TRICKLE UP - MALI

CASE STUDY

DRAFT

6 SEPTEMBER 2007

SEEP NETWORK’S POVERTY OUTREACH WORKING GROUP

MF/MED APPROACHES TARGETING VERY POOR PEOPLE

Jan MaesSeptember 2007

TABLE OF CONTENTS

Executive Summary..............................................................................................................i1. Context.............................................................................................................................1

1.1. Country Socioeconomic and Poverty Data...............................................................11.2. Local context – target area........................................................................................2

2. Organizational Framework..............................................................................................82.1. International Organization........................................................................................82.2. Local organization..................................................................................................10

3. Description of “Very Poor” Target Group.....................................................................143.1. Individual and Household conditions.....................................................................143.2. Socioeconomic conditions......................................................................................15

4. Poverty Targeting and Assessment................................................................................174.1. Poverty measurement practices..............................................................................174.2. Available Poverty Data...........................................................................................184.3. Poverty Targeting...................................................................................................19

5. Products and Services....................................................................................................215.1. Financial Products..................................................................................................215.2. Microenterprise Development Services..................................................................235.3. Non-financial Services............................................................................................265.4. Design and Product Development:.........................................................................275.5. Implementation Process..........................................................................................30

6. Results 6.1. Method of measuring results......................................................................316.2. Impact.....................................................................................................................316.3. Cost Effectiveness and Sustainability.....................................................................32

Executive SummaryIn 2003, Trickle Up initiated a successful program in the northern Mali regions of Timbuktu and Gao that focuses on helping very poor people, primarily women (94%), start or expand income generating activities, by providing conditional seed capital, access to savings via savings group formation, as well as business training and counseling.Trickle Up has built and trained a network of more than 20 non-governmental organizations as partners, all local community development organizations in northern Mali. These local partners identify potential microentrepreneurs, provide market-oriented business training customized to low-literacy populations, administer seed capital, and evaluate the success of the businesses.

In less than four years, over 10,800 microentrepreneurs received seed capital grants in the amount of $100, and formed 430 business development savings fund (BDSF) groups, with 25 members each.

Trickle Up uses a two-step poverty targeting approach. Geographic targeting is the first step and programs are limited to the poorest regions of Mali: Timbuktu, Gao and Mopti. Within those regions, where very poor people are the majority, TU partner agencies use a participant selection tool, which focuses on three components:

- poverty- commitment/motivation- entrepreneurial ability

The poverty component scored each potential microentrepreneur on a set of locally relevant and easily verifiable poverty indicators: gender of microentrepreneur, disability, number of children, employment, school attendance of children, source of water for the household, and number of meals consumed each day.

In order to assist very poor people in engaging in profitable income generation activities, Trickle Up and its local partner NGOs offer microenterprise seed capital grants, microenterprise training, and training to local groups of Trickle Up participants in managing their own savings and loans. In addition to this “Trickle Up package’, local partner NGOs often provide microentrepreneurs also with additional programs or services, that might include capacity-building, health and hygiene, women’s empowerment, agricultural extension, natural resource management, savings and credit activities, literacy classes, artisanal skill development.

The seed capital grant is provided in two separate installments. The first installment (in the amount of $80 or $90) is provided immediately after a business plan has been prepared, and the second installment ($20 or $10) takes place after the entrepreneur completes a business report, at least three months since the first grant or after the business has at least gone through an entire business cycle, whichever is the longest period.

In order to receive the cash grant, participants need to meet a set of conditions, including:- To complete a full business training curriculum (see further for more

information);

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- To present a viable business plan and business report;- To invest seed capital grant in business assets only;- To contribute weekly savings of approximately $1.40 to Business Development

Savings Funds.

Trickle Up has found that very poor people, who struggle almost on a daily basis to make ends meet, have a very low savings capacity which often prevents them from saving a large enough lump sum to significantly change their income opportunities. Very poor people also typically lack any regular cash inflow, and therefore cannot afford the risks that come with a microloan. Trickle Up offers risk-free conditional seed capital in the form of $100 grants, buttressed by high-quality training and access to savings and other key services that are delivered by local community development organizations. This model is based on the hypothesis that a large portion of the poorest people are excluded from microcredit, whether self-excluded for fear of the risk, formally excluded because of MFIs’ rules, or geographically excluded by virtue of a simple lack of MFIs in the area. Further, Trickle Up posits that this group can ascend to the first rung of the microfinance ladder with a unique package of risk-free seed capital, training, savings and other services. TU fills a niche that remains unnoticed and underserved, yet that represents a major proportion of the world’s poor.

In order to build their microenterprises and assets, TU entrepreneurs are required to join a Business Development Savings Fund (BDSF) as soon as they receive their seed capital grant. Each group is made up of 25 Trickle Up entrepreneurs selected by a local NGO program partner, all starting their businesses at the same time and in the same village. Mandatory weekly contributions start at approximately $1.40. These funds can be used for business purposes only. Through the BDSF, women do not only improve their financial security, but they also have access to additional capital should they need to take out an individual business loan.

In addition, members can also request a loan. Individual loans for group members are at 5% interest rate. For some groups, non-members are also eligible to receive loans (for business ventures) at a rate of 10%. Some groups also invest some of these savings in high-profit group ventures, such as purchasing and selling grains, farm animals, and produce.

Trickle Up’s mission is to empower people living on less than a dollar a day to take the first steps out of poverty by providing them with resources to build microenterprises for a better quality of life. Reaching very poor people is required by the Trickle Up mission and this is made very clear as part of the contract with its local partner agencies. At the same time, Trickle Up has in the past never been able to accurately and reliably measure the poverty of its program participants. In Mali (and other core TU countries), a poverty scorecard has been recently developed and will be field tested before the end of 2007. Trickle Up plans to use this poverty scorecard routinely not only to assess the poverty level of incoming program participants, but also to measure their movement out of poverty as the program progresses.

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Compared to microcredit programs, the Trickle Up approach appears less cost-effective. However, while TU continues to improve cost-efficiency through achieving larger economies of scale, it also strongly believes that assisting very poor in sustainably improving their livelihoods through microenterprise can only be achieved if sufficient assistance is provided (through intensive microenterprise training and seed capital) to move from below subsistence levels to economic self-reliance. Simply providing a loan to very poor people would not achieve this and might further worsen their livelihoods. On the other hand, Trickle Up is experimenting with new models to make its program more cost-effective. In Mali, Trickle Up supported savings groups are not only saving on a weekly basis to build up a loan fund, but each entrepreneur is also contributing a small amount each week (during three years) to provide a seed capital grant for a future microentrepreneur in her village.

SWOT Analysis:Strengths

1) Trickle Up has a very strong commitment to assist only very poor people with microenterprise support. This commitment is solidified in contractual agreements with its local partner NGOs.

2) Trickle Up actively targets very poor people, first by geographic targeting, followed by a poverty selection tool. Trickle Up is currently testing a poverty scorecard to better gauge participant poverty levels.

3) Trickle Up’s approach takes into account one of the biggest obstacles to move out of poverty for very poor people, i.e. their lack of access to capital and very low risk-taking ability which prevents them from taking a loan.

4) Unlike credit approaches, Trickle Up seed capital can significantly improve the living conditions of subsistence based households, improving their food security for instance by increasing their food production for own consumption.

5) The program does not only provide access to capital, but also trains people basic enterprise and financial literacy skills, assists people to form savings groups, and very importantly, gradually builds their self-confidence.

Weaknesses1) The TU model does not include financial self-sufficiency, which is the ultimate

aim of most microcredit programs. Trickle Up, however, is not a microfinance program, and argues that in order to take a lasting step out of poverty, very poor people need both training and seed capital to significantly improve their income opportunities, enabling them to cross the poverty line.

2) Seed capital grants might send the wrong signal by not allowing budding microentrepreneurs to truly understand the costs of doing business and perhaps by not providing a strong enough incentive to make the microenterprise a success (as they are not using their own hard earned capital). Both these phenomena occur rarely, however. Very poor people tend to take this once-in-a-lifetime opportunity very seriously, and even though the TU seed capital might be risk free, they still take on significant risks by complementing the grant with their own assets, for instance, or by foregoing other income opportunities (such as day labor) to work on their new microenterprises.

