Making Finance Responsible: Assessing Social Performance of Microfinance Institutions The role of the Microfinance Associations Network Meeting – SPTF – Jordan 2012

CERISE www.cerise-microfinance.org Microfinance knowledge exchange network focused on Ethical and Responsible Finance Core members: five French organizations specialized in microfinance Partners: MFIs, networks, donors, researchers, and investors in Africa, Latin America and Asia Themes: impact and social performance, rural and agricultural finance, governance. www.cerise-microfinance.org Additional talking points: CERISE groups together microfinance actors from around the world. CERISE developed the SPI tool, but SP is not CERISE’s only area of expertise. For more information, visit the website: cerise-microfinance.org Handouts: presentation CERISE 2

ProsperA network Introductions & Expectations PROmotion of Social PERformance – an Alliance initiated by CERISE and its partners Over 70 members (Dec. 2011) Networks from Africa, Asia and Latin America MFIs TA providers from Europe Social investors www.cerise-microfinance.org Additional talking points: CERISE spearheaded the ProsperA network. PropersA’s fifty members account for over 5 million clients. For more information on ProsperA, please visit CERISE’s website Handouts: presentation ProsperA (newsletter)

SPI, a social audit tool for MFIs Developed since 2000 with MFIs & partners Full assessment of social performance Identify strengths & weaknesses Communicate Compare to peers (CERISE database) Fully aligned with Mix Market (automatic) Integrates standards of the sector (CPP,USSP, Seal…) Free access to SPI and guide (with info to Cerise) Widely used in the MF sector by Networks, TA providers, Investors

Who uses SPI? Background to SPI MFIs Social Investors way to dialogue with partners, raise awareness of SP MFI Networks Benchmarking SP, standardized reporting, MIS Oikocredit, Kiva, Grameen-Crédit Agricole, AFD/Proparco, GoodReturn, etc LAC: Foro Lac Fr & its members (RFR, Finrural,…) Africa: AFMIN mb, CIF Asia: SPTF WG, MCPI MFIs Over 500 SPI audits in CERISE/ProsperA database (about 400 MFIs) Additional talking points SPI is used by MFIs as a self-assessment tool. Social investors use the SPI to check on the investee performance, to make investment decisions and to promote social performance among investees. Some of them use it as a basis for defining support on capacity building to improve SPM. MFI Networks also use SPI to create benchmarks for their network affiliates, to help standardize their reporting and to help develop MIS that include social indicators. As of September 2011, CERISE/ProsperA have a database with the results of about 450 SPI audits representing 350 MFIs

Transparency, capacity-building and advocacy on Social Performance Main challenge for credibility and sustainable growth of the sector Key role of the networks See the Decision Tree for networks / SEEP support to MFA Social assessment as an entry point for SP Strategy Rich experience of the networks so far Foro Lac Fr in Latin America (started SPI audits in 2007) CIF in West Africa + AFMIN in Africa Asian networks launching SPI audits

Content of Questionnaire The SPI tool Content of Questionnaire Part One: Basic details on the MFI, Profile, Social Strategy, Financial performance, Governance Part Two: 70 Social Performance Indicators Dimension 1: Targeting and Outreach Dimension 2: Products and Services Dimension 3: Benefits to Clients Dimension 4: Social Responsibility Additional talking points: + Not an impact analysis + content= questionnaire + guide (Wiki page) The questionnaire has two parts. Part One gathers descriptive information on the MFI, its context and its social strategy. Basic financial information is also collected here. They are key to balance SP and FP information, to make sure that FP are not forgotten, to be included in CERISE’s database to conduct statistical analysis on the links between SP and FP. Part Two gathers data on the Social Performance Indicators themselves. The indicators are broken down into four dimensions (read slide). Each of these four dimensions is broken down into three criteria of about 15 indicators each. Handouts: SPI Questionnaire Each dimension is broken into 3 criteria and has 16-19 questions for a total of 25 points

Standards of use of SPI Principles: the SPI charter The SPI tool: always use the latest version Process: the SPI Operational guidelines The steps for internal/external – Centralised/participatory The process for verification and quality control The staff: knowledge about SPI/ Links with Cerise – ProsperA (updated on training, tools, experiences, etc.)/ Certification Reporting: Individual report/ national analysis + report data to Cerise/ProsperA database (peer group) The version 3.3.1 of SPI has come with Standards of Use. These Standards of Use formalize the application of SPI audits. They are designed to orient users, strengthen quality control and enhance the clarity and credibility of the results disseminated. Any SPI user must agree with this standards before implementing it and sign the charter which gathers the terms and conditions of SPI. Among the requirements : Before implementing the SPI, make sure to use the latest version available on CERISE website and wiki page The implementation must follow the SPI Standards of Use – available on CERISE wiki page The user should have sufficient knowledge of the tool – the wiki page is a reliable and update source of information. The user should also keep in touch with CERISE to receive feedbacks, and useful material When finalized, the user should make sure the MFI has the filled and complete questionnaire. Data are to be reported to Cerise, who will process them on a confidential basis, and be able to provide outputs (benchmark/peer group analysis) to the MFI.

