SEF and Truelift: Achiever Milestone MFI

In this second post in our series on Small Enterprise Foundation (SEF), a recognized Truelift Achiever, we will be speaking with John de Wit, Founder and Managing Director of SEF, and Esido Mushwana, Research & Development Manager, on their experience with poverty-focused microfinance and Truelift Assessment. Hear firsthand why Truelift Assessment was important to SEF, and how their purposeful outreach to poor people in South Africa continues to evolve.

SEF and Truelift

We asked both John de Wit and Esido Mushwana of SEF – What brought you to Truelift? What about our mission and vision for microfinance compelled you to undergo Truelift Assessment? The answers were quite moving.

John de Wit and his founding partner built SEF on a mission to lift their clients out of poverty. Yet as the years passed, he started to be “much like many people, worried about what microfinance had become.” De Wit speaks of the crises around the world, including those in India and Morocco, and the troubling randomized control trials coming out around the same time: “It began to give a picture that, well, maybe it’s only the minority of MFIs that are really focused on social impact.” This  picture distressed de Wit, and it was that concern that brought him to Truelift.

“I had certainly always believed that, when we talked about microfinance, we were all talking about microfinance for poverty alleviation, or employment creation, or at least for social good….I saw Truelift as an effort to recognize and champion the way of the social focus – the social motivation approach to doing microfinance.”

Esido Mushwana also recounts many of these same concerns: “There was a challenge in the microfinance industry – are we actually really making an impact?” Truelift’s focus on outcomes for clients offered a unique value to SEF, as they wanted to know: “Is what we are doing really helping our clients or not? We need to look at indicators so that we can see that,” explains Mushwana.

In the next few paragraphs, we will learn more about SEF’s commitment to reaching and serving people living in poverty, how it has evolved and continues to evolve to this day.

SEF’s continuing journey

Purposeful outreach to people living in conditions of poverty

SEF was founded by John de Wit himself and another political activist in South Africa. Their mission was simple: they wanted to do something about the injustice of poverty surrounding them. “Right from the beginning that was the purpose,” says de Wit. Learning as much as they could from the Grameen Bank model, they  first launched the program in 1992.

A couple of years later with the program a seeming success by many measures, de Wit recounts his experiences while visiting local communities with SEF staff. He saw “people who were running even smaller businesses than our clients that were not joining the program….people living in even worse off housing than our clients were living in, and they were not joining the program.” De Wit was again troubled by what he was seeing, “why are these people who look like they are in even more serious poverty than our clients not joining our program?”

During that time, some notable experts in the field were talking about outreach to poor people in  microfinance, pointing to an answer to de Wit’s question. Professors Sukor Kasim and David Gibbons, affiliated with Grameen Bank, were spreading the word about targeting and pro-poor microfinance – “saying if you don’t have a system for targeting the poor you are going to miss the very poor,” recounts de Wit. It was at this point that John de Wit and the SEF team began experimenting with a targeting methodology.

They started with a tool similar to what is now the Cashpor Housing Index, and de Wit soon began to see that “Yes – we really were getting poorer clients if we used the targeting approach.” As pioneers in the early days of purposeful outreach to poor people, SEF went on to develop the still widely used Participatory Wealth Ranking (PWR) methodology. Esido Mushwana tells us a bit about SEF’s use of the PWR since he joined the SEF team in 2001: “We would go into communities and ask people – what do they mean when they say a person is poor? What are the characteristics? And then try to profile all of these characteristics….[The PWR] helped us to see who are the people to actually target.” Once PWR profiling is complete, SEF staff then go back into that community and speak with those identified as having the profiled characteristics of poverty. Mushwana explains the next steps in the process:

“So we would just go to their houses, whether or not they wanted to do business we were not sure. We would just go to the houses of the most poor [people in the community] according to the profiling that we had done. We would try and speak to those people and say – do you have an interest in making an income for yourself? And usually people would say ‘no, even if I wanted to start I don’t have the money and all that.’ So then we would ask them, what if you had the money? What if you had 500 Rands, 1000 Rands – what would you do?”

What they see next is quite compelling. As Mushwana explains, this is when you start to see people’s ideas really come to the fore; “Some would say, maybe I would sell cold drinks because it’s summer, and some would say I would put up a market and so on.” This very targeted outreach to vulnerable people in SEF communities saw great response. Those very poor community members de Wit was concerned SEF was not reaching began to join the program, thanks to the conversations promoted by purposeful PWR outreach.

As SEF has grown, more and more clients are coming to them on their own. “They know about us,” explains Mushwana. “They know the reputation of SEF. Clients even go out and encourage other people in the villages to come and join SEF because they know it helps. I fell in love with that and I have developed a great passion for the work.”

Most recently, SEF has adopted use of Grameen Foundation’s Progress out of Poverty Index (PPI) for their purposeful outreach to people living in conditions of poverty. Since they begun implementation last year, SEF has rolled-out the PPI in all but six SEF branches. PPI roll-out is due for complete implementation in 2014. The switch from the PWR to the PPI, explains de Wit, was closely linked to their success and growth: “When institutions are small, you tend to be able really motivate staff….Everybody is around the same mission. But as organizations get bigger and bigger, people get further and further away from the core leadership. And you find much more that you have to have a systems approach.” The PPI, explains de Wit, allows for auditing of the poverty data collected, where SEF can go back and check the data collected by staff, a task that is much more difficult to do when working with PWR data. De Wit also notes that the PWR can be quite expensive compared with the PPI, as “it takes a good deal of training for the staff to be able to do it well.” PPI is also linked to international and national poverty lines, allowing SEF to benchmark and measure the poverty gap between national and other poverty rates and client poverty rates – an important statistic for poverty-focused MFIs.

Next in the Series

Join us for the next post in this series where we will hear again from SEF leadership, this time on SEF Moving forward: Plans for a Truelift Achiever. Also take a look at this first post in this series, About Small Enterprise Foundation (SEF): Truelift Achiever.

Thank you to John de Wit and Esido Mushwana for taking the time to share your experience. We look forward to continuing to learn from SEF.