Note from Peru: Developing Poverty Assessment Tools

“Despite Peru’s ongoing political instability and the general strike on July 14, 2004, poverty assessment tool survey work there has turned out to be extremely promising, and will soon provide the second country database for developing poverty assessment tools.” So begins this Note from Peru, submitted by Julia Johannsen of the IRIS Center, whose team tested poverty assessment tools for microenterprise practitioners.

 

The 2003 amendment to the Microenterprise for Self-Reliance Act mandated the development of poverty assessment tools to determine the number of very poor beneficiaries of USAID microenterprise funding. USAID’s Microenterprise Development (MD) Team is collaborating with the University of Maryland’s Center for Institutional Reform and the Informal Sector (IRIS) to develop and field test such tools. Field tests will be conducted in a two-step process throughout 2004 and 2005.

 

In the first phase of testing, tests of accuracy, households in Bangladesh, Uganda, Peru and Kazakhstan—one country in each of the four main USAID regions—are being surveyed to test the predictive capacity of a variety of poverty measurement indicators. In the second phase of testing, tests of practicality, local microenterprise practitioners will apply the selected tools to gather information about a variety of criteria, especially cost and ease of implementation. Testers utilize a carefully developed composite questionnaire that includes indicators contributed by practitioners and other members of the microenterprise community. Successful work in Bangladesh has provided the first country database; the Peru field tests will provide the second.

 

Ms. Johannsen’s experience with testing in Peru highlights the challenges of accurately measuring poverty in a politically unstable country encompassing diverse regions and problems faced by the rural and urban poor. Some highlights of her experience:

 

“Sampling and training for the Peru accuracy test began in May 2004. With additional funding from CGAP, IRIS and the Peruvian survey firm Instituto Cuanto conducted a 2000-household survey, 1200 of which are client households sampled across a range of different types of financial institutions in different parts of the country. Included among the financial institutions are two rural banks, two local cooperatives, a national NGO, and a social Edpyme bank that is transforming into a commercial bank. The team also conducted an 800-household, nationally representative sample. Household data collection lasted until mid-August 2004.

 

“Given Peru’s current political instability, convincing banks to share their client information and clients to describe their monetary transactions has been challenging. For example, Instituto Cuanto highlighted the questionnaire section on voluntary savings and informal lending as critical for Peru. The high inflation of the late 1980s under President Alan Garcia resulted in the complete loss of savings and pensions for hundreds of thousands of Peruvians, who consequently do not trust banks and politicians. Succeeding governments have not restored this trust. For this reason, every time political instability and corruption scandals shake the country, Peruvians are reluctant to answer survey questions regarding personal savings and lending. We therefore moved this questionnaire section to the very end of the interview, thereby succeeding in capturing information vital to designing and reporting on microfinance programs.

 

“For the same reason, we did not ask for the names of remittance recipients, thereby avoiding humiliation and lack of trust on the part of respondents. We did request a differentiation between the possible remittance recipients of each household. Respondents could use vague, descriptive designations, such as, ‘my uncle in Huanuco,’ or ‘my oldest brother in Bolivia.’

 

“Peru’s diverse climatic and sociocultural settings required extensive survey adjustments. Particularly, the division of the country into coastal, highland, and jungle regions necessitated the adaptation of questions about food [which form one component of the survey].

 

“For the most inferior foods, a regional distinction between urban (remaining fruits and vegetables at the market place or the inferior parts of chicken and fish) and rural (remaining tubers and other vegetables after harvest) was necessary. It is an unwritten law in Peru that landlords do not clean their fields completely after harvest in order to leave something for the rural poor. While these criteria apply perfectly to the coastal region, we added foods that are typical meals of the very poor in the Andes and jungle regions.

 

“Food aid programs are essential in Peru and are handled as separate questionnaire sections in Peru’s national living standard surveys. However, in order to maintain the strictest possible comparability of our questionnaires across the four countries selected for poverty assessment tool testing, we decided not to structurally modify the questionnaire. Instead, food aid programs were incorporated into questions about weekly expenditures on food consumed outside the residence and a gift question for each food item.”

 

When the last enumerator teams finished their work at the end of August, Ms. Johannsen conducted a two-day debrief with the Instituto Cuanto’s staff. Ms. Johansen held group discussions and administered a survey to evaluate the composite questionairre and specific indicators, the results of which are currently being assessed.

 

While the poverty tool development and testing is ongoing, important lessons have already been learned that should result in highly accurate and cost-effective tools. Practicality tests are scheduled to begin in the fall of 2004. Completed and certified tools will be implemented beginning in 2005.

 

For more information on the poverty assessment tools project, visit http://www.povertytools.org.