Presentation by Julie Denève November 2015 MFIs as social entreprises?MFIs as social entreprises? Helping MFIs become more socially responsible

–Luxembourg-based NGO specialised in microfinance and inclusive finance since1994 –Active in West Africa, Central and Latin America, South-East Asia, MENA region and Luxembourg –Beneficiaries : 150 microfinance institutions 5 million people –Staff: 40 people based in Luxembourg – 1 office in Tunis –Funding: 70% from the Ministry of Foreign Affairs of Luxembourg ADA – Appui au Développement Autonome

The sector is promoting social values such as reducing client vulnerability, alleviating poverty, etc. The products delivered by MFIs are intended to solve social problems : poverty, gender gap, lack of access to education, health, savings, insurance, etc. But, although social goals are a common denominator, the strategy to reach them is sometimes quite different. How about the way those products are delivered? Mission drifts and microfinance crises Social orientation in MF

Towards more responsibility Necessity for the sector to become more responsible through: Client protection Social performance management Several tools and standards have been built up to help MFIs improve and prove their social practices and results.

SMART CAMPAIGN Design and deliver appropriate product Prevent client overindebtness Are transparent Adopt responsible pricing Treat respectfully and fairly their clients Protect privacy of client data Adopt effective complain resolution SPTF Define and Monitor Social Goals Ensure Board, Management, and Employee Commitment to Social Goals Treat Clients Responsibly Design Products, Services, Delivery Models and Channels That Meet Clients’ Needs and Preferences Treat employees Responsibly Balance Financial and Social Performance Best practices

Social Performance Management (SPM) is the effective translation of an institution’s mission into practice in line with accepted social values. Source: Social Performance Task Force

Intent & Design Internal Systems/ Activities OutputsOutcomes INTENT AND DESIGN What is the mission of the institution? Does it have clear social objectives? INTERNAL SYSTEMS & ACTIVITIES What activities will the institution undertake to achieve its social mission? Are systems designed and in place to achieve those objectives? OUTPUTS Does the institution serve poor and very poor people? Are the products designed to meet their needs? OUTCOMES Have clients experienced social and economic improvements? IMPACT Can change in client welfare be attributed to institutional activities? Impact Social performance management – Dimensions and Tools Source : SPTF

From a socially performant MFI to a social enterprise… Social Performance Management has the objective to improve the sector and MFIs practices A step towards MFIs being considered as social enterprises Depending on the MFI status, its context but also on its will to balance its social and financial mission, the MFI will be more or less socially performant.

Julie Denève Research & Development Project Officer ADA 39, rue Glesener 39, rue Glesener L-1631 Luxembourg L-1631 Luxembourg Tel.: Tel.: Thank you for your attention!