Promoting Information Exchange in the Microfinance Industry

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Promoting Information Exchange in the
Microfinance Industry
Common Indicators for Social Performance
Measurement November 11, 2006
Microfinance Information eXchange, Inc.
DRAFT - Updated December 1, 2006
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What? For Whom?

• WHAT
• Goal select CORE set of indicators that can be
  standardized and reported on a wide scale
• NOT define ALL the indicators that are useful to
  measure social performance
• Core Indicators (CI) to be integrated to existing
  initiatives, not to replace them
• FOR WHOM?
• For MFIs, donors, investors and the public at
  large

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Why?

• WHY?
• Increase funding, improve social performance,
  mitigate reputation risk for microfinance
• Increase awareness on microfinance integrated
  into public information platform MIX Market
• Improve performance benchmarks on MFIs
  integrated into MBB

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Basic Facts for Core Indicators

• Short list that does not impose a burden too
  heavy on MFIs
• 10 20 to start
• Buy-in
• from MFIs are useful to MFIs themselves (i.e.,
  can be used to improve social performance) gt
  Survey to get MFI feedback
• From users of data gt included in all data
  collection initiatives, ratings, etc. Who is
  ready to endorse?

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Selection Criteria for CI

• Indicators that MFIs can easily report on
  (ideally, drawing from data already captured by
  their MIS systems, or can easily be added)
• Indicators that MFIs can self-report
• Indicators that are objective can be verified by
  third parties
• Indicators that are globally comparable
• KEEP IN MIND
• Do MFIs report on any of the indicators?
• Do the networks/funders that require these
  indicators have high compliance?

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Types of Indicators

• Outcome
• MDG type indicators that measure household,
  enterprise, or individual outcomes
• Proxy indicators
• MIS generated indicators, e.g., client retention,
  FSS, effective interest rates, number of products
• Process indictors
• e.g., whether MFI conducts market research,
  whether MFI discloses effective interest rate,
  length of group meetings, types of collateral
  taken, etc.
• Corporate social responsibility indicators
• e.g., MFI contributions to community, compliance
  with environmental standards, pay ratio male to
  female, percentage of females in management,
  staff turnover, etc.
• THIN approach

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Types of Indicators
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Choice of Framework

• Option 1 Select initiative that shares same
  criteria for Core Indicators (i.e., USAID Social
  Performance Assessment Tool)
• Or
• Option 2 Start with raters framework and select
  indicators that match the criteria for Core
  Indicators

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Pre-select indicators that match criteria

• Select from 69 indicators, across categories
• CONTEXT
• Organizational Profile
• Financial Services and Access
• PROCESS
• Social Performance Management
• Social Responsibility
• RESULTS Social Goal Outreach
• Social Goal Appropriate Services
• Social Goal Change Effects of Impact

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Results 25 core indicators many already
captured 11 need to be added

• Total client households
• Percent of rural and urban clients
• Effective interest rate on different loan
  products (EIR)
• Whether the MFI has both a written, formal
  internal CSR policy and a written, formal code of
  conduct governing actions between employees and
  between employees and clients
• Average time between approval and disbursal of
  loan
• Women and men on board of directors, in
  management, field staff, and support staff
• Percentage of employees that have left during the
  two most recently completed fiscal years
• Percent of clients with the MFI for the past 2
  years
• Findings of any recent (within past 2 years)
  impact studies of MFI (along with design details,
  methodology for, size of sample, method for
  poverty assessment)
• Contribution toward achieving MDGs change in
  assets or income
• Contribution toward achieving MDGs percent of
  school-aged children (girls and boys separately)
  of clients who attend primary school (compared to
  children of non-clients)

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Seemed to match but were not selected

• Percentage of administrative units (equivalent
  to states) in country with active clients
• Percentage of loan clients with non-traditional
  collateral (e.g., group guarantee, third-person
  guarantee, movable property, etc.)
• Whether the MFI provides clients formal access to
  management.
• Whether the MFI provides health insurance for
  full-time employees (in addition to national
  health coverage system).
• Client retention rate
• Percentage of portfolio growth attributable to
  existing clients over most recently completed
  fiscal year
• Number and percent of accounts in different loan
  cycles (or percent of clients by loan cycle or
  years with MFI)
• Operational areas rankedwith distribution of
  clients across areas
• Number of financial services-supported
  enterprises by number of hired (non-household)
  employees (0, 12, 35,69, 1030, lt 30)

