Learning more about microfinance beneficiaries in Peru

More attention has been paid to the finances of microfinance institutions than their social performance. Microfinance institutions report that some clients – such as poor women with young children – drop out of schemes and find it hard to repay loans. In Peru new forms of assessment are helping microfinance managers to better understand their clients.

A paper from the Imp-Act programme based at the Institute of Development Studies, UK reports on how three Peruvian microfinance institutions (MFIs) have tried to develop ways to measure their social impact. Qualitative in-depth individual interview protocol (QUIP) studies were carried out to investigate clients’ enterprises, their relationship with their lending group, the effect that membership had on their households, and their confidence and ability to provide leadership for their communities.

Each of the institutions studied offers credit, savings and either offers training services or is directly linked to organisations that provide training. The methods of the MFIs differ but almost all clients are middle-aged women, formed into groups of 20-30, who meet about once a month and who are obliged to save a substantial proportion of the credit offered in each lending cycle.

Many respondents said they valued membership of groups, had made friends and had incorporated values of solidarity and responsibility into their daily lives. Women said they appreciated having a forum in which to share their concerns and aspirations as business women, wives and mothers. Many report their lives have been improved by the possibility to invest in education, improve their houses and, in some cases, have a better diet.

However, researchers also found that:

• One in six respondents had become worse off as a result of group membership.
• Kinship obligations often force women to spend loans for consumption purposes.
• Ten percent had left their groups and eighteen percent were thinking of doing so.
• Departing clients were dissatisfied with the way the group was run or had conflicts with other members.
• Almost a quarter experienced ill health, with negative effects on their businesses.
• Members with more kinship ties have more power: this can lead to abuse of power and make it hard for younger women to be accepted into established groups.

The author recommends that MFIs:

• tailor programmes to meet the needs of younger clients and offer them childcare so they have more time to work
• recognise that government structural adjustment programmes put pressure on women to provide for health services in the absence of state support
• understand how poor health causes women to leave lending schemes or leads to neglect of enterprises
• support improved access to cheap and effective health services for female clients
• undertake research to find out to what extent participation in microenterprise schemes leads to new forms of social organisation and greater decision-making power.

Source(s):
‘Assessing the social performance of microfinance using the QUIP: findings from Huancayo, Chimbote and Cajamarca, Peru’, Action Research Programme, Working Paper No. 10, by Katie Wright-Revolledo, August 2004 Full document.

Funded by: Ford Foundation

id21 Research Highlight: 29 March 2006

Further Information:
Katie Wright-Revolledo
INTRAC
P.O. Box 563
Oxford OX2 6RZ
UK

Tel: +44 (0)1865 201851
Fax: +44 (0)1865 201852
Contact the contributor: kwright-revolledo@intrac.org, k.e.wright-revolledo@bath.ac.uk

INTRAC

Imp-Act
Institute of Development Studies
University of Sussex
Brighton BN1 9RE, UK

Tel: +44 (0) 1273 873733
Fax: +44 (0) 1273 621202/691647
Contact the contributor: Imp-Act@ids.ac.uk

Imp-Act, UK

Other related links:
'Debt from microfinance traps Bolivia’s poorest'

'Testing the impacts of microfinance on women'

'Realising the potential of microfinance, id21 insights 51'

Credit Bureaus and the Rural Microfinance Sector: Peru, Guatemala and Bolivia

ProMujer Peru: Microfinance and Poverty Case Study