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3) Trickle Up’s approach by itself is not a sufficient solution in areas with undeveloped or saturated markets To be more effective , especially in remote rural areas. To be more effective under such conditions, Trickle Up is moving further towards making new markets more accessible to the poor, including value chain approaches.

Opportunities1) Trickle Up’s approach targets a niche market that is difficult to reach by both

savings-led and credit-led microfinance. The chronically poor, people with disabilities, people living with HIV/AIDS and other very vulnerable people have difficulty generating a steady cash flow, no matter how small the required amount to save or pay back a loan. Once their income activities take a jumpstart and remain sustainable, they will be in a much better position to graduate to savings and/or credit services.

2) Along the same lines, there are many opportunities for Trickle Up to partner with existing microfinance institutions who want to reach out to people who are poorer than their regular target clients. Trickle Up is already engaged in a few of such partnerships, where Trickle Up helps program participants graduate to microcredit. In Mali, a recent assessment of the microfinance players in the Northern regions, where Trickle Up operates, has been undertaken to investigate the feasibility of such ‘bridging’ strategies, where the most successful microentrepreneurs can access bigger loans than they could obtain from their BDSF.

Threats

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1. Context 1.1. Country Socioeconomic and Poverty Data

Table 1.1. Country Statistics1.1.1. National Currency FCFA

Amount Year1.1.2. Population (millions) 13.1 million 20041.1.3. Population density per square kilometre 10 20041.1.4. Percentage urban / rural population 30/70 20041.1.5. Inflation 4.0% 20041.1.5. Nominal Exchange Rate (current, X Currency per US$1) 208.71*2.8 20031.1.6. PPP Exchange rate 208.71 20031.1.7. HDI value 0.338 20041.1.8. HDI ranking 175 20041.1.9. GDP/Capita (PPP US$) 998 20041.1.10. Local currency equivalent of $1-a-day international poverty line ($1.08!)

225.412003

1.1.11. Population below national poverty line (%) 1 63.8% 20031.1.12. Population living below $1 a day (%) 72.3% 20041.1.13. Population living below $2 a day (%) 90.6% 20041.1.14. Population growth rate 2.9% 20041.1.15. Life expectancy 48.1% 20041.1.16. HIV prevalence (% ages 15-49) 1.7% 20051.1.17. Malaria cases (per 100,000 people)1.1.18. Population undernourished 28% 20031.1.19. Children underweight

1.1.20. Adult literacy Male

Female26.7%11.9%

2004

1.1.21. Net primary enrolment ratio Male

Female46%

2004

1.1.22. Net secondary enrolment ratioMale

FemaleN/A

1.1.23. Physicians per 100,000 people 8 2004

1.1.24. Health expenditures per capita2.8% of GDP

2004

1.1.25. Gender-related development index (GDI) rank 134 20041.1.26. Gender-related development index (GDI) value 0.329 2004

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1.2. Local context – target area

1.2.1. Briefly describe local socioeconomic conditions1.2.1.1. Geographic reference of location and size of populationMali, a landlocked country in West Africa that covers 1.2 million square kilometer, has an estimated population of 11.4 million, which is growing at 2.2% per year. The overall population density is only 10 people per square kilometer. Over 80% of its population is rural and 46% is under 15 years old. Almost 60% of Mali’s land area, corresponding to the three northern regions of Timbuktu, Gao and Kidal, is semi-arid or arid. Two of Africa's largest rivers, the 900-kilometre Senegal River and the 1 600-kilometre Niger River, flow through the country. In addition to fishing and dry season grazing areas, both rivers have vast floodplains where crops are cultivated; crops are also grown around permanent lakes and depressions.

1.2.1.2. Local population characteristics:.1.2.1.2.1. Ethnic groupsThere are five major ethnic groups within the Northern Provinces: (i) the Songhoi or Sonrhai, who are settled farmers along the Niger River; (ii) the Peuhl or Fulani, who are semi-nomadic or transhumanting pastoralists utilizing floodplain areas as dry season pastures; (iii) the Kel Tamacheq or Touareg; (iv) the Arabs or Maures, who are nomadic herders; and (v) the Bozo, who are semi-nomadic fishers on the Niger River. Relations between these groups are often tense because of competition for land and water.

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1.2.1.2.2. Most important economic activitiesMali's economy is based heavily on agriculture, which accounts for 40% of GDP, 75% of export earnings and 80% of employment. Its main crops are the traditional staple foods rice, millet and sorghum, with cotton as the main cash crop in the south. Crop production is dominated by smallholder subsistence farmers who sell only between 15% and 20% of their output. Pastoralist animal husbandry is an important source of livelihood in the north.Since its currency was devaluated in 1993, Mali's GDP has grown by an average of 5% to 6% per year. Inflation has been kept under control and the country has developed a comparative advantage, particularly with regard to livestock. Despite significant progress, socio-economic development remains constrained by the vulnerability of crop and livestock production to rainfall, a weak industrial sector, a large informal sector, weak human resources and the degradation of natural resources.

1.2.1.2.3. Cultural and religious backgroundMuslim 90%, Christian 1%, indigenous beliefs 9%

1.2.1.3. Natural resources, economic activities, markets, unemploymentMali is the third largest exporter of gold in Africa. Phosphate, kaolin, salt, and limestone are also mined. Subsistence farming, fishing and nomadic herding are most common livelihood activities in the North.

1.2.1.4. For rural areas only: most important crops and livestock activities, water supply (irrigation, rain fed), seasons and number of harvests, land availability, ownership patterns and contracts.

Crop-raising in the north is limited to the floodplains of the two rivers (Niger and Senegal) and to areas around permanent depressions and lakes. Soils are fragile, and infertile, and input use is low. Production is mainly increased by expanding planted areas; fallow periods are too short to restore fertility. There is considerable potential for irrigation along the Niger River, where improved water control could reduce the dependency to rainfall. The traditional crops of these areas – rice, millet, and sorghum – have potential in local, national and regional markets. • Livestock contributes 10% to 12% of GDP and 9% of 15% of export earnings. Mali exports large quantities of meat to Algeria, Côte d'Ivoire, Ghana, Mauritania and Senegal. Mopti is the main livestock-raising area, followed by Timbuctu, Gao and Kidal. Productivity is low, however, as a result of disease, poor husbandry practices and overgrazing. Animal health services are limited and the vaccination rate here is considerably lower than the national average. The degradation of rangelands and the diminution of water points have led herders to settle for longer periods around permanent water sources. Competition with farmers is a source of rising tension and the permanent presence of herds and flocks is degrading the rangelands near water sources.• Fishing is heavily dependent on the extent and duration of river flood regimes.

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Approximately 80% of national output is caught in the Mopti region. Although fishing is the traditional profession of the Bozo people, it is becoming a secondary activity since most Bozo are now involved in farming.

1.2.1.5. Occurrence of droughts, floods, natural disasters or conflictsDroughts and desertification are two major constraints. A desert locust plague ruined the harvest a few years ago. Herders have been forced increasingly to keep their herds and flocks near permanent water sources, which has resulted in tensions between pastoralists and other herders, and settled farmers. Conflicts in the north during the 1990s have also led to insecurity, which perpetuates chronic poverty.

Other recurring events cause significant fluctuations in the economic and prices of goods and services: drop in gold production, drop in the price of cotton, increase in oil prices and fluctuation of the US dollar vis-à-vis the euro/CFAF.

1.2.2. Describe government policies aimed at the very poor1.2.2.1. Social protection schemes by the government.Despite the Government’s and development partners’ concerted efforts, access to social services remains limited, particularly in the remote northern regions. In theory 67% of the population has access to a safe water source, but 66% of these are in disrepair. In Timbuktu, 79% of villages do not have access to a modern water source; in Gao, barely 10% have a borehole or modern well. Access to health services is also weaker in the north. Although Mali allocates over one quarter of its budget to education, enrolment remains low, particularly among rural children in the north. Girls are often taken out of school to help care for livestock.

