Women like Meher and Salimabi in the Indian state of Karnataka survive on less than US$3 a day while supporting their families. By using the Progress out of Poverty Index (PPI), microfinance institutions (MFIs) like Grameen Koota are empowering Meher, Salimabi, and other poor women in India to become financially independent and break from poverty.
Fifteen years ago, Meher’s husband passed away. Widowed with 6 children and living in a small, stone house, she began taking loans with local microfinance institutions to make up for the loss of her husband’s income. She became more self-sufficient as her children grew up and was able to fund her son’s vision of opening a small business. With the help of Grameen Koota, Meher consolidated multiple loans and provided for the rest of her children, who now help maintain the business’s daily operations.
Nearby, Salimabi and her husband worked hard to raise 7 children. Salimabi had the desire, but not the means, to lift her family from poverty. She took out her first loan with Grameen Koota to buy a sewing machine, then took a second loan to open a “petty shop” in her neighborhood. She managed the shop with her husband, selling groceries. Later, she took out loans to support her son’s dream of starting a local carpentry business. Today, Salimabi’s son is living on his own, and is helping to support her.
Worldwide, more than 2.5 billion people lack access to formal financial services. In India, a country of over 1 billion people, more than 650 million people don’t have access to banks and can’t set up a savings account. If these “unbanked” people have an idea for a small business, they cannot secure a loan to start it. If the crops they grow are wiped out in a flood, they have no insurance to help them buy new seeds. They cannot take out a loan for a house or to send their children to school.
These people often resort to borrowing from lenders who charge exorbitant interest rates. This traps borrowers in a cycle of indebtedness and prevents them from achieving their full potential.
Grameen Koota offers an alternative. It provides access to financial services for low-income women in India, helping them raise their standards of living and become financially independent.
Grameen Koota is using the Progress out of Poverty Index (PPI), a tool designed by the Grameen Foundation, a Cisco nonprofit partner, to determine the success of its programs. Data gathered from the PPI helps organizations like Grameen Koota design products and services targeted to client segments, evaluate the effectiveness of those products and services, and track changes in poverty levels among their clients over time.
Members from local branch offices meet with the women on a regular basis to give advice and ensure that they are paying off their loans. Grameen Koota also offers clients other financial products, including health and life insurance, and loans to buy toilets, clean cook stoves, water purifiers, and solar lights.
Grameen Koota used the PPI to ask Meher and Salimabi 10 simple questions to determine their family’s poverty level against the national poverty line. Questions included “How many household members are 17 years old or younger?” and “What is the education level of the male head/spouse?”
With the results, Grameen Koota was able to provide Meher with income-generating loans, which she used to help her son start a stone quarry business. As one of Grameen Koota’s earliest borrowers, Meher has never missed a payment and is living in her own house. Salimabi not only used an income-generating loan to open her family’s grocery store, but also availed herself of other Grameen Koota products to make improvements and repairs to her house, including a clean water connection system.
Grameen Koota holds free client education workshops on topics such as health, sanitation, HIV/AIDS awareness, nutrition, family planning, business planning, and financial literacy. Meher and Salimabi have attended financial education workshops to learn more about budgeting, savings, business planning, and the loan process.
Grameen Koota now has over 220 branch offices in three states in India, which serve over 650,000 low-income women and their families. Grameen Koota has a goal of helping 2 million low-income households with a growing number of services and products by 2020. At its core, giving people access to banks and financial services is about equity and helping them move out of poverty, so their success doesn’t depend on the circumstances into which they are born and live.
By using data collected from the PPI and working with the government and businesses, Grameen Koota has been able to measure and validate its poverty outreach efforts; design and roll-out new product offerings like clean cook stoves, water purification systems, sanitation systems; assess the performance of products and services; and, track client poverty levels over time. The PPI has been a key tool in helping Grameen Koota achieve its mission of serving underserved populations and being a sustainable provider of financial services to the poor.