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Mozambique is among the most disaster-prone countries in the world. A bigger than usual, and mostly unexpected, flood occurred in the central-northern region of the country in the first few months of 2015, causing huge damage to infrastructures. In this paper, we use a nationally representative household budget survey that was being carried out in the field during those months to assess the short-term impact of the 2015 flooding on household consumption and poverty levels. Applying a difference-in-difference approach, we find that, for those exposed to the flood, consumption reduced significantly in the short term, in the range of 11–17%, depending on the specification, on the estimation procedure implemented or on the subsample of households selected. Poorer households, and especially households living in rural areas, seem to have been affected significantly more. Poverty levels also increased due to the flood, by about 6 percentage points. These results are relevant for policy planning and natural disaster management, as well as for ex-ante vulnerability assessment in Mozambique and other risk-prone developing countries with similar characteristics.

Moldova has experienced rapid economic growth in the past decade, which has been accompanied by reductions in poverty and good performance in shared prosperity. Nonetheless, Moldova remains one of the poorest countries in Europe and faces challenges in sustaining the progress. The challenges for progress include spatial and cross-group inequalities, particularly because of unequal access to assets, services and economic opportunities. Moreover, strengthening the persistently weak labor markets to boost employment, especially in the nonfarm sectors, is critical for sustaining progress toward the twin goals of reducing poverty and expanding shared prosperity and for addressing the problems associated with an aging population in a fiscally responsible manner. Accordingly, ensuring the viability of the pension system and improving social assistance are necessary areas of reform, particularly in a context of fiscal pressures, the aging population, and the great vulnerability of the poor to shocks. The Moldova poverty assessment 2016 includes three prongs of analysis: this report, which explores trends and the drivers of poverty and shared prosperity, and the accompanying analyses, ‘a jobs diagnostic for Moldova’ and ‘structural transformation of Moldovan small-holder agriculture and its poverty and shared prosperity impacts.’ The jobs diagnostic explores the main labor demand and supply challenges in Moldova in more detail, while the analysis of structural transformation focuses on the agricultural sector and whether it can become a driver of progress.

The paper investigates the structure and dynamics of consumption inequality and inequality of opportunity in Tanzania. The analysis covers the period 2001 to 2012. It reveals moderate and declining levels of consumption inequality at the national level, but increasing inequalities between geographic regions. Spatial inequalities are mainly driven by the disparities of households’ characteristics and endowments across geographic locations. An important part of these endowments results from intergenerational transmission of parental background. Father’s education appears as the most important background variable affecting consumption and income in Tanzania. Without appropriate policy actions, there are few chances for the next generations to spring out of the poverty and inequality lived by their parents, engendering risks of poverty and inequality traps in the country.

In the early 1970s, microfinance came to public attention as a promising tool to reduce poverty. However, some people began to claim that microcredit is unsuitable for sustainable development. Nevertheless, the lack of scientific support for both viewpoints has created a need for empirical studies to disentangle whether microfinance interventions should be implemented, and if so, how. The objective of this thesis is to provide evidence on the role of microfinance in Latin America, with a particular emphasis on Mexico. The main innovation of this study is the focus on four topics that have thus far received relatively little attention. Firstly, the relationship between efficiency and the ownership structure of microfinance institutions (MFIs) in Latin America is investigated. Non-Governmental Organizations (NGOs) and Cooperative/Credit Unions are found to be less technically efficient and have an inferior technology relative to Banks and Non-Banks Financial Intermediaries (NBFIs). Secondly, this study assesses five different microfinance programs on household welfare in Mexico. The findings reveal that savings-oriented microfinance programs outperform programs that primarily offer microcredit, in reducing poverty. Thirdly, the impact of microfinance on vulnerability to poverty is analyzed. The results of this analysis show that membership in a savings and credit society in Mexico improves the well-being of households and reduces their vulnerability. Finally, the impact of the loan officer’s characteristics on determining repayment rates in microfinance is examined. The main outcome suggests that the gender of the loan officer and his/her professional experience are important determinants of repayment rates. Further conclusions are that loan officers who work longer in Pro Mujer have higher default probabilities and that peer monitoring of group members is not a significant determinant of loan default.