1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination and affirmative action laws.N/A

1.2.2.3. Property and land rights.Family law favors men, and women are particularly vulnerable in cases of divorce, child custody, and inheritance rights, as well as in the general protection of civil rights. While the law gives women equal property rights, traditional practice and ignorance of the law prevent women, even educated women, from taking full advantage of their rights. Traditional practice discriminate against women in inheritance matters, and men inherit most of the family wealth. Hereditary servitude relationships continue to informally link different ethnic groups, particularly in the north. There is evidence that members of the Tamachek community continue to live in forced servitude and are deprived of civil liberties by members of other ethnic groups. Members of the black Tamachek community, often referred to by the pejorative label bellah, report on the continued existence of feudal slave-related practices in the country.

1.2.2.4. Local government and non-governmental development programs.

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The Malian Government’s Programme d’Appui aux Communes Rurales is a project that works to improve access to social services (education, health, clean water) and boost economic development. It provides grants ranging from $4,000 to $40,000 to local groups to support community-based projects.

NGO players: Freedom from Hunger, Solidarité-Unité-Coopération, Coordination régionale des ONG de Mopti, Mali Finance, Africare, among others. Note that they may not specifically work in Gao, SEAD’s target area.

1.2.2.5. OtherN/A

1.2.3. Brief profile of microfinance environment.1.2.3.1. List microfinance institutions (other than subject of case study) and other financial institutions/services accessible by the poor.

As of 2003, the microfinance sector in Mali comprises 41 networks with 752 local entities and a total membership of 614,000, covering close to one-third of all families in Mali. The sector comprises three subsectors: cooperatives with 70 percent of total outreach, so-called village banks (caisses villageoises) with 20 percent, and solidarity credit groups in the Grameen tradition with 10 percent. The subsectors are similar in operational terms, including joint liability. They differ with regard to savings in terms of total resources: 57 percent among the cooperatives, 39 percent among the village banks and 27 percent among the solidarity groups. The sector is highly concentrated: 88 percent of all deposits and 84 percent of all loans outstanding are in the cooperative subsector, and two-thirds of that in just two networks.

The two most common types of microfinance providers in the rural North are the caisses villageoises, and the credit cooperatives. For instance, two of the biggest credit cooperative networks in Mali, Nyésigiso and Kondo Jigima have a presence in Mopti and Timbuktu. The Nyèsigiso Network is a group of financial cooperatives made up of a central credit union and 11 ‘mother coops’, with 25 associated outlets in the rural areas. The regions of Timbuktu and Gao have the least coverage. There are no caisses villageoises and the two microfinance models, savings and credit cooperative and solidarity-based microcredit, only reach a fraction of the population.

1.2.3.3. Demand versus supply of microfinance services.The Mopti region has a microfinance penetration rate of 7%. The bulk of microfinance clients belong to caisses villageoises. The entire Timbuktu region counts slightly above 6,000 microfinance clients, which for a population estimated at 300,000 represents a penetration rate of less than 2%. Most of these clients are members of savings and credit cooperatives and solidarity based MFIs. The microfinance penetration rate in Gao is even worse, with less than 0.5% of the active population associated with an MFI or savings and loan cooperative.A recent study estimated that less than 2% of the demand for microcredit was met in the three regions where TU operates.

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1.2.3.4. Depth of microfinance outreach.Very poor people are rarely reached, except perhaps by the caisses villageoises, which are only present in Mopti.

1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the very poor.Nyesigiso credit union networks in Mali added Freedom from Hunger’s Credit and Savings with Education (CEE) to the products and services offered to their clients. Not sure if the CEE addition is implemented in any of the Northern regions of Mali. No other MF/MED initiatives other then TU known to reach the very poor in these regions.

1.2.4. Poverty1.2.4.1. Existing Poverty data and geographic areas of the country where extreme poverty is most concentrated. Include both urban and rural areas where extreme poverty dominates most. Include map and/or table with available poverty data (from national census, World Bank or UN surveys, participatory poverty assessments, etc.)

Mali is one of the world's poorest countries and an estimated 88% of the poor live in rural areas. Women are more affected by poverty than men; their access to health services is extremely precarious. Of women over 15 years of age, 80% are illiterate and cultural norms often limit their access to information, resources and participation in decision-making. Chronic hunger affects at least one fifth of the population and malnutrition is widespread.

The TU program targets Mali’s Northern rural regions of Timbuktu, Gao and Mopti. Despite their productive potential, communities in northern Mali are the poorest in the country. Poverty in the northern regions is characterized by environmental degradation, lack of infrastructure and chronic food deficits. The conflicts in the north that occurred during the 1990s have also led to insecurity, which perpetuates chronic poverty. The rural poor are especially vulnerable to the fragile environment; many are food insecure. With few assets or access to physical or financial resources, they depend on income-generating activities with low productivity. In addition, they have limited access to basic social services, primary health care, safe water, useable roads, electricity and communication services.

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1.2.4.2. Does the target area fall within these extreme poor regions?TU operates in three of the four regions with highest poverty incidence: Mopti, Timbuktu, and Gao. The choice to target Northern Mali was based not only on the fact that this region is the poorest of the country, but also the least served by microfinance (and other development) programs.

1.2.4.3. If known, what is the proportion of population in the target area living below $1-a-day and/or within bottom 50% of people living below the national poverty line?See table above. Mopti is the region with the highest incidence of extreme poverty (38.1%). Timbuktu also has a high rate of extreme poverty (26.4%), whereas Gao has a relatively low rate of extreme poverty (11.1%).

1.2.4.4. Main determinants of poverty.Despite their productive potential, communities in northern Mali are the poorest in the country. Poverty in the northern regions is characterized by environmental degradation, lack of infrastructure and chronic food deficits. The conflicts in the north that occurred during the 1990s have also led to insecurity, which perpetuates chronic poverty. The rural poor are especially vulnerable to the fragile environment; many are food insecure. With few assets or access to physical or financial resources, they depend on income-generating activities with low productivity. In addition, they havelimited access to basic social services, primary health care, safe water, useable roads, electricity and communication services.

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2. Organizational Framework2.1. International Organization

2.1.1. Name and type of the organization (INGO, multilateral agency, foundation, other)Trickle Up Program, US-based international NGO

2.1.2. Organizational background2.1.2.1. Mission and visionTrickle Up empowers people living on less than a dollar a day to take the first steps out of poverty, providing them with resources to build microenterprises for a better quality of life.

2.1.2.2. Brief historyTrickle down economics was a political selling point in 1979 and Glen and Mildred Robbins Leet weren’t buying it.  Frustrated that huge sums of money allocated to top levels of society never reached the world’s poorest, the Leets decided to reverse the equation — from the bottom-up.  In 1979, the Leets founded Trickle Up as an empowering response to global poverty.

Trickle Up outreach began when the founders traveled to one of the Caribbean’s poorest nations, Dominica.  The Leets recognized what other poverty alleviation programs were missing: that even the world’s lowest income people have entrepreneurial potential.  The model they created was simple, but effective. With the assistance of local agencies and $1000 of their own money, Glen and Mildred gave ten people grants of $100 to launch their own microenterprises. The Leets provided them with Trickle Up business plans and reports to track business expenses and earnings.  New business activities ranged from building blocks to selling eggs, jams, and school uniforms.  Some of those businesses are still operating today! Results were overwhelmingly positive in terms of quality of life improvements for our entrepreneurs.  Like this, the Trickle Up program was born. Twenty-nine years later, Trickle Up is a critical vehicle for social and financial empowerment.  Trickle Up has helped people start or expand over 150,000 businesses as a way out of poverty, affecting the lives of over half a million people.

1.1.2.3. Type of support: funding, capacity building, technical assistance, direct service provider, other

TU provides business training, seed capital grants and support to help people launch a microenterprise.  Trickle Up offers grants, not loans, to our entrepreneurs, because TU believes that this is the most appropriate way to assist the very poor to take a first step out of poverty, and considers very poor people unable or unwilling to obtain a microloan. 

