Evidence on microcredit for the ultra-poor: GSDRC Helpdesk Research Report
Conventional microcredit models can be adapted to meet the needs of the ultra-poor, across the following areas: identifying and removing barriers to participation; monitoring; flexible loan conditions; supervision, training and support; linking economic strengthening with other services; and providing a ladder of financial services. Microfinance institutions (MFIs) face trade-offs between pursuing profit and reaching the poorest; some programmes serving the poorest may not be financially sustainable without additional support.
A number of ‘graduation programmes’ aim to bridge traditional re-distribution schemes and conventional microfinance programmes. They help participants to graduate to using mainstream microfinance services, via the transfer of income-generating assets, food aid, health services and skills training. There is a growing evidence base on the impact of these types of programmes.
This brief report is organised in four sections:
- it summarises evidence on the impact of microcredit for the ultra-poor
- it presents findings on supply-side design of microcredit for the ultra-poor
- it focuses on apex funds for the ultra-poor
- it summarises evidence on the approach to graduating the ultra-poor into microcredit