MFIs as social entreprises?
Helping MFIs become more socially
responsible
November 2015
Presentation by Julie Denève
ADA – Appui au
Développement Autonome
– 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
Social orientation in MF
• 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
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.
Best practices
SPTF
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
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
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
Social performance management –
Dimensions and Tools
Intent &
Design
Internal
Systems/
Activities
Outputs
Outcomes
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?
Source : SPTF
Impact
IMPACT
Can change in
client welfare
be attributed to
institutional
activities?
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.
Thank you for your attention!
Julie Denève
Research & Development Project Officer
[email protected]
ADA
39, rue Glesener
L-1631 Luxembourg
Tel.: +352 45 68 68 1
www.ada-microfinance.lu