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Florent Bédécarrats Combining Social and Financial Performance

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  • 1. Combining social andfinancial performance: Aparadox? Florent Bédécarrats-CERISE Industrialized Country Tracks Sessions Microcredit Summit Valladolid Nov. 15th 2011
  • 2. Background CERISE: practitionners and researcher network created in 1998 by CIDR, GRET, IRAM, CIRAD & IRC Creating and disseminating knowledge on impact, social performance, governance & rural finance Pionnering social performance assessment and management since 2001, founding member of Social Performance Task Force Animating ProsperA, Alliance for promotion of social performance: MFIs, networks, investors and donnors www.cerise-microfinance.org
  • 3. Why bother about the linksbetween social and financialperformance? This question has always been at the heart of microfinance promise and remains key for practitionners Research was lacking adequate data and drew approximate conclusion on inadequate data (eg. %of women, average loan size…) Idea of a systematic trade-off = conventional wisdom partial understanding of SP New understanding thanks to widespreading social assessments: CERISE-SPI, MIX, Social ratings, evaluations by ethical investors… In reality, few oppositions and several synergies useful for piloting MFIs www.cerise-microfinance.org
  • 4. How do we assess social performance?  SPIinternal or external for 3.3: questionnaire audit T a rg e tin g th e p o o r  Created a n d e x clu d e d *** 100%  Simple, can be a one 80% day process 60%  4 dimensions: 12 40% criteria, 71 indicators S o cia l 20% A d a p ta tio n  Includes Smart o f se rvice s** principles, MIX-SPTF 0%re sp o n sib ility* indicators, MF Transparency definitions,  Compatible w. SPTF B e n e fits fo r clie n ts*** universal standards, Seal of excellence  Currently 440 audits of 332 MFIs from 58 countries in CERISE’s www.cerise-microfinance.org database
  • 5. Whose social performance dowe assess? ECA CERISE: 14 MFIs (4%) MIX: 189 MFIs (19%) MENA MCS: 68 MFIs (2%) CERISE: 12 MFIs (4%) Asia MIX: 55 MFIs (5%) CERISE: 32 MFIs (10%) MCS: 87 MFIs (3%) MIX: 287 MFIs (27%) LAC Africa MCS: 1723 MFIs (49%) CERISE: 189 MFIs (57%) CERISE: 84 MFIs (25%) MIX: 347 MFIs (34%) MIX: 150 MFIs (15%) MCS: 639 (18%) MCS: 981 MFIs (28%)Latin America and Africa are more represented: commitment of networks & social investors governments challenging microfinance www.cerise-microfinance.org
  • 6. Whose social performance do MIX we assess? MIX CERISE CERISE(MFI type) Bank (MFI scale) (MFI Scale) Bank (MFI type) Credit 3% Large 7% Union Credit Large Small 25% NGO 14% Union 37% 35% 37% Small NGO 30% 46% 50% Medium Rural Medium 29% NBFI Rural NBFI Bank 29% 36% Bank 16% 6% 1%  Slightly more NGOs and Coops than MIX  More small MFIs www.cerise-microfinance.org
  • 7. What social performance results D1. Targeting by type of MFI? Bank C1.1 and outreach 80% NBFI Geographic NGO Targeting 70% 100% C1.2 Credit Union C4.3 SR to Individual 60% comm/env 80% Targeting 50% 60% C1.3 Pro- C4.2 SR to poor 40% clients D2. 40% Methodology D4. Social 30% Adaptationresponsibility 20% of services C4.1 SR to C2.1 Range 0% staff of services C3.3 C2.2 Quality Empower- of services ment D3. Benefits C2.3 to clients C3.2 Client Innovative participation and NFS C3.1  NGOs are targeting champions Economic benefits  Coops best in participation  Banks on service adaptation and social responsibility www.cerise-microfinance.org
  • 8. Relationships social/financial Performance  Trade offs: ◦ Individual targeting of poverty ◦ Non financial services ◦ Client protection  Synergies: ◦ Geog. targeting & participation improve productivity ◦ Quality of services & reasonable interest rates improve portfolio quality ◦ Service adaptation improvewww.cerise-microfinance.org efficiency
  • 9. Conclusion Double bottom line is no “mission impossible” Can be achieved when trade-offs and synergies are combined cleverly following a well planned social performance management strategy Such relationshimps can also evolve over time (cf. Microfinanza’s study) www.cerise-microfinance.org