Presentation by Julie DenèveNovember 2015

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 responsibilityNecessity 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 overindebtnessAre transparentAdopt responsible pricingTreat respectfully and fairly their

clientsProtect privacy of client dataAdopt effective complain

resolution

SPTF

Define and Monitor Social GoalsEnsure Board, Management, and

Employee Commitment to Social Goals

Treat Clients ResponsiblyDesign Products, Services, Delivery

Models and Channels That Meet Clients’ Needs and Preferences

Treat employees ResponsiblyBalance 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

Outputs Outcomes

INTENT AND DESIGNWhat is the mission of the institution?Does it have clear social objectives?

INTERNAL SYSTEMS & ACTIVITIESWhat activities will the institution undertake to achieve its social mission?

Are systems designed and in place to achieve those objectives?

OUTPUTSDoes the institution serve poor and very poor people?Are the products designed to meet their needs?

OUTCOMES Have clients experienced social and economic improvements?

IMPACTCan 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 DenèveResearch & Development Project Officerj.deneve@ada-microfinance.lu

ADA39, rue GlesenerL-1631 LuxembourgTel.: +352 45 68 68 1

www.ada-microfinance.lu

Thank you for your attention!