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Poverty measurements that are useful to the poor

In an effort to promote microfinance and enterpreneurship, Paraguayan NGO Fundacion Paraguaya has developed the Poverty Stoplight, a measurement tool and coaching methodology that is designed primarily to help poor families make sense and navigate their way out of poverty.

This marks a significant departure from traditional ‘extractive’ measurement approaches – and for this reason we are featuring them as one of our ‘development mutants’. After expanding to Tanzania and South Africa, the Poverty Stoplight is now being used in the UK, Mexico and Argentina. We caught up with Eduardo Gustale Gill, Fundacion Paraguaya’s Head of Poverty Stoplight Programme, to find out more.


  1. In some ways, the Poverty Stoplight can be thought of as ‘the opposite of a household survey’. Why did you decide to turn data collection upside down?

When we kept seeing our microfinance clients continuing to have poverty-related problems despite doubling their income, we set ourselves the goal to better understand what it means not to be poor in Paraguay. In this quest, we found a lot of indexes that aimed to measure multidimensional poverty but that did a poor job of helping a grassroots organisation, or an impoverished family, do something about it. The main stakeholders – the families actually suffering from poverty conditions – were not taken into account as protagonists, only as units of observation. For some needs this may be fine, but if you actually want to take action, household surveys are not enough.


What we did is to create an easy-to-understand pictographic questionnaire with actionable indicators (the ‘Stoplight’) and put it onto a tablet with the help of Hewlett Packard. Families then self select where they think they are in each of the 50 indicators, choosing from three categories, red – extremely poor, yellow- poor, green- not poor. When the self diagnosis is finished, information can be aggregated centrally but also stays with the family in the form of a ‘life map’.


An example of one of the indicators in the Poverty Stoplight, Access to Drinking Water


This bottom-up approach, contrary to a household survey, is not only meant to help the organisation that collects the data. It is bi-directional and not solely extractive. It is also simple and visual, helping to make it participant-centric and therefore empowering. In this exercise, it is the families who own their poverty and not the government, which we think is very dignifying. The Poverty Stoplight provides families with a realistic and concrete way to act on their current situations and develop pragmatic strategies to overcome them.


  1. You recently started engaging with major corporates. What benefits do enterprises get from using the Stoplight and how did your business model evolve to work with them?

It is important to note that Corporate Social Responsibility is a concept that still does not have much traction in Paraguay. In this context, among businesses we found that ‘poverty in the workforce’ was all a matter of perspective. Action was sparked when Fundacion Paraguaya set a specific goal: ‘zero poverty’ for private organisations, starting with their own employees. The company becomes the enabler, providing the Poverty Stoplight tool and related resources, but the family is the protagonist. As of today, 86 private companies have implemented our programme. What they discovered is that most of the solutions to get employees out of poverty don’t necessarily require financial resources, as information, motivation and peer influence seem to be the most effective way of improving conditions.


The companies have found that the programme improves employee satisfaction and helps focus their efforts, thereby achieving improved outcomes with fewer resources. Participating companies have reported for example, a significant decrease in staff turnover year on year following the implementation of the programme. Spurred on by the poverty measurement, one of those companies, to help their employees’ families diversify their sources of income, has implemented a microfranchise programme for people to sell their products. In two years, they are already working with 300 beneficiaries and it represents 2% of their total revenue.


Now with a partnership with CAF (Development Bank of Latin America) we are aiming to consolidate the tool and this programme to take it to more countries and companies.


  1. We saw some incredible ‘before and after’ pictures from one of your campaigns to create social and ‘viral’ pressure for people to improve their living conditions. Can you tell us more about the rationale behind them? Why, for instance, focusing on dentures?

A central component of the Poverty Stoplight is the idea that poverty is multidimensional. By this we don’t only mean the various factors that make someone  poor, but also the multiple reasons why someone does not have, for example, a modern bathroom, or enough income. We aim to look at it with an integral approach, that is why we include ‘interiority and motivation’ as one of our six dimensions of poverty.


So when we work with a client that is ‘red’ in dental conditions, which means they are extremely poor in that indicator, we know it might not be due to lack of access to a dentist, but it could be because she is afraid, or it’s not a priority for her, or it’s expensive or even because in her community it’s not an issue to have no teeth after a certain age.


This helps us think about solutions from a different perspective. One of them is the competition ‘My Bathroom, My Kitchen: My Pride’. This contest is a solution created to solve challenges in indicators concerning kitchen standards, sanitation and dental hygiene. Lending groups self select a member that needs to work on one of the indicators, and they then have a four-month period to improve using their own resources. Winners are selected through a public vote using Facebook, which in turn serves as a communication strategy to raise awareness about sanitation needs. 250 new bathrooms and kitchens where built in 2016, Fundación Paraguaya contributed only 7,000 USD in prizes.


