Who needs help and who doesn't

Social Policy has been at war with targeting since the very early conception of public cash transfers. How can governments make sure that they help those who need social support and not compensation seekers?
Targeting is certainly the key word and probably the most complicated and crucial element distinguishing good from bad aid programs.

I have news; I think microfinance could help with this. Information on microfinance usage could be used as a proxy to identify social protection beneficiaries.

Think of a village or a region with very low income levels. Within those income levels you have the poor, the very poor, the ultra poor. Think about those days when you would delegate to your little brother what your mum asked you to do…weeell, this is the right picture: there is always somebody below you. Now, as a point of departure, let’s assume that microfinance should target the poor, probably not the very or ultra poor, who do not have regular income sources and will almost certainly become debt-trapped if they borrow. So, could “use of a microfinance service” serve as an indicator to distinguish those who need social protection from those who doesn’t? You got it.

Imagine the following questionnaire in rural India or Bangladesh:

Have you ever had a loan with a microfinance provider, open a micro-savings account or contract an insurance policy?

- Answer is yes - customer might or might not need social protection assistance
- Answer is no - higher chances that low, very low income respondent needs assistance

Most probably those who haven’t used a microfinance product are the real ultra poor. As long as it is easier, cheaper and faster to validate usage of a "micro service" than to do means testing….this could work.