2.1.3. Development intervention approach2.1.3.1. Primary target group and development focus

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TU supports very poor people, with a strong focus on women and people with disabilities.TU’s current geographic focus comprises West Africa (Mali and Burkina Faso), East Africa (Uganda and Ethiopia), South Asia (India and Nepal), and Central America (Guatemala and Nicaragua).TU’s primary development focus is microenterprise development for the very poor.

2.1.3.2. Specialized in MF/MED or multisectoralTU employs a grants-based MED approach to assist very poor households in implementing (expanding, improving, starting) a microenterprise, and also assists Trickle Up beneficiaries in managing their own savings groups.

2.1.3.3. MF/MED modelTU provides both enterprise development assistance (business training, facilitating access to markets…) and access to finance (through conditional seed capital grants, encouraging savings including formation of savings groups and access to microcredit).

2.1.3.4. Other sectorsTU works with local NGO partner agencies who implement this economic empowerment program alongside their own social services to assist the very poor in meeting basic needs.

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2.2. Local organization

2.2.1. Organizational development (S)

Trickle Up has built and trained a network of 20 non-governmental organizations as partners, all local community development organizations in northern Mali. These local partners identify potential entrepreneurs, provide market-oriented business training customized to low-literacy populations, administer seed capital, and evaluate the success of the businesses. Sometimes these local NGO partners also integrate TU’s microenterprise support package with their own social services and/or programs. These are the current local NGO partners of Trickle Up in Mali:

Association pour l’Appui au Développement Intégré (AADI)Agence Evangélique de Développement (AEDM)Association des Groupements Villageois Féminins (AGVF)AÏTMA Association des Volontaires du Sahel (AVS) Association pour la Promotion et l’Appui au Développement Local (APADL) Action Recherche pour le Développement des Initiatives Locales (ARDIL)Woïya Kondaye Espace de Réflexion et d’Entraide avec les Femmes (EREF)Equipe de Recherche et d’Appui Pour le Développement (ERAD)ESPOIRFemmes Jeunesse Développement au Nord Mali (FEJEDENOM)Groupe d’Animation Action au Sahel (GAAS-MALI)Groupe d’Appui au Développement (GADEV)Groupe de Recherche d'Etudes de Formation Femme Action (GREFFA)Nouveaux HorizonsOrganisation Pour un Développement Intégré au Sahel (ODI-SAHEL)Organisation Pour la Gestion de l’Environnement au Sahel (OGS)Solidarité Pour l’Autopromotion à la Base (SABA)Sahel Etude Action pour le Développement (SEAD)SELLE

Trickle Up’s partner agencies in Mali vary widely is size, capacity and area of focus, but with the assistance of Trickle Up each agency integrates the Trickle Up microenterprise approach with its existing services and programs to reach the very poor.

In Tombouctou, Action pour le Développement des Initiatives Locales (ARDIL) or Action for the Development of Local Initiatives is present in four of the five regional districts and supports a wide range of programs in various fields including community development, health, literacy, and microenterprise. ARDIL works with several target groups including women and people with disabilities. In Niafunké (about three hours west of Tombouctou), Woïya Kondaye is the branch of a national women’s organization working specifically with poor rural women. In Gao, Sahel Etude Action pour le Développement (SEAD) or Study and Action for Development in Sahel is one the most progressive organizations in the region. Founded in 1987, SEAD’s mission is to promote sustainable development through agriculture, animal

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husbandry, access to water, and other community-development initiatives. SEAD’s approach is rather innovative and focuses on capacity-building, research, and the inclusion of gender perspectives. In the village of Goundam (Tombouctou area), AITMA is a smaller organization that works mostly with Tuareg communities on craft development. AITMA is also known for being an organizer the annual international Festival au Désert (Festival in the Desert) in Essakane outside of Tombouctou, which features traditional Tuareg music, dance, poetry, and other art. Through AITMA Trickle Up provides grants and training to Tuareg women in the communes of Gargando and Essakane.

Most of these NGOs are not primarily focused on microfinance/microenterprise development, but rather on such diverse areas as natural resource management and environment, health, agriculture, food and water security, education/literacy, women’s empowerment, democracy and governance. Only a few were involved in savings and credit, or income generation activities, before partnering with Trickle Up.

Rather than lumping all Trickle Up partner agencies in Mali together, the following description focuses on SEAD as an example of a local partner agency.

Table 2.2. Institutional BackgroundIssues Observations

2.2.1.1. Name of the organization or institutionSahel Etude Action pour le Développement (SEAD)

2.2.1.2. Geographic area of operation

14 rural communes and 1 urban commune (Gao) in three ‘cercles’ of the Gao Region

2.2.1.3. Legal structure NGO2.2.1.4. Registration status Registered2.2.1.5. Regulation status N/A2.2.1.6. Date established 1987

2.2.1.7. Specialized (MF/MED) or multisectoral

Multiple sectors: economic activities, agriculture, handicrafts/artisan support, livestock, irrigation, environment, training and research, education, health, technology

2.2.1.8. Start of MF/MED activitiesSince 2004, when TU partnership began

2.2.1.9. Core business (f.i. credit, savings, …)Food security, education, health

2.2.1.10. Business model N/A2.2.1.11. Target market – MF/MED Poor rural women2.2.1.12. Number of clients/participants – MF/MED 1,225

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Issues Observations

2.2.1.13. Number of staff47 (overall)10 (Trickle Up program activities)

2.2.2. Organizational development (S) 2.2.2.1. Mission and visionSEAD’ mission is to contribute to the well-being of both the sedentary and nomadic populations, particularly women and destitute children in the North of Mali through technical support and assistance to local communities in areas of education, production, mobilization of internal and external resources.

2.2.2.2. Brief historyN/A

2.2.2.3. ObjectivesSEAD’s overarching objective is to contribute to sustainable development and autonomous advancement of local communities, by- To organize the sedentary and nomadic communities of Northern Mali- Technical and institutional assistance to those communities- To support to mobilization of internal and external resources- To facilitate communication and collaboration among all stakeholders in the area.

2.2.2.4. Organizational culture, leadership, innovation (S, M)SEAD is a well-functioning indigenous NGO with a strong organizational culture. SEAD reviewed and rewrote its mission and vision within the past 2 years, and staff feel strongly about both. Staff are very motivated and very loyal. It is a participatory NGO with bottom-up leadership.

2.2.2.5. Organizational structure, roles and responsibilities (diagram may be helpful)SEAD strives for participation, decentralization and bottom-up leadership. For example, SEAD wanted every single one of its staff to be trained on TU so all could participate.

2.2.2.6. General qualifications and profile of field staff (S, M)Field staff are called animators. Their tasks involve:- Inform and sensitize communities about Trickle Up program- Selection of Trickle Up participants- Microenterprise training (during six weeks)- Assist in completion of business plans- Distribution of seed capital grants- Weekly follow-up visits with individual microentrepreneurs- Training and technical assistance for business development savings funds (BDSF)- Monitoring and evaluation, data collection for Trickle Up country office

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SEAD has a good proportion of women and men because it has a strong focus on gender sensitivity. SEAD aims for its field staff to mirror its target population, and most field staff come from the communities in which they work.

2.2.2.7. Training/sensitization (of staff, managers, board) on mission and poverty outreach (S, M) SEAD and other Trickle Up local partner NGOs in most cases already work with very poor communities. Trickle Up also trains partner NGO staff in the importance (for the TU mission) to reach the very poor and how to reach the very poor by using a TU designed poverty targeting tool.

2.2.2.8. Incentives for poverty outreach (S, M) There are no monetary incentives for poverty outreach, neither is there a conflict between financial and social performance, because the local organization is not directly involved in financial services. The most important incentive for reaching the very poor is TU required selection of very poor by using a locally relevant poverty tool. Selection of program participants is not entirely based on poverty indicators, but on “commitment” indicators as well (such as membership in solidarity group, previous participation in trainings, willingness to participate in a savings group...). Furthermore, if partner NGOs don’t target the poor by using the selection criteria, they cannot remain TU partners.

2.2.2.9. GovernanceAs a small NGO, SEAD is governed by a Board, and is subjected to periodic auditing of its financial activities as required by most foreign donors.