A before and after photo from the ‘My Bathroom, My Kitchen: My Pride’ competition


In the same line of work the competition ‘My Happy Smile’ seeks to transform the smiles of our clients. After taking the Poverty Stoplight survey, participants work with their local Committees of Women and personal advisor to make healthy teeth a priority. This approach uses self-management and solidarity to empower individuals to take action. By making one’s teeth and smile a priority, people often feel more inclined to address other challenges in their lives.


María Elena Ledezma, Winner of 2016 My Happy Smile Contest: “I was in a difficult situation because I did not have dentures, I could not laugh. But one day my colleagues in the Committee helped me and encouraged me. My adviser encouraged me to work on my teeth. My life changed with this contest, because now I have a smile, which I did not have before, and I feel very beautiful.”


  1. You recently expanded to developed countries like the UK. What are the major differences in operating in more mature markets?

Poverty is still a concept very associated with certain geographies, however we know that it exists everywhere, and in more developed countries it is associated with more subjective and complex concepts. The Poverty Stoplight does a great job at identifying the commonalities of multidimensional poverty in different contexts and cultures and provides a refreshing way to rethink poverty in these societies.


One major difference is that in developing countries, poverty is a very visual phenomenon and is easy to recognise. However, in developed countries like the UK, poverty is a phenomenon that often occurs behind closed doors. The adaptation process is always a challenge, but we still find that the same indicators are relevant regardless of the country. For example, there are more people living in overcrowded homes in South Africa than in the US, but it is still a common problem in both places.


The root of the problem also varies; in Paraguay for instance we lack healthcare centres, whereas in the UK, despite having one of the best healthcare systems, there are still families who do not make good use of it. Finally, since we aim for achievable goals, there are indicators where ‘what it means not to be poor’ (green) varies from context to context. For example, take the Access to Water indicator; in Paraguay a family is green if it has a faucet in its property, in Nigeria it is green if they have access to a well in the village, while in Newcastle it is about having access to hot water.


In general terms, working in more mature markets has had good implications for the way we work. For example we’ve learned a lot about data protection and data use in these countries that now set our standard.


  1. All development mutants, by definition, evolve! What major challenges are you facing as you further your international strategy, and how are you tackling them?

We are proud of the progress we have made as we have honed our approach and created exciting opportunities to expand our impact dramatically.


I want to start by recognising what we have already learned in the past years:

  • Poverty is multidimensional and involves subjective indicators, which are equally important.
  • Every family has the potential to overcome poverty.
  • Each family is poor in their own way.
  • Indicators must be adapted to reflect the local context, as achievable goals are key to empowering families to take action.
  • Multiple stakeholders can have an active role and be committed, and they have an important role to eliminate poverty, not just the government.
  • Bureaucracy and lack of resources translates into the inability of governments to implement the methodology. Governments have a very important role in our framework but other organisations are more efficient in working with impoverished families. Organisations like ours or private companies can have a direct and significant positive effect in eliminating poverty worldwide.
  • Headcount is good for metrics, but when providing results-oriented solutions, families need to be your unit of analysis and intervention.
  • Technology can help us reach millions of people and manage multidimensionality by allowing families to self-select subjective indicators that are not observable.


The introduction of technology has allowed us to go from reaching a couple of hundred families to working with over 25,000 families in the past four years. The programme has expanded beyond Fundación Paraguaya’s microfinance unit, transcending to local businesses, international NGOs and governments. With the ability to show governments exactly where and how poverty is manifested in their communities, the Poverty Stoplight has the capacity to bring in considerable influence and resources into the fight against poverty. This, we are sure, will help address our next question: How do we go from reaching thousands to reaching the millions of people that could benefit from developing self-help participatory plans?


Our main challenge now resides in putting technology in the centre of what we do. If we want to reach millions it is not only about communication or a good business model, we need to make the tool accessible to anyone that wants to use it. This evolution will essentially oblige us to adapt and has disrupted our way of thinking. We are excited about taking this path but we are still understanding its implications.


The only way we can leapfrog into a technology-centred instrument is by opening up to a world that fosters and welcomes collaboration at all levels. We are looking towards a new scope and type of partners, and are eager to learn from organisations that have something to teach us: from multilateral organisations like CAF, to amazing individual coders around the world.


Find out more about Fundacion Paraguaya‘s work or explore the Poverty Stoplight in more detail. To receive updates on the programme, follow Poverty Stoplight on Facebook and Twitter.

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