Consuming Money in a Cashless Society: value, signifier

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Microfinance with a Mission Learning Together
Building a Comprehensive Knowledge of
Microfinance The Role of Research
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Assessing Performance of Microfinance Providers
Engaged in the Delivery of Social Welfare
Dr Karl Dayson k.t.dayson_at_salford.ac.uk
June 2006
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Introduction

• Microfinance in Britain about social policy
  enterprise development/financial inclusion
• Phoenix Fund and Growth Fund
• Little interest in developing a financial
  services community weve already got one
• Conventional benchmarks may be irrelevant as
  sustainability may not be main objective
• In UK credit unions for personal finance CDFIs
  for business lending

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Unsustainable in perpetuity?

• Size
• Lending to high risk customers
• Need for personal service
• Cap on interest rate for credit unions moral
  cap on CDFIs
• High operational costs inefficiencies
• But dont know if these are structural or
  organisational? minimal research

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Measuring performance (1)

• Purpose understanding lending process
  efficiency
• Product cost allocation model (CGAP 2004)
  apportioning indirect costs to specific
  activity/product
• Survey of microfinance providers a sub-sample
  timesheets of staff
• categorising activity into 5 core groups
• Personal loans
• Business loans
• Savings
• Administration
• Governance and others.

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Measuring performance (2)

• 3 stages to estimation model
• identification of activity costs
• allocation basis
• model estimation.
• Financial performance interested in actual
  budgeted performance
• Sought to understand the loan process in
  different types of lenders
• Timesheet measured actual staff activity in 15
  minute blocks throughout a week
• Also collected data on mgmt estimated time
  distribution
• Able to compare estimated to actual financial and
  staff performance.

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Conclusion

• Comparing financial performance on global scale
  is often problematic, but measuring time is a
  practical comparative tool
• Accounts tell you a problem, internal process
  flowchart timesheets identify where the problem
  may be occurring
• Sometimes sustainability is less important than
  the funder getting value for money, especially
  when dealing with social welfare provision.
• But still important to demonstrate continued
  efficiency