In the early 1970s, microfinance came to public attention as a promising tool to reduce poverty. However, some people began to claim that microcredit is unsuitable for sustainable development. Nevertheless, the lack of scientific support for both viewpoints has created a need for empirical studies to disentangle whether microfinance interventions should be implemented, and if so, how. The objective of this thesis is to provide evidence on the role of microfinance in Latin America, with a particular emphasis on Mexico. The main innovation of this study is the focus on four topics that have thus far received relatively little attention. Firstly, the relationship between efficiency and the ownership structure of microfinance institutions (MFIs) in Latin America is investigated. Non-Governmental Organizations (NGOs) and Cooperative/Credit Unions are found to be less technically efficient and have an inferior technology relative to Banks and Non-Banks Financial Intermediaries (NBFIs). Secondly, this study assesses five different microfinance programs on household welfare in Mexico. The findings reveal that savings-oriented microfinance programs outperform programs that primarily offer microcredit, in reducing poverty. Thirdly, the impact of microfinance on vulnerability to poverty is analyzed. The results of this analysis show that membership in a savings and credit society in Mexico improves the well-being of households and reduces their vulnerability. Finally, the impact of the loan officer’s characteristics on determining repayment rates in microfinance is examined. The main outcome suggests that the gender of the loan officer and his/her professional experience are important determinants of repayment rates. Further conclusions are that loan officers who work longer in Pro Mujer have higher default probabilities and that peer monitoring of group members is not a significant determinant of loan default.

Persistent poverty remains a huge challenge in Sub-Saharan Africa. In Kenya, official statistics indicate that the incidence of rural poverty was 49% in 2005/2006. This study uses different approaches and data sources to explore temporal and spatial dimensions of rural welfare in Kenya. The objective is to identify and understand the linkages between welfare, livelihood assets, livelihood strategies, local-level institutions, and exposure to shocks. First, we compared participatory and income approaches to studying poverty and poverty dynamics. We found a significant positive correlation between the results obtained using the two approaches, with both approaches showing evidence of geographical clusters of poverty. Nevertheless, discrepancies in poverty rates and dynamics were found as well. Second, we used asset-based approaches to explore the nature of rural poverty dynamics over multiple periods. We found that majority of households that were poor in two consecutive survey years were structurally poor. Of the households escaping poverty, a large proportion was characterized by stochastic transitions. Few households successfully escaped poverty through asset accumulation, while a large proportion of households declining into poverty experienced structural movements. A combination of livelihood strategies, shocks, and other factors interact to influence household structural transition. Third, we characterized shocks facing rural households. Health expenses, ill-health, funeral expenses, livestock losses, land sub-division, and death of major income earner were the most frequently reported shocks. We also found limited evidence that welfare level affects exposure to specific shocks, but a significant geographical effect. Finally, we revisited the geography versus institutions debate at the micro-level suing local data to explain within-country income differences. We found that certain geographical variables appear more important drivers of per capita income levels than local institutions. Our community-level measures of institutions did not explain within-Kenya income differences. Altogether, the findings underscore the importance of geographical targeting of poverty reduction interventions. Moreover, the coexistence of high rural poverty rates and limited asset accumulation, and strong macroeconomic growth highlight the fact that causes of poverty are complex. Macroeconomic growth policies need to be complimented with policies that enhance escapes from poverty (“cargo net” policies) and those that prevent descents into poverty (“cargo net” policies).

Persistent poverty remains a huge challenge in Sub-Saharan Africa. In Kenya, official statistics indicate that the incidence of rural poverty was 49% in 2005/2006. This study uses different approaches and data sources to explore temporal and spatial dimensions of rural welfare in Kenya. The objective is to identify and understand the linkages between welfare, livelihood assets, livelihood strategies, local-level institutions, and exposure to shocks. First, we compared participatory and income approaches to studying poverty and poverty dynamics. We found a significant positive correlation between the results obtained using the two approaches, with both approaches showing evidence of geographical clusters of poverty. Nevertheless, discrepancies in poverty rates and dynamics were found as well. Second, we used asset-based approaches to explore the nature of rural poverty dynamics over multiple periods. We found that majority of households that were poor in two consecutive survey years were structurally poor. Of the households escaping poverty, a large proportion was characterized by stochastic transitions. Few households successfully escaped poverty through asset accumulation, while a large proportion of households declining into poverty experienced structural movements. A combination of livelihood strategies, shocks, and other factors interact to influence household structural transition. Third, we characterized shocks facing rural households. Health expenses, ill-health, funeral expenses, livestock losses, land sub-division, and death of major income earner were the most frequently reported shocks. We also found limited evidence that welfare level affects exposure to specific shocks, but a significant geographical effect. Finally, we revisited the geography versus institutions debate at the micro-level suing local data to explain within-country income differences. We found that certain geographical variables appear more important drivers of per capita income levels than local institutions. Our community-level measures of institutions did not explain within-Kenya income differences. Altogether, the findings underscore the importance of geographical targeting of poverty reduction interventions. Moreover, the coexistence of high rural poverty rates and limited asset accumulation, and strong macroeconomic growth highlight the fact that causes of poverty are complex. Macroeconomic growth policies need to be complimented with policies that enhance escapes from poverty (“cargo net” policies) and those that prevent descents into poverty (“cargo net” policies).