Operationalising Social Performance In Microfinance

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Operationalising social performance in
microfinance Anton Simanowitz
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1.1 Introduction
Action Research Programme 20012004

• Imp-Act is a three-year action research programme
• 30 partners in 21 countries very diverse range
  of MFIs
• Implemented by a team from three British
  universities the Institute of Development
  Studies (IDS), the University of Bath, and the
  University of Sheffield
• Developed from the needs of MFIs and their
  stakeholders

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Achieving a double bottom-line

• Do MFIs have effective services to achieve their
  social goals?
• Two questions
• Do MFIs have the data with which to manage their
  social performance?
• Can MFIs report credibly report on social
  performance to external stakeholders?

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• Internal agenda
• Knowing your clients -gt better services
• who is reached (gender, poverty level, caste)
• Monitoring changes in clients and drop-outs (and
  non-clients?)
• Managing social performance
• Making informed management decisions
• Improve financial and social bottom-line

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• SEF. Impact Monitoring System
• Product decisions to improve financial
  performance
• Use social data to monitor impact of changes on
  financial performance
• Poverty monitoring of drop-out, arrears,
  attendance, savings, business value

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Source Imp-Act partner
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• Internal agenda
• Not just how to use financial services but making
  them most effective to achieve social goals

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• External agenda
• Transparency in reporting of social performance
• Link to MDGs donor agenda
• Social investors

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A framework for a social performance
1. What are your social performance goals? MFIs
need to clearly define their social goals -
delivery of financial services to specified
markets dimensions of outreach - expected
benefits/ impacts on clients/wider community
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A framework for a social performance

• 2. Monitoring status of clients
• On entry
• Changes over-time monitoring of simple
  indicators
• Drop-outs
• Eg. sex, age, marital status, employment, no.
  children, education level, business type,
  business value, poverty level, location

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• 3. Assessing impact
• Weak attribution
• Management discussions
• Market research
• Strong attribution
• Qualitative interviews (QUIP)
• Panel data from MIS
• External studies

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• 4. Social performance management
• Using information to improve practice
• Ensuring organisational learning systems
  involving staff and clients at all levels
• Continuous process of generating and using
  information
• Organisational culture is key

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The Feedback Loop
Communication
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• 5. Credibility of social performance data
• Who?
• Management, Board, government, donors, policy
  makers
• Why?
• Avoid mission drift resource allocation and
  strategic decisions
• How?
• External studies
• Auditing of MFI generated data (eg. CGAP Poverty
  Audit)

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• Pursuing the double bottom-line
• PRIZMA
• Defining social objectives poverty and
  vulnerability
• Understanding of poverty in Bosnian context
• Recent poverty lot of assets but low income

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• Pursuing the double bottom-line
• PRIZMA
• Know your market
• Poverty assessment
• Review and modification of products and services
• Changing staff incentives eg. Include drop-out
• Changing organisational culture and messages
• Better placed in competitive market
• More efficient and effective financial and
  social bottom-line

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• Pursuing the double bottom-line
• PRIZMA
• Managing social performance
• Poverty assessment and monitoring system
• Tracking poverty and change in poverty against 30
  MIS variables
• Ability to make informed decisions

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• PRIZMA Poverty Score card
• Track client poverty status as part of the credit
  scoring process
• 2. Locally relevant indicators are linked to
  national poverty data through LSMS poverty survey
• 3. Data is integrated into on-going monitoring
  system to allow for tracking of client status and
  assessment of impact.

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• PRIZMA Poverty Score card
• Key features
• Indicator development
• Simplicity of use virtually cost-free
• Timely information to management
• Highlights issues and complements market
  research, including segmentation, retention, and
  other operational concerns

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• Pursuing the double bottom-line
• PRIZMA
• External reporting
• Poverty outreach
• Change in poverty status
• Understanding of PRIZMAs role (not quite impact,
  but close)

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• Pursuing the double bottom-line
• PRIZMA
• Quality control
• LOT (lot quality assurance)
• Internal auditing of poverty score card
• External credibility through documented process
• Final review by Imp-Act will provide an example
  of auditing

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Improving the Impact ofMicrofinance on
PovertyAction Research Programmewww.Imp-Act.or
gwww.microfinancegateway.org/impactResource
CDs, IDS Bulletin, Newsletter, Feedback Loops
Practice Notes available