Financial inclusion has increasingly transformed the lives of millions of entrepreneurs in developing countries. However, it is widely accepted that greater access to financial services is not a panacea for eliminating poverty.

Recognizing this limitation, Incofin cvso investee Fundación Paraguaya designed the Poverty Stoplight, a revolutionary tool that deconstructs the complexity of poverty into more manageable sub-dimensions such as employment, health, housing and education, each with measurable indicators. Through a simple, electronically delivered survey, each family self-diagnoses its current living conditions as “red” (extreme poverty), “yellow” (poverty) or “green” (no poverty) for each indicator. The family then works directly with Fundación Paraguaya to develop a customized “Poverty Elimination Plan” that addresses the unique challenges they face.

Since inception, The Poverty Stoplight program has already helped 85.000 people eliminate multidimensional poverty in their communities. Incofin is now helping Fundación Paraguaya extend the reach of the program. With support from the Technical Assistance Facility of Incofin’s Fairtrade Access Fund (FAF), the MFI is, for the first time, applying this tool among smallholder farmers. Effectiveness is enhanced through cooperation with Manduvira, an organic sugar cane cooperative in Paraguay that is also an FAF investee.

Impact potential from this program extension is high since smallholder farmers constitute the largest global population segment of those living on less than $2 per day[1] and face unique vulnerabilities from crop price shocks, seasonality and climate change.

“We are not talking about reducing, alleviating or combatting poverty, we’re talking about eliminating it.” – Eduardo Gustale, Poverty Stoplight Program Manager

[1] https://www.cgap.org/sites/default/files/Focus-Note-Early-Insights-from-Financial-Diaries-of-Smallholder-Households-Mar-2015.pdf