2.2.3. MF and MED servicesN/A – See section 5

2.2.3.1. MF model and products/services. 2.2.3.2. Description of main target group (if not the very poor).2.2.3.3. Selection and/or eligibility criteria2.2.3.4. Use of poverty assessment tool

2.2.4. Resources and external assistanceSEAD is funded by various international PVOs (including Cordaid, Trickle Up, WED) and through collaboration with World Food Program and a decentralization program initiative by the Government of Mali. Its annual budget is around $400,000.

2.2.5. Relationships (networks, partnerships, other institutions)2.2.5.1. NetworksN/A2.2.5.2. PartnershipsN/A

2.2.5.3. Other institutionsN/A

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3. Description of “Very Poor” Target Group3.1. Individual and Household conditions

3.1.1. Gender93.6% are women

3.1.2. AgeAverage age = 39 years

3.1.3. Disability and chronic disease2.5% persons with disabilities

3.1.4. Culture or religionN/A

3.1.5. EthnicityN/A

3.1.6. Membership to socioeconomic groups, such as caste and classN/A

3.1.7. Household type, composition, marital statusUnmarried: 3.5%Married: 37.8%In polygamous marriage: 33.0%Divorced: 6.5%Widowed: 19.3%

3.1.8. Literacy81.1%

3.1.9. EducationN/A

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3.2. Socioeconomic conditions

3.2.1. Refugee or IDP statusN/A

3.2.2. Economic conditions (F, C) 3.2.2.1. UnderemploymentN/A

3.2.2.2. Income Sources65% of program participants are the sole income earner of their household. 76.2% cannot afford sending their children to school. Before participating in Trickle Up, 89% of participants were engaged in the following income activities:- Services: 7.0%- Trade: 68.3%- Services: 8.6%- Handicrafts: 5.2%- No income activity: 10.9%

Before entering the program, 32% reported that they had one meal per day, 53% had two meals, and 15% had three meals.

3.2.2.3. Land ownershipTU microentrepreneurs do not own or lease land, but most have access to land for cultivation. If cultivation does not meet household subsistence needs, people need to buy food on the market. Gao has good market connections with Bamako and other areas.

3.2.2.4. Asset ownershipN/A

3.2.2.5. Income levelHousehold incomes are very low, with the majority below $0.50 (at nominal exchange rate) per capita per day.

3.2.3. Geographic conditions3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density71% live in rural villages, 8% in peri-urban and 21% in urban areas.

3.2.3.1. Access to marketsThis is different for each target area. Access to markets for urban and rural communities depends on distance to the river Niger, which is the main trade route in Northern Mali. All major towns are located at the river, and distance from the river Niger varies for each village. Most Trickle Up partner organizations serve areas that are relatively close to the river Niger compared to overall region.

3.2.3.1. Access to banks

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Branches of banks (and increasingly of some microfinance institutions) are only available in the trading centers of Gao, Timbuktu, and Mopti.

3.2.3.1. Access to doctors and clinicsN/A

3.2.3.1. Proneness to natural disastersSame as 1.2.1.5.

3.2.4. Major vulnerabilities and risks encountered by target group (F, C) Lack of food security; lack of health care—malaria, HIV/AIDS; drought and desertification, and recently, flooding.

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4. Poverty Targeting and AssessmentTrickle Up Mali, and Trickle Up worldwide, does currently not assess poverty of clients, but employs a poverty targeting tool, based on poverty indicators that are typically determined locally. See section 4.3. for details. Currently, Trickle Up Mali does not measure client poverty, but it has recently developed a poverty assessment tool for Mali, which will be field-tested in November 2007. See for details under 4.2. There is currently no USAID certified poverty tool for Mali.

4.1. Poverty measurement practices

The following information pertains to the Poverty Scorecard to be field-tested in late 2007 and to be used routinely starting in 2008.

This easy-to-use poverty scorecard for Mali was developed by Mark Schreiner and is called a “judgmental” poverty scorecard, because indicators and points were selected based on the experience and judgment of the analyst and of program managers in Mali. The lower the score, the more likely a household is poor. The scorecard will help Trickle Up to target services and track changes in poverty over time. All 20 indicators and their possible responses are drawn from questions in Mali’s national expenditure survey, but the poverty scorecard could not benchmarked to an objective, expenditure-based poverty line, because the results of this 2001 national survey were unavailable. If they become available in the future, the tool can still be benchmarked.

4.1.1. Poverty data collection4.1.1.1. Which poverty indicators are collected?These are the poverty scorecard questions. Note that answer choices are not included.1. How many family members are 17 years old or younger?2. How many children ages 6 to 14 attend school?3. What is the highest educational level that the female spouse/head has completed?4. How many members of the household work in agriculture, animal husbandry, fishing, or forestry?5. How many members of the household hold a salaried job?6. What is the main construction material of the residence’s roof?7. What is the main construction material of the residence’s floor? 8. What is the residence’s main source of lighting? 9. What is the main source of drinking water? 10. What is the main fuel for cooking?11. What toilet arrangements does the household have? 12. How many rooms does the household occupy?13. Do you have an improved wood-burning stove?14. Is there a kitchen?15. Does the household own any plows, harrows, grain mills, tractors, motorized pumps, motorized cultivators, or vaporizers (pumps

for cotton)? 16. Does the household own any handcarts, bicycles, or motorbikes? 17. Does the household own any radios?18. Does the household own any televisions?19. Does the household own any telephones?20. Does the household own any fans?

Minimum possible score (most likely poor): 0Maximum possible score (least likely poor): 41

4.1.1.2. What poverty assessment tool is used?“Judgmental” Poverty Scorecard

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4.1.1.3. When and how often are poverty data collected? To be determined. Most likely: at entry, 1 year, 2 years, 5 years

4.1.1.4. Which clients are measured?To be determined. Most likely all clients at entry and samples at 1 year, 2 years, 5 years

4.1.2. Use of poverty data4.1.2.1. What, if any, are poverty categories distinguished by poverty data?N/A

4.1.2.2. How are each of these categories defined? N/A

4.1.2.3. How are poverty data used by organization? 4.1.2.3.1. For client monitoring? 4.1.2.3.2. For client screening? 4.1.2.3.3. For client targeting? 4.1.2.3.4. For impact monitoring/assessment? 4.1.2.3.5. For other uses?

4.2. Available Poverty Data

4.2.1. Poverty distribution results by internal poverty data collection methodN/A

4.2.2. Poverty data from a recent poverty and/or impact assessment studyN/A

4.2.3. Poverty Data obtained through use of USAID certified poverty toolN/A

4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion was used: $1 a day or bottom 50% below poverty line?4.2.3.2. Provide details on poverty assessment exercise: time conducted, sample size and selection…4.2.3.3. Poverty results: proportion of very poor clients versus poor clients.

4.2.4. Interpretation of Poverty dataN/A

4.2.4.1. Comparison between internal and USAID poverty tool data4.2.4.2. Organization’s own interpretation of poverty outreach

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4.3. Poverty Targeting

4.3.1. Does the organization use a poverty targeting tool?Geographic targeting is the first step. Trickle Up has programs only in the poorest regions of Mali: Timbuktu, Gao and Mopti. Within those regions, very poor people are in the majority, and Trickle Up works selects suitable partner agencies with a mission that is compatible with Trickle Up (especially in terms of reaching the very poor) and with sufficient organizational capacity. Excessive costs or lack of suitable local NGOs are sometimes an obstacle to reach the very poor in the most remote areas within those the abovementioned three regions.

TU partner agencies use a participant selection tool, which focuses of three areas:- poverty- commitment/motivation- entrepreneurial ability

Poverty is scored between a minimum of 2 and a maximum of 15 as follows. The following table represents the poverty selection framework. Almost all poverty indicators are easily observable/verifiable.

a) Gender F = 3 M = 1 Physically Handicapped : Yes = +2b) # of children : (0=0) (1-3=1) (4-8=2)

(8+=3)c) Employed person in household; Social security recipient?

Yes = 0 No = 1

d) If children are of age, do they attend school? Yes, all= 0 No, not all= 1No children = 0

e) Where do you get water : ■ running water = 0 ■ private, shared, or public fountain = 1 ■ River, stream, or rain water = 3f) Number of meals per day : 3 = 1 / 2 = 2 / 1 = 3

4.3.2. What is the client poverty target level?In order to be eligible for the program, a minimum score of 8 is required.

