1. SEPTEMBER 2007 Increasing Transparency on Social Performance Presented by: Gema Perez E-mail: gperez@planetrating.com Planet Rating 13 rue Dieumegard 93400 Saint Ouen France Tél : 33 1 49 21 26 30 – Fax : 33 1 49 21 26 27 contact@planetrating.com - www.planetrating.com

2. November 16th to16th 2007 Measuring social performance of MFIs Created in 1999 and became a private independent rating firm in June 2005 Planet Rating: The Global Microfinance Rating Agency Planet Rating has the most extensive global coverage: Paris HQ: covering Eastern Europe & Asia Lima Office: covering Latin America & the Caribbean Dakar Office: covering West & Central Africa Kampala Office: covering East & Southern Africa Beirut Office: covering North Africa & Middle East Most diversified rating team in the industry: Multicultural: American, Canadian, Colombian, Dutch, French, Lebanese, Senegalese, Spanish, Ugandan, Peruvian, Vietnamese citizens Multilingual: Arabic, Dutch, Italian, English, French, Lugandan, Spanish, Portuguese, Vietnamese, Wolof speakers Qualified & experienced team: Planet Rating’s Managing Director is the only head of rating agencies that has operational microfinance experience; he was former General Manager of SPBD – Samoa’s largest MFI Each senior analyst has conducted at least 12 rating missions on 3 different continents Analyst backgrounds: investment banking, management consulting, non-profit, microfinance

3. November 16th to16th 2007 Measuring social performance of MFIs Planet Rating is one of the most experienced microfinance rating agencies in Eastern and Central Europe and NIS We have rated MFIs of all sizes, types, legal statuses and stages of development: Bosnia and Herzegovina: Mikrofin, EKI, Partner, Sunrise, LOK micro, MI BOSPO, Benefit, Prizma Russia: FFECCC, RWMN, VRFSBS Armenia: Aregak, MDF Kamurj Mongolia: Khan Bank, Xac Bank Moldova: MicroInvest Serbia: AgroInvest Georgia: Constanta Kosovo: KEP

4. November 16th to16th 2007 Measuring social performance of MFIs Planet Rating and our reports are recognized by microfinance investors Many key investors (e.g. FMO, Blue Orchard, responsAbility, Oikocredit, KfW) prefer our detailed and deeply analyzed reports EBRD and EIB – the leading European microfinance investors – are frequent readers of our rating reports Wide Report Distribution Our reports are distributed to and read by all 76 microfinance funds and investors and numerous donors such as development banks and bilateral agencies Get rated by Planet Rating means instant recognition and credibility with investors

5. November 16th to16th 2007 Measuring social performance of MFIs We value what we measure: measure your social performance! For most MFIs, institutional sustainability is only a means to an end: achieving their social goals. Transparency on financial performance, with the existence of clear financial performance standards, regular reporting, external evaluations and ratings, has played a significant role in the development of strong microfinance institutions. In order to further strengthen the sector, increased transparency and accountability on the capacity of MFIs to effectively achieve their social goals is needed. Social Ratings are now available for MFI that wish to complement their institutional and financial rating and provide a comprehensive information to their stakeholders (Boards, Management Team, Fund providers, Supervisory Bodies) for an optimal decision-making.

6. November 16th to16th 2007 Measuring social performance of MFIs Social Rating: A tool to improve your social performance Social ratings include an audit of your Social Performance Management systems conducted with a transparent methodology and in an interactive mode to ensure an optimal appropriation of the conclusions of the audit Interviews with management team, board, field staff Verification and validation of social performance information and indicators Document review (communication documents as well as internal) For institution where social performance management systems are only incipient, our Social Ratings can be complemented by a one-day training for MFI staff on concepts and best practices currently being developed in the field of social performance management (optional) Social Performance Management is defined as the processes through which you define and formalize your social goals, design the systems to put these intentions into practice, measure actual outcomes and use these results to refine systems and improve practice

7. November 16th to16th 2007 Measuring social performance of MFIs Social Rating: A tool to communicate about your social performance Our Social Rating standardized and comprehensive rating reports are designed to suit the information needs of all MFI stakeholders (Boards, Management Team, Fund providers, Supervisory Bodies) Socio-economic environment Outreach and microfinance service offering in the country Social performance indicators (with benchmarking) Concise and clear justification of conclusions

8. November 16th to16th 2007 Measuring social performance of MFIs Social Rating: Reduce risk, create opportunities Improve your social performance management systems Identify weaknesses and learn about best practices Reduce reputation risks Demonstrate efforts made towards client satisfaction and client protection Build an image of socially responsible institution Differentiate your MFI from competitors to attract skills or funds and enhance staff motivation Increase transparency Comply with stakeholders information requests (fund providers, regulators, clients)

