662_Imp_ActTrainingClientAssessment.ppt

Operationalising social performance in microfinance

Presentation to Imp-Act workshopSEEP AGM, October 21st 2003

Anton Simanowitz

Imp-Act is a three-year action research programme

• 29 partners in 20 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

• Focus on improving practice for poverty impact, not just increasing outreach of financial services to the poor

Action Research Programme 2001–2004

1.1 Introduction

1 To develop credible and useful social performance (impact) systems based on the priorities of MFIs and their stakeholders

2 To broaden the scope of impact assessment to include wider poverty impacts

3 To influence thinking and practice relating to the role of microfinance in poverty reduction

Imp-Act aims to improve the quality of microfinance services and their impact on poverty

Three main objectives:

1.2 Introduction

Social objectivesMost MFIs have social objectives and aim to design their

programmes to meet these objectives

• who is reached (gender, poverty level, caste) • how clients benefit – relating to MDGs or other social objectives

eg. social equity or empowerment• how non-clients or wider community benefit

A concern with ‘social performance’

1.3 Introduction

1. Income• income growth (productive use of credit/savings)• income stabilisation (regular and reliable income)

2. Reducing risk and vulnerability• increased assets and savings• consumption smoothing • stronger social networks and support•increased skills

Social objectives – contribution to the MDGs

1.4 Introduction

3. Enabling access to services

eg. health, education, water

4. Social and economic empowerment of women

5. Wider socialEg. changing perceptions of women and poor at

community/society level

6. Wider economicEg. impact on poverty through labour markets

Social objectives – contribution to the MDGs

1.5 Introduction

1. Knowing your market• social motivation to reach specific groups (eg. poor)• increasingly competitive environment • adapting services to specific needs of different groups of

potential clients – makes commercial and social sense

2. Improving service• MFOs can cost-effectively collect information from their clients

to improve both social and financial performance.• Information on if an MFI achieving its social goals

- important internal validation of work- allow for improvements in their interventions

Increasing interest in social performance is motivated primarily by three concerns.

2.1 Why social performance?

3. Reporting to external stakeholders Donors and other external stakeholders are increasingly

concerned to monitoring the effectiveness of their funding towards their social objectives

Increasing interest in social performance is motivated primarily by three concerns.

2.2 Why social performance?

• social as well as financial performance – achieve and demonstrate

• need to collect information to monitor whether objectives are being met.

Achieving a “double bottom-line”

2.3 Why social performance?

• examining their own context, objectives and social performance goals

• designing social performance assessment or monitoring system

• institutionalising this system for use as part of the core operational methodology

• developing effective feedback mechanisms to ensure that information generated is used

• using information produced for operational performance monitoring, management decisions and strategic management

• making operational changes in the light of lessons learnt from the monitoring system and the information it produces

• presenting social performance data to external stakeholders.

Operationalising social performance

Imp-Act partners are…

3.1 Operationalising social performance

Developing social performance monitoring

• Must be simple, cost-effective and useful otherwise financial pressures will take precedent

• Integrated into on-going systems, rather than one-off assessments

3.2 Operationalising social performance

1. What are your social performance goals?• MFIs need to clearly define their social goals

- delivery of financial services to specified markets (outreach) - expected benefits/ impacts on clients/wider community

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

A framework for a social performance system

3.3 Operationalising social performance

Examples of use of monitoring data

• Poverty level of new clients – changes over time?

• Patterns of behaviour/need related to poverty level – business type, loan sizes, savings capacity, arrears, drop-out etc etc

• Changes in poverty level of clients – patterns compared to business type, gender, age, marital status, geography, loan officer, loan/savings amounts etc etc

3.4 Operationalising social performance

Client status monitoring: poverty

020406080

100

1 2 3 4 5 6 7 8

Loan cycle

Average povertyscore

Source: Imp-Act partner

3.5 Operationalising social performance

3. Assessing impact

• Monitor small number of impact related indicators (include in MIS)

• Regular management reports

• Understanding based on MFI knowledge/experience

• Changes in status or monitoring indicators is not impact eg. may be general income increase in whole country

• Follow-up research to understand underlying reasons for changes and drop-outs

3.6 Operationalising social performance

Source: Imp-Act partner

Monitoring changes in status: business value

0500

10001500

1 2 3 4 5 6 7 8

Loan cycle

Average businessvalue

3.7 Operationalising social performance

Imp-Act partner examples

PRADAN (India). Internal Learning System

• Participatory client diary system – track and analyse changes in own lives

• Summarised and analysed at group level

• Summarised into MIS

• Client monitoring system but also impact analysis

3.8 Operationalising social performance

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

3.9 Operationalising social performance

Decision-Making

Reporting

Information Collection

Information Consolidation

CommunicationCommunication

Analysis

Delegation

Implementation

Pilot testing

Communication

The Feedback Loop

3.10 Operationalising social performance

Imp-Act partner examples

SEF (South Africa). Impact Monitoring System

• Monitor impact indicators from all clients on all loan cycles• Capture in MIS

• Quarterly management reports (also submitted to Board)• Useful in strategic decisions

eg. balancing financial and social bottom lines (decisions taken using both financial and social information)

• Learning tool for field staff and clients • Identifies most vulnerable clients to target support

3.11 Operationalising social performance

5. External credibility of social performance data

Who? Board, government, donors, policy makers

Why? Avoid mission drift; resource allocation and strategic decisions

How?1. External studies

2. Auditing of MFI generated data (eg. CGAP Poverty Audit)

3.12 Operationalising social performance

Improving the Impact ofMicrofinance on Poverty

Action Research Programme

www.Imp-Act.orgwww.microfinancegateway.org/impact

Resource CDs, IDS Bulletin, Newsletter, Feedback Loops Practice Notes available at back of this room