4.3.3. Staff use of poverty targeting (S, F) 4.3.3.1. Training/sensitization (of staff, managers, board) related to poverty outreachHow is staff trained in poverty targeting? Partner NGO field staff have been trained in using the participant selection tool, and understand about the importance of reaching the very poor to the mission of Trickle Up. If local partner NGOs do not already have a strong focus on the most vulnerable community members, the Trickle Up program and support enables organizations to do so. 4.3.3.2. Staff incentive schemesThere are no explicit staff incentive schemes to reach the very poor.

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Reaching the very poor is a commitment by local partner NGOs, which is also formally addressed in the agreement between each partner NGO and Trickle Up.

4.3.4. Issues with poverty targeting (S, F) Often demand for participating in Trickle Up’s microenterprise program is much higher than available resources, which is one of the reasons that other selection criteria (motivation, entrepreneurial ability) are used in addition to poverty criteria.Poverty selection criteria might be more or less relevant depending of the poverty level of the target area. In relatively well-off areas, selected participants might be better off than those selected according to the same criteria in a very poor area. Until now Trickle Up has not been able to test the accuracy of the poverty selection tool. Planned poverty assessment by using a recently developed poverty scorecard for Mali will allow for comparing poverty levels among different partner NGOs and target areas.

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5. Products and ServicesTrickle Up and its local partner NGOs offer microenterprise seed capital grants, microenterprise training, and training to local groups of Trickle Up participants in managing their own savings and loans. In addition to this “Trickle Up package’, local partner NGOs often provide microentrepreneurs also with additional programs or services. These programs depend on local partner agencies’ own mission and activities, and vary from one agency to the other. They include capacity-building, health and hygiene, women’s empowerment, agricultural extension, natural resource management, savings and credit activities, literacy classes, artisanal skill development.

5.1. Financial Products

In terms of financial products, Trickle Up provides new program participants with a seed capital grant to start a new enterprise or to expand/enhance an already existing income generating activity. The capital grant is provided in two separate installments. The first installment (in the amount of $80 or $90) is provided immediately after a business plan has been prepared, and the second installment ($20 or $10) takes place after the entrepreneur completes a business report, at least three months since the first grant or after the business has at least gone through an entire business cycle, whichever is the longest period.

Among the conditions for the seed capital grant are:- To complete a full business training curriculum (see further for more

information);- To present a viable business plan and business report;- To invest seed capital grant in business assets only;- To contribute weekly savings of approximately $1.40 to Business Development

Savings Funds (see below)

TU entrepreneurs are also required to join a Business Development Savings Fund (BDSF) as soon as they receive their seed capital grant. Each group is made up of 25 Trickle Up entrepreneurs selected by a local NGO program partner, all starting their businesses at the same time and in the same village. Mandatory weekly contributions start at approximately $1.40. These funds can be used for business purposes only. Through the BDSF, women do not only improve their financial security, but they also have access to additional capital should they need to take out an individual business loan.

The groups manage themselves, elect their own executive committee and set their own rules. All members meet every week to make contributions, initially 1$ each, starting from the first week of business. The microentrepreneurs will participate in consecutive saving cycles, which end by withdrawing the accumulated savings by each member to reinvest in their microenterprise. These withdrawals increase in size over time and are paid back to the group fund without interest.

In addition, members can also request a loan. Individual loans for group members are at 5% interest rate. For some groups, non-members are also eligible to receive loans (for business ventures) at a rate of 10%. Some groups also invest some of these savings in

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high-profit group ventures, such as purchasing and selling grains, farm animals, and produce.

After having operated largely informally (without legal status) these groups acquire their formal status (association) to access more services with other authorities (banks, government services, etc). Trickle Up provides the models and tools to do so during the training.

Table 5.1. Microfinance Product DetailsProduct Features and Policies

5.1.1. microcredit

5.1.1.1. Individual or group productBDSF members can borrow individually from the group fund

5.1.1.2. Loan terms (maturity, interest rate, interest type, flexibility)

6-12 months, 5% monthly interest, first two months no payments

5.1.1.3. Loan source BDSF (members’ own savings)5.1.1.4. Loan use Business-related

5.1.1.5. Loan size (first loan, average loan, maximum loan size)

Variable – set by group. Loans range from $100 – $1,200, depending on size of group fund

5.1.1.6. Meeting requirement and frequency

BDSF group meets every week.

5.1.1.7. Mandatory savings requirement and amount

Mandatory savings is 500 CFA ($1)

5.1.1.8. Collateral requirement No

5.1.1.9. Other eligibility requirementsViable business plan, in good standing, contributed all mandatory savings

5.1.1.10. Loan default policyMany groups require members to pay a fine if they cannot pay back a loan.

5.1.1.11. Repayment flexibilityGroups introduce some flexibility as needed, with group consensus.

5.1.1.12. Other N/A5.1.2. microsavings

5.1.2.1. Individual or group Group (BDSF)5.1.2.2. Savings Type Mandatory5.1.2.3. Deposit/collection location At group meeting, kept in lockbox

5.1.2.4. Deposit frequency, amounts, flexibility

Weekly, approx $1.40. Sometimes groups mutually agree on a savings holiday for 1 or 2 weeks for special occasions

5.1.2.5. Meeting requirement and frequency

Required; weekly.

5.1.2.6. Savings terms (interest rate, minimum deposit, …)

No interest, but group fund accumulates through interest charged on individual loans.

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Product Features and Policies

5.1.2.7. Withdrawal and savings use policies

Savings are withdrawn by all group members simultaneously after certain savings cycle. Withdrawal is for enterprise use only, and is paid back to the group without interest.

5.1.2.8. Record keeping and accountingYes. Both group accounting and individual passbooks.

5.1.2.9. Investment of depositsSometimes in group enterprise opportunities; also as external loans to non-members

5.1.2.10. Other N/A5.1.3. microinsurance

5.1.3.1. Microinsurance Type N/A5.1.3.2. Group or individual product N/A5.1.3.3. Term N/A5.1.3.4. Eligibility requirements N/A5.1.3.5. Renewal requirements N/A5.1.3.6. Rejection rate N/A5.1.3.7. Voluntary or compulsory N/A5.1.3.8. Product coverage (benefits) N/A5.1.3.9. Key exclusions N/A5.1.3.10. Pricing – premiums N/A5.1.3.11. Pricing – co-payments and deductibles

N/A

5.1.3.12. Pricing – other fees N/A5.1.4. microgrants

5.1.4.1. Individual or group product Individual household5.1.4.2. Amount (and number of grants) $100, in two instalments: $80/90 and $20/105.1.4.3. Eligibility requirements See requirements explained above.5.1.4.4. Grant use and other conditions Microenterprise only.5.1.4.5. Savings requirement or matched savings arrangement

No

5.1.4.6. Straight grant, no interest or partial repayment

Grant requires microentrepreneur to contribute 500 CFA per week to BDSF

5.1.4.7. Other N/A

5.2. Microenterprise Development Services

Microenterprise training takes place in 6 half-day training sessions over the course of three weeks. The purpose of these sessions is to allow those involved to become accustomed to the use of business concepts and to participate in practical exercises that will prove to be extremely useful. The first session is entitled “Identifying Products and Services” during which participants receive an introduction to Trickle Up, an overview of the program, and establishment of the rules. They also try to come up with business ideas and become familiar with the business plan.

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Session 2 is called “Competition” and this is when participants show their business plan and explain their activity. Then they hear stories and are made to think about competition in a number of different contexts, such as strengths and weaknesses of products, differentiation, as well as determination of price in order to be competitive in the market. The goal is to determine how they can be most successful with their business activity.

Session 3 expands on the concept of differentiation and is called “Market Study.” Participants are encouraged to carefully examine the market in which they will be working so that they can decide who will be their potential clients and how much people will pay for their product. They should also be thinking about how many clients they will have each day and how many products they will sell.

