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Social impactBen Simmes, Managing Director OikocreditTokyo 6th
HOW TO ACHIEVE SOCIAL IMPACT?                                THE EFFECTIVE                                TRANSLATION OF O...
Mission of OikocreditOikocredit promotes global justice bychallenging people, churches and others toshare their resources ...
Two objectivesSocial investmentsEmpowering disadvantaged peoplewith credit
Support Associations providing capitalNorth America: Europe:Canada         Germany  USA          France               Spai...
Key activities• Discuss role of money and use of financial reserves• Develop and offer alternatives• Enable investing/offe...
Two objectivesSocial investmentsEmpowering disadvantaged peoplewith credit
SOCIAL IMPACT STRATEGY: 5 PILLARS• OIKOCREDIT ITSELF• PROJECT PARTNERS• END-BENEFICIARIES• MICROFINANCE SECTOR• INVESTORS
OIKOCREDIT  SPECIALISED DEPARTMENT  INTERNATIONAL, REGIONAL, COUNTRY SPM STRATEGIES  INTERNAL CAPACITY BUILDING; BOARD, ST...
Oikocredit in Microfinance                     Oikocredit         CGAP MIV Survey                                        R...
1/3 of our 890 partners are cooperatives                             At 31 December 2011
Githunguri Dairy Farmers Cooperative       Small scale dairy farmer       Average 3 acres, 5 cows
BULLOCK WORKERS, MFI OWNERS                            •   Savings and credit                            •   Health and sa...
CHOOSE RIGHT PROJECT PARTNERSFINANCIAL SCORE CARDESG SCORE CARD
Scorecard contentsFive dimensions:1. Outreach and targeting (20%)2. Client benefit and welfare (40%)3. Governance (25%)4. ...
CLIENT WELFARE & BENEFIT (40%)
B. Client Benefit and Welfare•   Avoiding overindebtedness•   Transparency•   Feedback from clients•   Code of ethics•   I...
Universal standards are organised into six categories1. Define and monitor social goals2. Ensure board, management and emp...
ExampleStandard2a   Members of the Board of Directors are committed to the institution’s     social missionEssential Pract...
ExampleStandard3a     The institution determines that clients have the capacity to repay       without becoming over-indeb...
OIKOCREDIT PARTNERSASSISTANCE TO STRENGTHEN    SOCIAL PERFORMANCE-   SOCIAL PERFORMANCE AUDITS-   TARGETTING POOR-   PROMO...
CERISE SPI (social audit) Tool                                       FUNDACION MUJER - COSTA RICA                         ...
AUDITS IN LATIN AND CENTRAL AMERICA                      Number of SPI audits    Number of MFIs Bolivia                   ...
CAPACITY BUILDING PARTNERSDonors:-   Dutch Ministry of Development Cooperation-   IFC-   Rabobank-   ICCO-   Church of Swe...
HIGHLIGHTS INTERNATIONALActive participation in boards, debate and developments:Smart Campaign:    -     fine tuning of th...
CLIENTSClient protection principles•   Appropriate product design and delivery•   Prevention of over-indebtedness•   Trans...
MONITORING DATABASE                      Data collected:                      • Number of clients                      • A...
Sharinginformation withinvestors
CHALLENGE    YOU HAVE TO BE JUST ASPROFESSIONAL TO ACHIEVE SOCIALRETURN AS TO ACHIEVE FINANCIAL           RETURN
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A 2 ben simmes social environmental impact.ppt

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A-2 Ben Simmes social environmental impact

