Promoting Information Exchange in the Microfinance Industry

Microfinance Information eXchange, Inc.

Common Indicators for Social Performance Measurement – November

11, 2006

DRAFT - Updated December 1, 2006

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WHATGoal: 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

What? For Whom?

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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

Why?

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• 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) > Survey to get MFI feedback

– From users of data > included in all data collection initiatives, ratings, etc. Who is ready to endorse?

Basic Facts for Core Indicators

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• 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?

*Selection Criteria for CI*

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1.Outcome:– MDG type indicators that measure household, enterprise,

or individual outcomes

2.Proxy indicators:– MIS generated indicators, e.g., client retention,

FSS, effective interest rates, number of products

3.Process indictors:– e.g., whether MFI conducts market research, whether MFI

discloses effective interest rate, length of group meetings, types of collateral taken, etc.

4.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

Types of Indicators

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Types of Indicators

2. What can MFIs report?

1. What do we want MFIs to report?

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• 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

Choice of Framework

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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

Pre-select indicators that match criteria

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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 ranked—with distribution of clients across areas• Number of financial services-supported enterprises by number of

hired (non-household) employees (0, 1–2, 3–5,6–9, 10–30, < 30)

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• Step 1: Confirm pre-selection of indicators (today)

• Step 2: “TIPS”: – Terms: standardize– Indicators: standardize– Performance Standards: set

• Step 3: Populate database/Promote

Process

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• November 11th: – pre-endorsement of indicators and process from

Taskforce members

• November 22th: – based on today’s 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

Process Step 1: Pre-select Indicators

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• 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

Process Step 2: “TIPS”

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• July + 2007:– Start collecting consistently Common Indicators,

through every evaluation/assessment/audit, etc.

Process Step 3: Populate Database/ Promote

GRAMEENFOUND.

PLANETRATING

M-CRILGRI

AMAP IMP-ACT

IRIS

CGAP-FORD

CERISE

CORE INDICATORS

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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)

In Parallel…

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…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?

*What will be MY role*…

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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)

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

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Update on Timeline(as of December 1, 2006)

Task Original Timeline(11/22/2006)

Update

Pre-endorsement of indicators and process from Taskforce members    

November 11th, 2006 Done      

Based on Nov. 11 feedback from Taskforce, finalize short list (10 to 20 to start) and prepare questionnaire for feedback from MFIs and data users    

November 22th, 2006 In progress      

From MFIs: will send survey to MFIs, through regional networks, SEEP SPWG, affiliate networks       

November 22nd – December 22nd, 2006

From users of data: survey to investors and donors      

November 22nd – December 22nd, 2006

Final list (including standard definitions) based on feedback and new testing     January – June 2007

Formal endorsement from Taskforce members, SEEP SPWG, CGAP, CMEF, regional networks and other industry orgs.     January – June 2007

Discussion/selection on Peer Group variables for benchmarking January – June 2007

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

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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

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

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• 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• John Ikeda - WOCCU

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• Hanny Maes – HIVOS