For session 4 entitled “Calculating Costs and Projected Sales”, those involved present what happened in their market study homework and begin thinking about all steps that will go into the business and all costs they will incur when starting up the business. They learn to calculate sales through examples, and also determine the cost of raw materials, working capital and equipment used.

“Calculating Profits” is the subject of training session 5. This is only possible if participants were able to calculate their expenses during the previous session, which will then be subtracted from the total sales. Then in groups they must calculate the percentage of profit for the example business and work to calculate their own profits using one of the work sheets.

Once the Business Plan is completed for Trickle Up, the Business Development Savings Fund must be explained in detail. That is why Session 6 focuses on “Training the Entrepreneurs on the Business Development Savings Fund.” The BDSF is an essential part of the program and exists to help the microentrepreneur finance his/her business and allow it to grow. Those involved learn about investing into the fund, participating in savings groups, and using the fund to increase business revenue. This is also a way for the partner NGO to work alongside the entrepreneur and solve problems that may arise.

The NGO partner agency field staff does not only provide this training, but assists each microentrepreneur individually on a regular basis, starting with the formulation of the business plan to calculating revenues and profit to reinvesting in the microenterprise.

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Table 5.2. MED Service DetailsService Types and Features

5.2.1. Training5.2.1.1. Financial literacy Yes5.2.1.2. Business planning and management

Yes

5.2.1.3. Marketing Yes5.2.1.4. Recordkeeping and bookkeeping

Yes

5.2.1.5. Skill development Yes5.2.1.6. Technical assistance Yes5.2.1.7. Training method Group training5.2.1.8. Other N/A5.2.1.9. Costs to client None

5.2.2. Business Consultancy and Advisory Services

5.2.2.1. Individual or group sessionsBoth group and individual counselling sessions

5.2.2.2. Frequency6 times during the first 6 months, once at the end of the 1st year, twice during the second year and twice during the third year.

5.2.2.3. Topics Same as business training topics above

5.2.2.4. Confidence BuildingYes, this is an important part during training, practical exercises and individual sessions

5.2.2.5. Other N/A5.2.2.6. Costs to client None

5.2.3. Market Linkages 5.2.3.1. Input supply No5.2.3.2. Marketing Assistance No5.2.3.3. Market Information No5.2.3.4. Producer organizations Sometimes, through BDSF5.2.3.5. Business linkage promotion No5.2.3.6. Quality Control No5.2.3.7. Other N/A5.2.3.8. Costs to client N/A

5.2.4. Other

5.2.4.1. Employment generation

TU-supported microenterprises often provided increased employment for household and non-household members (especially in case of anise group income projects)

5.2.4.2. Technology developmentIn some cases: anise farming and food preservation

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5.3. Non-financial Services

Providing non-financial services is at the discretion of the TU partner agency, and if they are provided, these services vary from partner agency to partner agency.Plans exist to roll out literacy and other social capital development training through the TU Mali-developed Alpha Business training kit, but implementation depends on funding.

Table 5.3. Non-financial Services DetailsService Types and Features

5.3.1. Nutrition

5.3.2. Health and Sanitation

5.3.3. Education

5.3.4. Social Capital Development

5.3.5. Other

5.3.6. Empowerment and confidence buildingA major element of the BDSFs is confidence-building and empowerment for group members. Though clients are not involved in product and service design at the TU Mali-level, they take ownership of their BDSFs through leadership positions on committees, group decision-making and creation of their group’s by-laws. Those who are selected as BDSF representatives and participate in regional and sub-regional meetings build further confidence through those meetings. Anecdotal evidence suggests that clients do have

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more negotiating power in business transactions, especially when making group investments.

5.3.7. Graduation of very poor clients into mainstream MF/MED servicesTU is currently exploring a pilot “bridging” pilot with the IFC and ICCO/Terrafina. It would link the oldest entrepreneurs with MFIs. Next step is a project design phase.

5.4. Design and Product Development:

5.4.1. Program rationale/ theory of change?

5.4.1.1. Main issues and challenges of very poor clients which the organization seeks to addressPeople in chronic poverty lack of access to the assets necessary for a higher standard of income or welfare, whether these assets are thought of as human (access to education, healthcare), natural (access to land or other natural resources), physical (access to infrastructure), social (access to networks of obligations) or financial (access to financial resources and services). Very poor people spend most of their disposable income on food and other basic needs without meeting these. As a result, rather than building up assets they are often forced to take on debt and/or sell their little assets.

TU assists very poor people by focusing on critical human, financial and social assets to jumpstart their microenterprise activities and gradually improve their livelihoods towards self-reliance.

5.4.1.2. Intended outcomes and impactsIf successful, the microenterprise activities will enable TU microentrepreneurs to gradually accumulate and strengthen their livelihood assets, expand their choices for livelihood strategies, and ultimately achieve self-sufficiency. TU entrepreneurs and their households will become more resilient to shocks, downward trends and seasonal changes as the result of their accumulated assets and diversified income strategies. Less poor people can increasingly choose from a wide diversity of livelihood strategies to meet their various needs at different times.

5.4.1.3. How are products and inputs designed to achieve those intended impacts? TU provides support to the following core assets for microenterprise growth:- Microenterprise development training (human capital). To improve

microenterprise and basic financial literacy skills of people with low or no literacy.

- Savings services (financial capital) enabling TU entrepreneurs to build their savings for the purposes of microenterprise expansion, provision of essential household needs, and risk mitigation.

- Conditional seed capital (financial capital). Provide conditional seed capital to eligible entrepreneurs in amounts that are sufficient to start a microenterprise. The

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current standard amount of $100 in two installments will be flexible to take into account local conditions and microenterprise needs.

5.4.2. Concept development 5.4.2.1. Client Survey Demand/Needs assessmentNo

5.4.2.2. Competition analysisCompetition in the Trickle Up context would mean any other entity offering financial and enterprise development services to very poor sections of the population. The only source of credit available to very poor people in the regions where Trickle Up operates are local money lenders. In the example of the anise value chain, some business services (including credit) are offered by middlemen buyers, who typically do not reach very poor people, as these services are prohibitively expensive for very poor households who are subsistence farmers, but ant to start a new income generation activity.

5.4.2.3. Self-assessmentTrickle Up (USA headquarters) has recently undertaken a complete self-assessment of the organization and as a result has formulated a new strategic direction that is seen as significantly different from the past in important ways. These include a stronger geographic focus and presence in fewer countries coupled with increased decentralization; a stronger emphasis on other necessary microenterprise inputs than seed capital, such as microenterprise training, promotion of sustainable savings mechanisms, and linking Trickle Up microentrepreneurs to new markets.

5.4.3. Product/Service design 5.4.3.1. Product/service design processTrickle Up’s standard product, seed capital in the form of two consecutive grants triggered by a business plan and business report respectively, was expanded in the context of Mali to better respond to local needs. These innovations were possible, because Mali was the first country for Trickle Up to establish a permanent country office, and came at a time where change was encouraged due to the strategic review that was taking place within Trickle Up headquarters. As a result, the Mali program became a bit of a laboratory for testing changes to the basic model. These changes included organizational support (technical and financial) to establish Trickle Up savings groups (Business Development Savings Funds), market research and enterprise services for value chains with strong potential for very poor producers, etc. 5.4.3.2. New versus modified products/services for very poor clientsN/A. Trickle Up intends to serve only very poor clients.

5.4.3.2. Risk assessment and product design

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The uniqueness of Trickle Up’s approach is strongly related to risk assessment. Trickle Up believes that the very poor lack sufficient assets to take the risks associated with taking out a loan. Unlike less poor microentrepreneurs, who usually already have a fairly predictable (i.e. less risky) income stream in addition to the anticipated income resulting from a microenterprise financed by a microloan, the very poor do not have any regular cash income or savings to make the required loan payments in case their business venture would fail. Trickle Up agrees with the very poor that the risk of a microenterprise loan is too high and therefore provides microenterprise capital in the form of a conditional grant instead of a loan. Microgrants also allow very poor microentrepreneurs to purchase long-term productive assets (such as a building, equipment, bicycles, animals, and tools) that do not generate an immediate return. The Trickle Up seed capital grant strategy is designed to reduce the risk to an acceptable level for very poor households and individuals who want to engage in a microenterprise activity.

