Overcoming Poverty through Credit

The "Rural Credit to Reduce Hardcore Poverty Action Research" also known as Ahon Sa Hirap(ASHP)is a research project implemented by the Asia and Pacific Development Centre and the University of Philippines at Los Banos in the Philippines. The project follows the Grameen Bank Approach(GBA)of disbursing credit to the poor and focusses on alleviating the economic and social position of the poor through the provision of credit and the promotion of savings.

Initially the ASHP project’s target group included men and women from the target areas chosen at random. But within one year of implementation, the target group was defined to include women only.

Women are now preferred as the project staff are convinced that lending to women borrowers is more successful due to several reasons.The women have been experienced to be better with repayments, to be without the vices and the carefree behaviour of the men which ensures proper handling of the credit given and to have in them a deeper sense of shame (unlike the men)which makes them not want to be labled as absconders.

The women also handle family finances and feed and care for their children better than men.

The target group of the project is now defined as the poorest of the poor women in the target village.The women are required to be hardworking and whose husbands and children are without habitual vices.They also must be without any outstanding loans, other financial encumbarances or obligations from other credit sources.

The women are chosen through a Means Test, the main objective of which is to select the very poor and most needy among the heterogeneously poor in the community. The woman have to be poor but enterprising.

The Means Test involves 100% personal interviews with potential borrowers in their homes.Three main indices are determined before a potential borrower is selected for the project.These are the housing index, income index and the value of assets index. The Means Test has a scoring scheme specially developed for the project which makes the final determination.

Once the potential borrower women are chosen for the scheme, they are given a seven day training which is compulsory and then motivated to form groups as in the GBA.