Methodological options The SPI tool Methodological options Internal self-assessment (+/- 3hours) or external audit Centralized (top management) or participatory approach (different stakeholders and levels of the MFI) 1-3 day process (centralized) / 4-6 day (participatory) Additional talking points: There are two choices to make in terms of methodology. The institution may opt to apply the questionnaire internally, effectively conducting a self-assessment, OR call on an external auditor to administer the questionnaire. Next, the institution must decide whether to take a centralized approach, in which only top management would be consulted to fill in the questionnaire, or a participatory approach, which involves various stakeholders from all different levels of the MFI. The centralized process is shorter, only 1-3 days needed. The participatory is longer—you need 4-6 days—and naturally more in depth. Note to trainer: Trainer may want to add a point under the first bullet that refers specifically to the audience. For example, “in the case of XYZ Institution, assessment could be carried out by ABC, under supervision of EFG.”

Example of results: A participatory MFI The SPI tool Example of results: A participatory MFI Context and strategies Rural, women business sector Mature MFI Previous crises in MF sector (i.e: over-indebtedness, mission drift) has pushed social agenda forward SPI results Strong and balanced performance Range of services and Benefits to clients can be improved This is an example of the results of an SPI audit, carried out by an MFI whose members participate in the governance structure. (cooperative model) This institution is a mature MFI, operating in rural areas, and servicing women clients. The MFI had to face previous crises which occured in the Microfinance sector, what has led it to work further to promote social performance. The top graph shows results in the four dimensions. The bottom gives a more detailed look of results for each criteria. The SPI results give an overview of the strength and potential areas of improvement that have been identified by the actors conducting the audit: A strong and balanced sociale performance Weaknesses in diversification of services and Benefits to clients. 10

Cerise Data base: Comparing MFI Criteria 2: Choose the MFI (Ex: Crecer) Criteria 1: Choose the country (Ex: Bolivia) The criteria chosen allow to compare the results of 1 MFI and those of all MFIs in the country 11

Examples of the role of the Networks

CIF in West Africa: Assessment & Management SPI Training 2008, training on SPI + Set up a Reference Group (12 managers, 2 by members) 2009: Peer reviews using the SPI tool. 2010, Define an Action plan: reach more family agriculture => overview of practices increase outreach to women & vulnerable gp improve savings services better use of surpluses => work in progress set up a social performance M&E and impact assessment system => see reports + dashboards Peer Review SPI Social report Ag practices Social report Workshops Field work

CIF - Continued 2011, focus on two areas: financial services for rural development and family farms Consumer protection. Early 2012, the six cooperatives applied the Smart Campaign’s self-assessment tool, A full-blown assessment of members’ practices is expected to take place later in 2012 through peer reviews coordinated by CERISE. Agriculture Smart self assessment Social Report CPP Peer Review CPP Workshops Field work

Social Reports When the SPI tool is applied to a network of MFIs, the findings revealed for each member can be consolidated to build a social report. This is a way to promote social performance and share good practices.

From SPI to Social Dashboards This is an example of dashboard realized by a regional network of African cooperatives (fictive data, for illustrative purpose only). It is used for general assemblies of members and Boards of directors. It offers a common language for the whole network and gives the opportunity to follow key indicators of social performance.

Value-added of the Networks Knowledge of the members (accurate assessment, also linked to peer control) Economies of scale (improving capacities to conduct audits, capacities to work over time on action plans) Member-focused agenda: advocacy (e.g. RFR), capacity-building / strategic decisions (e.g. CIF), transparency (e.g. Finrural, Amucss) Services for the members

Contact CERISE: cerise@cerise-microfinance.org More informations… CERISE website: www.cerise-microfinance.org Contact CERISE: cerise@cerise-microfinance.org SPI Wiki Page http://spiwikiv3point3.pbworks.com