5.4.3.1. Prototype development and testingN/A

5.4.4. Pilot testingThe basic Trickle Up grants based approach has been in use for three decades. However, in recent years new program innovations have been field-tested, especially in Mali. Mali was the first country where TU established a permanent country office, which was a pilot test by itself and at the same time the field presence enabled testing out new approaches much better than before. In that sense, the Mali program has been a testing ground for many innovations that are to become part of the new strategic direction that Trickle Up has set in the last two years. The following are examples of innovations which have been field tested:

- A small set of Trickle Up microentrepreneurs participated in testing new enterprise development services, such as technical assistance and access to new markets, for anise farming and food preservation.

- The BDSF mentioned elsewhere are another innovation that was pilot-tested and then adapted countrywide

- A recent pay-it-forward model (see also 6.3.4.) started as a pilot in January 2007. All TU microentrepreneurs starting this year will participate in the pilot.

- A new training manual (including a literacy component) has been developed and funding is being sought to pilot-test.

5.4.5. Rollout N/A (the new services have not yet been replicated at scale)

5.4.5. Product/Service review and assessment Feedback was given by local partner NGOs involved in pilot-testing.

5.4.6. The Product Development Cost 5.4.6.1. Total cost N/A

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5.4.6.2. How were they funded?Donor (Argidius Foundation) provided funds to pilot-test access to new markets and support to very poor entrepreneurs. IFC funding also allowed to operate a country office. This, together with the higher scale of the Mali program compared to other Trickle Up country programs, allowed for relatively cost-efficient approach to new product testing.

5.4.6.3. Outsourcing during the development processNo, but there was close collaboration with the Ministry of Agriculture.

5.4.7. Feedback loopCurrently, microenterprise performance data (sales, investments and expenses, profits) are the main indicators to test effect of new products. Significant improvement in M&E data collection and use are underway as part of new strategic plan.

5.5. Implementation Process

5.5.1. ProcessLocal agency applies to become partner NGOTraining of partner NGOSelection of entrepreneursFormation of BDSFsTraining of entrepreneursPreparation of business planFirst disbursement of $90 to entrepreneursMicroenterprise investments and operationRegular visits with microentrepreneursPreparation of the business report (after approximately three months?)Second disbursement of $10 to entrepreneursContinuing and expanding microenterprise activitiesOne-Year evaluationContinuing work with BDSFs (training, capacity-building, legalization into assocations)Continuing data collection (after 1 and 2 years)

5.5.2. LogisticsThe most important logistical consideration for both partner NGO field staff and TU Mali staff is travel, sometimes under harsh conditions. Partner NGO staff need to be mobile to maintain frequent visits with TU entrepreneurs during training, capital disbursement, business counseling, M&E, etc. TU Mali staff also frequently visits NGO partner sites, for capital disbursement, training, and M&E. The cost of use of a vehicle is significant.

5.5.3. Information System

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Data are collected on each Trickle Up microentrepreneur by the partner NGO starting at the time of selection. The partner NGOs complete written forms and provide those to the Mali country office, where data are entered, processed and analyzed. Each partner agency is responsible for conducting individual surveys with selected microentrepreneurs and submitting the completed forms to the Trickle Up Mali Office once all surveys are completed. A basic training by Trickle Up staff on how to conduct the surveys is provided to partner agencies at the start of the program.

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6. Results

6.1. Method of measuring results6.1.1. Type of dataInformation on entrepreneurs at baseline is collected through two main documents: a Selection Form, including poverty, motivation, and capacity criteria and a more comprehensive Baseline Survey Form, which includes data such as number of meals per day, source of water, income resources, household expenditures…

In addition to baseline data on general living conditions of the entrepreneurs and their households, Trickle Up Mali collects business plans and business reports, respectively at the start of the program and after three months of business activity. Those two documents include business-related data such as amounts for working capital, sales, and profit.

Performance of the BDSF groups is tracked by monitoring savings and loan data.TU Mali field staff also meet with BDSFs and conduct surveys on overall functioning (bylaws, management, transparency) of the groups.

One year after the seed capital grant disbursement, partner agencies conduct a second survey which serves to compare the situation of entrepreneurs at baseline, one year later and two years later.

6.1.2. Data analysis and useData collected on each form is entered by Trickle Up - Mali staff and aggregated by partner agency.

The compiled data are shared with all partner NGOs and discussed during periodic partner meetings. Trickle Up and partners look at differences in data between partner agencies operating in similar areas and seek explanations when such cases arise. This procedure aims to cross-check results and helps partner NGOs understand factors that influence microenterprise performance.

A narrative report interpreting the raw data is then produced by the Mali office, which includes sections on income, expenditure, savings and credit, job creation, and livelihoods (health, nutrition, education, community life, etc.).

6.2. Impact

6.2.1. Poverty ImpactInternal data collection shows consistent increase in number of meals eaten and increased income by TU microentrepreneurs and their families. The percentage of families eating three meals a day increased from 25% to 85% after the first year of program implementation.TU is planning to use the recently developed Poverty Scorecard as a poverty monitoring tool in future.

6.2.2. Client satisfaction and feedback

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Client satisfaction is not routinely assessed by Trickle Up, neither are program participants considered as clients. However, while staff testifies that satisfaction with the program is generally very high, when asked what could be improved, microentrepreneurs often mention: access to greater capital, more business training and literacy training.

6.3. Cost Effectiveness and Sustainability

6.3.1. Scale and replicability6.3.1.1. Strategy for scale?What is the planned scale for Mali?One of the biggest limitations to scaling up is the size and capacity of local NGOs. Trickle Up partner NGOs typically lack the capacity to reach and follow up more than 100 microentrepreneurs each year. So, further scaling up is achieved by partnering with more and bigger NGOs.

6.3.1.2. Replicability of program or serviceReplicability depends on a number of factors:- Presence of local NGOs willing and able to implement Trickle Up programs

alongside other programs. - If partner NGO also implements microcredit activities, these need to be clearly

(preferably geographically) separated from microgrant programs.- For a seed capital grant approach to be effective, very poor people need to be able

to meet their minimum basic needs, especially in terms of food security and healthcare.

6.3.2. Financial and operational self-sufficiency (if applicable)6.3.2.1. Financial expense ratioN/A

6.3.2.1. Operational expense ratioN/A

6.3.2.1. Cost per clientStill to be provided....

6.3.2.1. Clients per staff memberAt the partner NGO level, on average each field agent works with 75 microentrepreneurs in 3 BDSF.TU-Mali has a total staff of 6, which includes driver, accountant, etc.

6.3.2.1. Average loan balance per borrowerN/A

6.3.2.1. Average savings balance per saverApproximately $100 after two years as member of a BDSF group

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6.3.2.1. Portfolio at riskN/A

6.3.2.1. Tailoring of product/serviceN/A

6.3.2.1. OtherN/A

6.3.3. Cost-effectiveness of non-financial services?Not available. Non-financial services are currently not offered by Trickle Up. In case they are offered by partner NGOs, they are solely responsible for implementation and costs.

6.3.4. Strategies to cover/reduce costs?Even though the Mali program is currently Trickle Up’s biggest program in terms of number of new microentrepreneurs assisted each year (including training, seed capital grants, assistance to BDSFs, and business counseling), further scale-up will reduce costs significantly through better economies of scale. Trickle Up’s grant-based microenterprise development approach is dependent on external funding for providing microentrepreneurs with access to seed capital. Even though the Trickle Up approach is fundamentally different from traditional microfinance, it has initiated an innovative “Pay-It-Forward” (PIF) system in Mali. Once microentrepreneurs join a BDSF and have received their seed capital grant, they start not only saving to fund their own credit fund, but they also contribute a small amount each week towards the seed capital grant for a future entrepreneur. By saving $1.40 each week, each microentrepreneur will have saved $218.40 after 3 years (156 weeks), of which $100 is to be used as seed capital grant for a new microentrepreneur, $14 to support the local NGO to train and monitor new BDSFs, and the remainder to stay in the BDSF’s own credit fund.

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