9. November 16th to16th 2007 Measuring social performance of MFIs Social Ratings: What do we rate? Intentions  clarity and consistency Clarity and visibility of intentions (translation into clear and binding documents) Relevancy given the MFI context and maturity Consistency of main decisions with stated goals and intentions Implementation  efficiency Efficiency of processes Availability of necessary resources Integration of these processes in the control/ audit / verification cycle Results  comparison with benchmarks Opinion on the reliability of indicators Comparison with national / international microfinance benchmarks Comparison with internationally approved Corporate Social Responsibility objectives (MDG; ILO; Global Compact; UN Charter)

10. November 16th to16th 2007 Measuring social performance of MFIs Social Rating Scale Social Ratings provide an opinion on the capacity of an MFI to achieve its social goals RatingDefinition 5 Advanced: Long-lasting commitment to social goals. Efficient management of social performance and social responsibility risks. Institution very likely to achieve a positive social impact. 4 Convincing: Clear commitment to social goals. Reasonable management of social performance and social responsibility risks. Institution likely to achieve a positive social impact. 3 In progress: Clear intent to reach social goals. Social performance management systems being implemented. 2 Incipient: Clear intent to reach social goals. Low capacity to manage social performance. 1 Intangible: Intention to reach social goals is non tangible. Low level of management of social performance.

11. November 16th to16th 2007 Measuring social performance of MFIs Synergies between Social Rating and GIRAFE Rating Because the sustainability of an institution is key to its social performance (by allowing it to provide service in a durable way), Social Ratings are only conducted for MFIs that have already undergone an institutional rating (with Planet Rating or another reputable microfinance rating agency) Social Rating missions can be conducted at the same time as GIRAFE rating missions, but it is not mandatory Stand alone Social Rating mission, depending on the size of the institution and the type of information available, takes 2-4 days on-site Combining both processes provides efficiency gains that are reflected in the prices

12. November 16th to16th 2007 Measuring social performance of MFIs Institutionalization of the Social Mission Social Mission and Strategy Does the institution have a clear social goal, shared by all stakeholders? How is it defined? Is the social mission integrated in the main decisions of the MFI? Is there a risk that the institution might loose its social focus? Social Performance Monitoring Has the institution put tools and systems in place to measure and track its social performance? Staff Mobilization Are processes in place to involve/motivate staff in/towards the achievement of social goals? Social Rating framework ( )

13. November 16th to16th 2007 Measuring social performance of MFIs Social Rating framework  Outreach Client targeting Has the institution defined its target population? Has the institution put systems in place to know its clientele? Has the institution put systems in place to reach out to its target clientele? Outreach to the poor and excluded Is the institution providing financial services to persons usually excluded from financial services (poor, rural, specifically disadvantaged groups)? Breadth of Outreach Is the institution reaching out / likely to reach out to a significant number of poor or excluded people? Social Rating framework ( )

14. November 16th to16th 2007 Measuring social performance of MFIs Social Rating framework  Service offering Service design and client satisfaction Does the institution have a good understanding of the financial needs of its clients and does it have processes to tailor the products to these needs? Are services adapted to the various financial needs of the target population (diversity of services, amounts, terms, repayment schemes, collection methods, guarantees, operational processes)? Are client satisfied with the services? Cost of the services Is the institution actively looking for ways to reduce the cost of the services for the clients? Social Rating framework ( )

15. November 16th to16th 2007 Measuring social performance of MFIs Social Rating framework  Social responsibility Customer protection Are there systems in place to guarantee that clients will be treated with respect and dignity? (transparency, fair treatment, prevention of over indebtedness, respectful collection mechanisms) Human resources Are all staff recognized equal rights? Are all staff receiving a fair compensation (financial and non financial) for their work? Social responsibility to the community Is the institution contributing to the community development with other means than financial services? (fair and responsible behavior on the market; promotion of fundamental human rights; respect for the local culture) Social Rating framework ( )

16. November 16th to16th 2007 Measuring social performance of MFIs Planet Rating Social Rating experience Our social rating methodology has been refined through on-site testing and collection of feedback from actors of the sector (MFIs, investors, donors, social performance specialists) during 2005 and 2006 The draft methodology was used for the social performance evaluations of six MFIs in Mali in 2006 The final methodology has been used for four social ratings in Ethiopia in July 2007

17. November 16th to16th 2007 Measuring social performance of MFIs Contacts Global Headquarters 13 rue Dieumegard 93400 St-Ouen Paris – France Tel: +33 1 4921 2630 Fax: +33 1 4921 2627 Latin America Francisco de Paula Ugarriza 813 – Oficina 301 Miraflores, Lima 18 – Peru Tel: +51 1 472 5988 / 471 9526 / 470 2666 Fax: + 51 1 4716816 West Africa Boulevard Djily Mbaye Immeuble FADH, 14th floor BP 5695 Dakar – Senegal Tel/Fax: +221 821 79 39 East Africa Plot 23b Bandali Rise – Bugolobi PO Box 36179 – Kampala – Uganda Tel: +256 414 236 745 Middle East & North Africa 42 Mariam Geahchan Street Ashrafieh, Beirut – Lebanon Tel: +961 3 11 96 81