises for: the sale of eyeglasses (with our partner, Vision Spring), over-the-counter pharmaceutical products and basic foodstuffs; loans to community water authorities; microcredits for education (with our partner, Vittana); youth savings clubs (with our partner, Aflatoun); youth village banking groups; group health insurance; client life insurance; and group discounts via a client club, among others. With these tools, clients can transform their "traffic lights" from red to yellow to green.
What is your projected impact over the next five years?
In Paraguay, we will gradually scale up our "traffic light" approach to cover all of our village bank clients (in 5 years, at least 50,000 vs. 37,000 today.) Thus, our solution will have 250,000 direct beneficiaries (50,000 x 5).
Outside of Paraguay, we expect that other MF programs will be testing our solution, with 3 programs running pilots of 5,000 clients each (3 x 5 x 5,000), with an additional 75,000 direct beneficiaries.
Total direct beneficiaries who have overcome poverty on or a clear path to do so: 325,000.
What barriers might hinder the success of your project? How do you plan to overcome them?
Barrier #1: Increasing need for qualified, dedicated village bank “advisors” to satisfy program demand in excluded and underserved communities. Solution: Recruit among successful village bank clients in nearby communities, train thoroughly, provide performance incentives.
Barrier #2: Need for more trainers to train clients and family members in occupational skills such as cell phone and motorcycle repair, sanitary food preparation & handling, etc. Solution: Enlist successful microfinance clients from nearby communities.
Barrier #3: Need for more tablets for “advisors” administering traffic light surveys to streamline data collection and keep program costs low. Solution: Compete for prizes and awards.
Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact
Complete “traffic light” pilot currently underway, enabling 5,000 more women to raise family income above the nat'l poverty line
Now think bigger! Identify your 12-month impact milestone
Start impact evaluation of the “traffic light” approach to poverty elimination prior to scaling up on massive scale.