SPECIAL REPORT: e-MFP Investors Action Group Wrestles with Measuring Microfinance Client Outcomes in Alignment with UN’s SDGs

Members European Microfinance Platformof the European Microfinance Platform (e-MFP) Investors Action Group met at last week’s European Microfinance Week to review their progress on developing methods for reporting client outcomes in terms of meeting the UN Sustainable Development Goals (SDGs).

Cécile Lapenu from Cerise explained that the action group is working to: (1) identify investors’ expectations regarding reporting on outcomes; (2) review existing impact reports and websites to identify the metrics now in use; (3) conduct field tests of selected indicators; and (4) document the results to serve as guidance for moving forward.

The group is now soliciting data from investors on their current data collection practices. This includes if and how they collect data from: (1) the financial services providers (FSPs) they invest in; and (2) directly from those FSPs’ clients.

Ms Lapenu argued that factors such as client satisfaction do not meet the generally accepted definition of outcomes. Some FSPs are measuring more robust criteria such as client income and number of employees in client enterprises. Still others are using tools such as the Poverty Probability Index (PPI, formerly known as the Progress-out-of-poverty Index). However, these FSPs generally lack the capacity to analyze this data and track it over time.

Among the goals of the Action Group is to create a framework that is helpful for investees as well as investors, preferably building on what they already use for tracking. Some FSPs may need support to see the value of collecting outcomes data at all. This would be in addition to the help many FSPs need to establish the data collection process and determine how to use the results to make changes in their organizations. One way to motivate FSPs is to illustrate the business case for collecting and using outcomes data. Does helping more clients exit poverty improve customer retention? Does documenting your clients’ successes help attract investors?

Viktoria Popova of Incofin explained that when working with FSPs and producers’ cooperatives, her firm begins by seeking to understand the investee’s vision for social performance, and then, “We build on what’s already existing and optimize how it’s being collected.”

Maya Kobalia from Georgia’s Microfinance Organization Crystal explained how it was challenging for Crystal to create a shared vision among shareholders, customers and staff regarding outcomes measurement. Part of the process involved calling 500 clients and bringing in 100 to participate in focus groups.

Estelle Marcoux from SIDI related how her organization has made successful outcomes more of a factor in its process for deciding whether to fund partners. However, SIDI’s partners generally lack the capacity to measure outcomes well. To do so, she believes most will need better computer systems and greater financial strength.

Edouard Sers of the Grameen Crédit Agricole Foundation described working with existing data to see what can be gleaned about client outcomes. Even after consulting with Cerise and making other efforts, however, Mr Sers said that determining whether investees’ clients have experienced lasting change “is a long journey.” He echoed other Action Group members in noting his organization’s intent to minimize any increases in FSPs’ reporting burdens.

Safeya Zeitoun of the Symbiotics Group described how her firm has tracked the outcomes of investees of the Loan for Growth Fund, which has USD 50 million deployed to 500 small and medium-sized enterprises (SMEs) in 20 countries. During each of the last three years, the firm has interviewed all 500 firms to collect data such as total income, number of employees, number of youth employees and owners’ outlook for the future.

In a separate effort, Symbiotics is working on a study of microfinance clients in sub-Saharan Africa. The team plans to conduct 600 interviews seeking data such as change in number of employees over time, level of indebtedness, whether the client had financial services before working with its current FSP and how the client believes her business performance has changed over time.

This feature is part of a sponsored series on European Microfinance Week, which took place from November 20 through November 22, 2019. The event is held each year by e-MFP, and MicroCapital has been engaged to promote and document the event on-site each year since 2012.

Sources and Additional Resources

European Microfinance Week 2019
https://registration.european-microfinance-week.eu/emw2019

MetODD-SDG assessment tool for mission-driven organizations
https://cerise-spm.org/en/metodd-sdg/

NextBillion: Three Key Sessions from European Microfinance Week 2019
https://nextbillion.net/three-key-sessions-from-european-microfinance-week-2019/

MicroCapital coverage of this year’s European Microfinance Week and past years’ since 2012
https://www.microcapital.org/category/european-microfinance-week/

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