SPM and MIS - Microfinanza

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MIS in Social Performance

ManagementMarco Boa

Asia Regional Manager

Beyond MicrocreditA Wholistic Approach to Poverty Eradication

MCPI, 29th and 30 th July 2010


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MicroFinanza Rating Brief Profile


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Who we are

Private and independent rating agency specialized in microfinance and ruralfinanceRating agency registered in the IADB Rating and Assessment Fund and in theADA Microfinance Rating and Assessment InitiativeHeadquarters are in Milan (Italy) with 6 offices in 4 continents

Ecuador: covering Latin AmericaNicaragua : covering Central AmericaMexico: for Mexican MFIsKenya: covering AfricaKyrgyz Republic: covering NISand Central AsiaPhilippines : covering Asia

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Market coverage

More than 550 evaluations in 60 countriesLARGEST MARKET SHARE in 2007 according to the last ADA-KPMG RatingMarket Outlook Report 2008MicroFinanza Rating has pioneered the social rating for microfinanceinstitutions, developing an innovative methodology which include the

direct collection of client-level data ( 55 SR conducted so far ).

16

1425

33

53

85

125

140

2001 2002 2003 2004 2005 2006 2007 2008 2009

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Social Performance Management

How to measure?


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Social Rating

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It provides an opinion on the capacity of an MFI to put its socialmission into practice and to achieve its social goals.It is based on an in-depth analysis of an MFI social performance

management system and social responsibility and an evaluation of itsresults

External and independentQuantitative and qualitative

Objective

ComparableStand-alone or coupled with financial rating


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Social Rating vs Impact Study

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Social rating does not measure impact; rather, itanalyzes the objectives , systems and results of

the Rural Bank, before the impact that thesemay have on clients.

SOCIAL RATING and IMPACT STUDY are :complementary toolsdesigned to respond to different needs .

SOCIALRATING

An impact study measures the change in theliving conditions of one population due to the

action of Rural Bank.

IMPACTSTUDY


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MicroFinanza Ratings Approach

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COMPREHENSIVE SOCIAL RATING

Collection of clients level information:submission of a questionnaire

focus group discussion with clients

Deeper Analysis:Indicators about clients socio-economic profileFeedback from clients aboutsatisfaction/dissatisfaction

STANDARD SOCIAL RATING

Data available at institutionallevel

Proxies

Differences can be more or less relevant depending on theeffectiveness and reliability of the SP monitoring system of the MFI


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MicroFinanza Rating Social Rating

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DIMENSION SUB-DIMENSION

SOCIAL PERFORMANCEMANAGEMENT SYSTEM

Social Mission, Objectives and Strategy, Governance

MIS and Social performance tracking and monitoringsystem

Alignment of the operational systems to the mission (HR,Internal control, product design)

SOCIAL RESPONSIBILITYSR towards the clients (including consumer protection)

SR towards the staff

SR towards the community and the environment

OUTREACHOperational areas

Target reached

QUALITY OF THE SERVICE

Variety of the service

Appropriateness to clients needs and client satisfaction

Non-financial services


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MIS and Social Performance

Feedback from Social Rating

experience


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Trend in the sector

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Potential g level of information for social performance tracking

MFIs collect information through ad hoc surveys/studies

MFIs often do not systematize and integrate the information through the

MIS

MFIs still focused on using social information for external use and less for

internal decision making

The MIS is not adequate to track and monitor the progress towards the

mission


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Information generation


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Social Goals vs. MIS

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SG 1: Reaching targets clients SG 1: Poverty assessment whenrelevant in the mission

SG1: Client profile (socio-economicindicators relevant to the misision)

SG 2: Client satisfaction assessment

SG 2: Client retention

SG 3: Tracking of changes in clientstatus, depending on the mission

Social information system anddecision making

SG 3: Creating change

SG 2: Meetings clients needs


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Process

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Clients

LoanOfficer

MIS

Decisionmaking


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Challenges and Benefits


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Challenges

CostBusiness Model vs. MISSelection of indicators to be monitoredConsolidation of the information

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Benefits

Systematization of social information not only contributes to measuresocial performance, but also has positive impacts on the financialperformance:

Client retention

Product design (new or already existing market niches)

Staff turnover

Risk management (control environment)

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Examples


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Case study: MFI A

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System to classify clients according to their level of capitalisation:1. Type 1: fixed capitalUS$20,000the systematic collection and monitoring of this information is noteworthy and is justified by

the mission objective of increasing the clients level of capitalization.