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Process

• Step 1 Confirm pre-selection of indicators
  (today)
• Step 2 TIPS
• Terms standardize
• Indicators standardize
• Performance Standards set
• Step 3 Populate database/Promote

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Process Step 1 Pre-select Indicators

• November 11th
• pre-endorsement of indicators and process from
  Taskforce members
• November 22th
• based on todays feedback from Taskforce,
  finalize short list (10 to 20 to start) and
  prepare questionnaire for feedback from MFIs and
  data users
• November 22nd December 22nd
• from MFIs will send survey to MFIs, through
  regional networks, SEEP SPWG, affiliate networks
• from users of data survey to investors and donors

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Process Step 2 TIPS

• January June 2007
• Final list (including standard definitions) based
  on feedback and new testing
• Formal endorsement from Taskforce members, SEEP
  SPWG, CGAP, CMEF, regional networks and other
  industry orgs.
• Discussion/selection on Peer Group variables for
  benchmarking

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Process Step 3 Populate Database/ Promote

• July 2007
• Start collecting consistently Common Indicators,
  through every evaluation/assessment/audit, etc.

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In Parallel

• Not directly linked to SP Core Indicators, but
  necessary to market them well and improve on
  them
• Test Indicators
• Analyze indicators/ help contextualize results
• Improve/expand indictors
• Do more ratings
• Etc.
• This complements the SP Core Indicators project
  (THIN and FAT both have a place in this process
  THIN for moving faster on SP Core Indicators and
  FAT to improve on them)

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What will be MY role

• in promoting the Core Indicators
• QUESTIONS
• Would you report?
• Would you promote? (i.e., would you encourage
  MFIs to report, even if you are supporting a
  specific initiative)
• Would you review?
• Would you help maintain fresh?
• Would you help update standards?

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Update as of December 1, 2006(DRAFT, work in
progress)

• Step 1
• After reviewing the short list of 25 indicators
  vs. long list, an updated list of 30 indicators
  are suggested
• Of the 30 indicators, some apply to financial
  performance as well, and some do not need to be
  updated on a regular basis (i.e., yes/no
  questions)

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Update on Timeline(as of December 1, 2006)
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Update as of December 1, 2006(DRAFT, work in
progress)

• Next Steps for Sub-Committee
• Suggest definitions, as well as guidelines for
  measuring and interpreting the 30 indicators
• Classify indicators in Simple and Complicated
• Brainstorm 2-step approach 1/ start with simple
  indicators 2/ add complicated latter-on
• Deadline for comments on indicators extended to
  year-end to accommodate sub-committee members
• Sub-committee to meet virtually end of December
  2006/beginning of January 2007 to
• Review final list of suggested core indicators
• Decide if 2-tiered approach needed
  (simple/complicated)
• Adapt process and timeline as needed

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Update of Sub-Committee members(40 as of
December 1, 2006)

• Reynaldo Marconi - FINRURAL
• Patrick Mc Allister/SEEP Consumer Protection
  Working Group
• Mila Mercado - MF Council of the Philippines
• Kasia Pawlak, MFC of CEE and NIS
• Hansruedi Pfeiffer/ SDC
• Rekha Reddy/ Accion-Council of MF Equity Funds
• Frank Rubio - Oikocredit
• Geert Jan Schuite/ FACET
• Tony Sheldon Bering Associates
• Anton Simanowitz/ ImpAct
• Frances Sinha/ EDA-MCril
• Evelyn Stark - USAID
• Katie Torrington/FINCA
• Sebastian Von Stauffenberg/ MicroRate
• Koenraad Verhagen - Argidius
• Peter Wall/ MIX
• Reynold Walter - REDCAMIF
• Gary Woller SEEP SPWG

• Wolday Amha, AEMFI
• Frank Bakx Dutch MF Platform
• Isabelle Barres/MIX
• Marc Berger/ SIDI
• Nigel Biggar/ Grameen Foundation
• Allan Bussard/ Integra
• Patrick Crompton/ASAP
• Bart de Bruyne/TRIAS and European SP working
  group
• Frank DeGiovanni/ Ford Foundation
• Henri Dommel/ IFAD
• Laura Foose/ ACT
• Micol Guarneri/ Microfinanza Rating
• Syed Hashemi CGAP
• Anne Hastings - Fonkoze
• Masami Hayashi/ MFN
• Lauren Hendricks/SEEP Savings-Led Working Group
• Emmanuelle Javoy/ Planet Rating
• Cecile Lapenu/ Cerise
• Teodorina Lessidrenska/GRI