On the first day of conference sessions at European Microfinance Week, experts in the social performance of microfinance institutions (MFIs) discussed how tools developed over the last ten years have reached a level of maturity warranting their wider rollout.
Cecile Lapenu of France-based Cerise described SPI4, the fourth iteration of a set of Social Performance Indicators intended to simplify reporting and provide a common language for different stakeholders to discuss social performance management (SPM). SPI4 incorporates the Smart Campaign’s Client Protection Principles and the Social Performance Task Force’s Universal Standards for SPM. It also includes optional modules on poverty, gender and the environment. To date, 432 SPI4 audits have been completed on institutions in 88 countries.
Jurgen Hammer of the Luxembourg-based Grameen Credit Agricole Foundation explained his organization’s use of the SPI4/ALINUS (Aligning Investors’ Due Diligence to the Universal Standards) framework to evaluate and benchmark the social performance of its partner MFIs. The foundation was meeting or exceeding the benchmark data in all categories except for its work with Tier-1 (large) MFIs. He explained that this was not too surprising given the foundation’s stronger focus on smaller MFIs. However, it did cause the organization to reevaluate how it works with larger MFIs.
Kinga Dabrowska of the Microfinance Centre (MFC), a Poland-based network of national microfinance networks, explained that since 2011 her organization has been funding efforts to improve SPM under grants from the US-based Ford Foundation. This included working with 15 investors and helping networks in 12 countries perform local social performance reports. In general, the MFIs had good social mission statements, financial education efforts and other client protection practices as well as growing interest in green products. However, the following were relatively weak: specificity of social goals; outcomes measurement and community support. On a one-to-one basis, MFC found that even competing MFIs were often willing to share knowledge with their peers in the area of client protection. Ms Dabrowska also noted that regulators are starting to collect SPM data as part of their standard monitoring procedures.
Alexis Lebel of OpenCBS, an Asia-based provider of open source loan-origination software, described how his firm’s 180 users can track social performance indicators such as whether children are in school and parents are using public benefits. Reports can be customized for secure sharing with employees, regulators, investors and other stakeholders. The firm also has a forthcoming product for investors that will include SPM reporting.
Adhy Suryadi of Koperasi Syariah BMT itQan, an Islamic cooperative in Indonesia, said, “We have to make sure that our clients’ welfare is measured.” He described his organization’s use of SPM tools since 2016, with support from the UN’s International Labour Organization. BMT itQan started with the SPI4 self-assessment and used those results to build elements of SPM into the organization’s 2017 business plan. Currently it is implementing the six dimensions of the Universal Standards for SPM in stages.
A representative of the ILO stated that “in the long term, this is good for business, [but] MFI managers don’t want SPM to cut into [short-term] profits.” Ms Lapenu argued that “there is a business case for SPM…. It’s often implemented as a risk management tool. It can be a very pragmatic approach.” Johanna Ryan of US-based VisionFund International said that of her organization’s 31 MFIs, her staff found better client retention among those using the SPI4 audit tool.
This interview is part of a sponsored series on European Microfinance Week, which is ongoing in Luxembourg through December 1. MicroCapital has been engaged to promote and cover the event on-site.
Sources and Additional Resources
European Microfinance Week 2017
MicroCapital Coverage of European Microfinance Week Since 2012
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