BEST PRACTICES:Poverty level of clients is periodically assessed through poverty assessmenttools (PPI, etc.). Ideally, the tool should be applied to all entering clients and

also to the clients who exit.Other features of the socio-demographic and economic profile of clients are

monitored to specifically track the progress towards achieving the targetprofile identified in the mission.

BUT : targets in terms of number of clients per each category are not clearly fixed atbranch level, and it is said that capital is not a sufficient criteria to define the povertyprofile of clientspoverty profile of clients is not systematically assessed

Information integrated in the MIS: FDL


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Case study: MFI B

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PPI Pilot: June - October 2008 5.200 clients 7 branches Active clients (cycle 1 to 5)

Legal Form NGO

No. clients (mar09) 56,452

Outstanding portfolio (mar09) 8,716,689

No of branches 21

Area of intervention Urban, rural

Credit methodology Individual, solidarity group

Results of PPI pilot:

Recent clients below national poverty line

Possible reasons of discrepancy: PPI changed in 2009 (not fullycomparable); sample only covers region 3 (not region 1 and 2); risk inquality of output due to high LO work overload and PPI targets

Higher poverty among new clients (29%) than repeated clients (cycles 2-5: 25%-26%; >5: 22%)

Plan to extend to all branches (on a census or sampling basis) and

regularly included into the MIS.

The use of the PPI: ASKI


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Case study: MFI C

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No. loans by clients age

25-6589%

15-2410%

66+1%

47% 53%83%

17%1%

80%

19%1%

R

e f u g e e

R e s i d e n t

M a l e

F e m a l e

D i v o r c e d

M a r r i e d

S i n g l e

W i d o w

No. loans by gende r, re fugee and marital status

High quality of data in MIS: indicators updated at eachloan cycle; breakdowns available.

Challenges : externally oriented reporting, analysispotential for decision making not exploited.

No. and avg. amount of loans by cycle

0

100

200

300

1 2 3-4 5-6 7-8 9-10 11-16

17-22

-1,0002,0003,0004,000

no. avg. amount

No. and avg. amount of loans by sector

0

5001,000

1,500

2,000

A g r i c u l t u

r e

C o m m e r c

e

I n d u s

t r y

S e r v i c e

s

C o n s u m

p t i o n

H o u s i n g

0

20004000

6000

8000

no. avg. amount

Introducing the SPM in the MIS


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How the Social Rating can contribute


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Social Rating INPUT for the MIS

Especially through the Comprehensive Social Rating alist of indicators is disclosedThe use of the PPI can be a first PILOT tool tomeasure the clientele poverty profileFor those MFIs which have already integrated the PPIor other poverty measurement tools, the SR canplays an audit role

The process of clients interview and data collectioncan be a good example on how to replicate thisparticular phase of information generation

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Example of Indicators (1)

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Area: Social Responsability

From the MIS

Female Staff Female Staff in the Management Staff turnover ratio Portfolio yield Real Portfolio yield

From the Comprehensive SR

Financial Awareness (interest rate,service charges, etc Clients with additional credit Clients who paid debts with credit(past) .


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How to define indicators from dataavailable at MIS level

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Social goal

Reach poor

Reachvulnerable

Client loyalty

Improve living

conditions

Average per capita household expenditure (=HH expenditure / HH members);

% households with per capita expenditure below the national poverty line % illiterate clients Average dependency index (total number of dependents / total HH members)

Relevant indicator calculated with data in the MIS

% Households with Cement house walls by loan cycles

Average variation in the saving balance between loan cycles

% clients in loan cycle 3 and more

Data auditis a pre-

conditionto the use

of data


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Contacts

Thank you!!!

Our MANILA office:

Unit 34 Cattleya Gardens, 111 C. Palanca St.,Legazpi Village, 1229 Makati City

Phone: +63 2 8173767

Mobile: +63 (0)9183500821Email: [email protected]

wwwmicrofinanzaratingcom info@microfinanzaratingcom 27
mailto:[email protected]://www.microfinanzarating.com/mailto:[email protected]:[email protected]://www.microfinanzarating.com/mailto:[email protected]

SPM and MIS - Microfinanza

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