Interview with Luis Fernando Sanabria, general manager, Fundación Paraguaya, Paraguay
Fundación Paraguaya is a microfinance institution that develops and implements innovative and long-lasting poverty eradication solutions. The interview in this box and all direct quotes not cited in the text are from interviews carried out by the Microcredit Summit Campaign.
Fundación Paraguaya’s mission goes beyond financial inclusion. We believe that, while financial inclusion is a powerful and essential tool, it is not enough to eliminate poverty: our mission is to develop innovative solutions to poverty and disseminate them worldwide. Not only do we try to financially include our 70,000 customers, but we also help them close the poverty gap and move out of poverty by providing solutions to the 50 indicators of poverty identified in our “Poverty Stoplight” methodology.
We believe that poverty is multidimensional. It is like a big gray cloud that crushes poor families. They feel overwhelmed by this cloud because it is so complex that it is hard to know where to start. They say, “I was born poor and will remain poor all of my life,” out of resignation, a lack of self-esteem, but above all, the lack of a starting plan.
The Poverty Stoplight tool aims to operationalize that concept by dividing that gray cloud into small pieces that can be taken by families one by one in order to move forward. We have divided our Poverty Stoplight into six dimensions: 1) income and employment, 2) education and culture, 3) health and environment, 4) housing and infrastructure, 5) organization and participation, and 6) interiority and motivational. These six dimensions have 50 indicators, and each indicator has three designations: red for extreme poverty, yellow for non-extreme poverty, and green for no poverty.
We developed self-assessment software for tablets and smartphones, wherein families evaluate themselves using photographs and their responses are georeferenced. For example, to not be poor in Paraguay (green) you need to have a faucet, a tap. If you have a well or a stream on your property, you are poor, but not extremely poor: you are yellow. If you have to bring water from outside your property, then you are extremely poor: you are red.
The Poverty Stoplight is different from other poverty measurement tools in a couple ways. First, families use the software to conduct a self-assessment and then create their own roadmap out of poverty. This is vital because it leaves the problem in the family’s hands. It is not organizations lifting people out of poverty, it is the families themselves. What we can do is provide tools to release the energy that is already within the poor.
Second, we are not an index. Indices serve their purpose, but for the poor, they mean very little. If you score 7 out of 10 in any given index, it means nothing to a poor person. However, the fact that you have a common bathroom and you need to have a modern bathroom to move out of poverty leads to a concrete action that can be carried out. Having a checklist like the Stoplight allows us to not forget any indicator because no one can move out of poverty until all the indicators are green.
This can improve MFI products and services because we have a map of the demand: who lacks water, health services, education, financial training, credit, and supplies, as well as who has no self-esteem and where violence against women takes place, etc. By being georeferenced, the demand provides us with a community map that allows us to coordinate the supply. This kind of map allows us, for example, to tell Paraguay’s public services, “Look, these 20 families in this community need training to make their family budget.”
We aspire to have the existing services in the public and private sectors seek their customers in a proactive way. This way, if we can get our organizations to reach out to them with a well-planned map, we have a better chance of succeeding.
To learn more about the Poverty Stoplight tool, visit http://www.fundacionparaguaya.org.py.
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