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Evaluation report

2000 CHN : Impact Assessment Report of Social Development Programme for Poor Areas



Author: Chowdhury, A.M.R.; Nigam, A.; Shui-Meng, N. ; Fang J.

Executive summary

Background

The Social Development Programme for the Poor Areas (SPPA) in China is a micro-credit programme but with a special focus. Apart from poverty reduction, the SPPA program purports to use micro-credit as a conduit to achieve broader human development goals. The main strategies employed are the use of micro-credit as an entry point to organise poor women into groups at the village level, encourage regular meetings to provide knowledge on Facts for Life, and the use of loans and savings. At the same time, local sectoral partners under the leadership of the county governor are mobilised to better plan and utilise resources for the expansion of quality basic services to meet the needs of the poor.

Purpose / Objective

An impact assessment of the SPPA programme was carried out to draw lessons to guide future strategies and direction, and to contribute to policy dialogue on micro-credit and poverty reduction in China. The areas of change or impact that are addressed through the assessment are:
- Improvements in material well-being
- Reduced vulnerability to seasonal fluctuations in income and strengthened coping capacity
- Improved status of women and girls
- Increased multi-sector coordination and capacity building at different levels
- Sustainable micro-credit institutions

Methodology

The techniques of data collection included survey and in-depth interviews, focus group discussions, case studies and village profiles. Because of time and resource constraints, the study was restricted to 6 counties of 24 project counties located in 3 of the 12 provinces where SPPA is present. For each province, the samples were selected independently and included 400 SPPA and 200 comparison households, making a total of 600 households per province. To get an understanding of the quality of the data collected, selected households were revisited with a smaller version of the household questionnaire, which showed that the data quality was reasonably good.

Key Findings and Conclusions

By December 1999, the SPPA programme has trained 42,141 women and organized them into 7,627 small groups and 1,478 large groups. Of the women recruited, 90% have been active till the end of 1999 and of the active members, 71% are borrowers. More than 80% of the micro-credit loans are used for agricultural production and animal husbandry reflecting the dominant structure of the local economy of the areas where the project operates. As of end-1999, the members have accumulated more than RMB 6.7 million yuan (US$ 817,000) in savings.

Based on self-reported data, the SPPA counties have achieved a repayment rate of more
than 90% in the first three years. However, the overall repayment situation seems to be deteriorating. Interview of staff and women during focus group discussions indicates that they consider the collection of monthly repayments cumbersome. There is an obvious trend for project staff to become less vigilant in the enforcement of programme regulations. Some staff explained that this attitude is influenced by their lack of certainty as to whether the programme will continue beyond 2000 and whether their own position in the office will be secure.

Many SPPA members (28% in Gansu to 41% in Anhui and Guizhou) reported that there was seasonality in their poverty situation. This proportion was higher among the comparison group, indicating deeper impoverishment and vulnerability for this group. When the SPPA members were asked whether their vulnerability reduced because of their membership, most replied in the affirmative. Continuing on this, most of the members added that provisions of loans, capacity development and skills training helped them a lot in overcoming their vulnerability. The building of support networks for those who are poor is clearly an important contribution of the SPPA.

In the SPPA programme, use of safe water was promoted and it was found that it was used by a great majority of households irrespective of SPPA membership. Both SPPA members and non-members overwhelmingly reported that they used iodised salt in cooking. Between 19-22% of SPPA members in Anhui and Gansu have constructed sanitary latrines after joining the program as compared to only 5-7% among non-members. The programme also promoted the use of fluid during diarrhoea episodes. An overwhelming majority of the SPPA members in Anhui and Gansu and about half of Guizhou mentioned ORT as the treatment of choice. On the other hand, only a small proportion of the non-members mentioned it.

The SPPA micro-credit model is acknowledged by many project leaders to be more effective than other subsidised loan programs for poverty reduction because of its integrated approach on capacity building and improvement of basic services. For this reason, many counties have adopted some aspects of the program into the government or poverty alleviation-supported initiatives.

Recommendations

Make Program Sustainable to Cover Operating Costs
One of the first tasks of SPPA should be to set up an institutional mechanism for separating out the costs of the lending operations and making them operationally sustainable. On the basis of a back-of-the-envelope calculation, it is estimated that RMB 100,000 yuan of interest earning per county is needed to meet the costs of lending operations at the county, township and village level. Under this assumption, four of the six counties selected in the survey could become operationally sustainable with the current rates of interest.

Better Targeting of Membership
Nearly three-quarters of the SPPA members in Gansu and one-third in Guizhou came from non-poor groups. This is an example of wastage or inclusion error. Many poor households remain outside SPPA. While most project staff claimed that they have used the project criteria of poverty and women with young children, particularly girls, for pre-screening, it is also clear from talking to women that concern over the very poor's ability to repay, and other political and local considerations frequently influence their decision as to who could finally participate.

Improve Project Management and Provide Finance Skills and Training
County leaders and staff at various levels expressed great appreciation for the different types of training provided, and many attributed these types of training to improving their management and training skills, raising awareness of gender issues, mobilisation and field work skills. However, the capacity development in micro-credit operation is not adequate. Most of the staff are part-time and do not have professional background in accounting, financial management or loan portfolio management. The field assessment revealed that the internal controls and loan management is weak. This is linked to the inadequacies of the MIS developed for the programme. Another concern is that there is no established auditing system.

Build on Positive Image to Expand
A separate study of the SPPA's scale mobilisation and communication initiative in one county in Anhui confirmed the high degree "brand recognition" of the SPPA among villagers and government officials. The government and UNICEF should build upon this "brand" awareness to promote integration of capacity building and access to basic services with micro-credit in future programming.



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Report information

Date:
2000

Region:
EAPRO

Country:
China

Type:
Evaluation

Theme:
Income Generation

Partners:
Department of International Relations of the Ministry of Foreign Trade and Economic Cooperation, Government of China

PIDB:
ZZ008-52

Follow Up:
Followup

Language:
English

Sequence Number:
2000/001

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