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  • www.oikocredit.org
  • www.oikocredit.org
  • www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk.   We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
  • www.oikocredit.org 1) 2007 including one off result Banco del Desarollo of 12.7 2) 2009 affected by lower growth and higher provisions
  • www.oikocredit.org
  • www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk.   We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
  • How is Oikocredit situated within the Microfinance industry?
  • www.oikocredit.org
  • www.oikocredit.org
  • www.oikocredit.org
  • We are able to plot the ESG results per dimension and at a glance, we see how MFIs in a particular country compare against each other in a particular dimension. In the dimension Client benefit and welfare, we first of all look at how an MFI takes care not to harm clients – we look at processes in place to assess repayment capacity, how the MFI informs clients about interest rate, how an MFI solicits feedback from clients and uses that to review its products and services. www.oikocredit.org
  • www.oikocredit.org
  • Our strategy calls for using social audits – we have introduced the Social Performance Indicators social audit tool developed by Cerise. The tool focuses on 4 main areas of social performance: outreach, adaptation of products and services, client benefits and social responsibility. Within each dimension are several key elements which are scored and leads to a graphical presentation of results. Based on the results, Oikocredit has a discussion with the MFI and we may then agree to support the MFI in addressing areas it wants to improve. We also work with partners on the Progress out of Poverty Index. It is compatible with the social audit tool in so far as the dimension of outreach is concerned and the PPI results feed into our pricing of loans. We have the possibility to give partners a discount for extraordinary social relevance and reaching the poor and the excluded is an element of that discount and the PPI provides verifiable information.
  • www.oikocredit.org
  • www.oikocredit.org
  • www.oikocredit.org
  • Transcript of "A 2 ben simmes social environmental impact.ppt"

    1. 1. Social impactBen Simmes, Managing Director OikocreditTokyo 6th
    2. 2. HOW TO ACHIEVE SOCIAL IMPACT? THE EFFECTIVE TRANSLATION OF OUR MISSION INTO PRACTICE
    3. 3. Mission of OikocreditOikocredit promotes global justice bychallenging people, churches and others toshare their resources through sociallyresponsible investments and by empoweringdisadavanged people with credit
    4. 4. Two objectivesSocial investmentsEmpowering disadvantaged peoplewith credit
    5. 5. Support Associations providing capitalNorth America: Europe:Canada Germany USA France Spain Netherlands Belgium Switzerland Austria Denmark Sweden Italy United Kingdom Latin Asia: America Philippines Mexico Japan Uruguay Korea
    6. 6. Key activities• Discuss role of money and use of financial reserves• Develop and offer alternatives• Enable investing/offer investment products• Share experiences• Positive examples of scalable business models that create social and environmental value
    7. 7. Two objectivesSocial investmentsEmpowering disadvantaged peoplewith credit
    8. 8. SOCIAL IMPACT STRATEGY: 5 PILLARS• OIKOCREDIT ITSELF• PROJECT PARTNERS• END-BENEFICIARIES• MICROFINANCE SECTOR• INVESTORS
    9. 9. OIKOCREDIT SPECIALISED DEPARTMENT INTERNATIONAL, REGIONAL, COUNTRY SPM STRATEGIES INTERNAL CAPACITY BUILDING; BOARD, STAFF, SA’S INVESTORS IMPROVEMENT OF SYSTEMS AND TOOLS REVIEWING POLICIES (CAPACITY BUILDING, DISCOUNTS..)
    10. 10. Oikocredit in Microfinance Oikocredit CGAP MIV Survey Results (2009)MF Portfolio in 15% 7%AfricaMF Portfolio in 27% 11%Asia & PacificMF Portfolio 18% 47%CEE & CAPortfolio in top 5 34% 58%countries (47% in top 10)% of MFI 79% 63%borrowers -women
    11. 11. 1/3 of our 890 partners are cooperatives At 31 December 2011
    12. 12. Githunguri Dairy Farmers Cooperative Small scale dairy farmer Average 3 acres, 5 cows
    13. 13. BULLOCK WORKERS, MFI OWNERS • Savings and credit • Health and sanitation • Gender empowerment • Business development skills • Marketing support • Dividends in each of past 5 years to clients 71% owned by clients
    14. 14. CHOOSE RIGHT PROJECT PARTNERSFINANCIAL SCORE CARDESG SCORE CARD
    15. 15. Scorecard contentsFive dimensions:1. Outreach and targeting (20%)2. Client benefit and welfare (40%)3. Governance (25%)4. Environment (5%)5. Responsibility to community & staff (10%)
    16. 16. CLIENT WELFARE & BENEFIT (40%)
    17. 17. B. Client Benefit and Welfare• Avoiding overindebtedness• Transparency• Feedback from clients• Code of ethics• Interest rates• Non-financial products & services
    18. 18. Universal standards are organised into six categories1. Define and monitor social goals2. Ensure board, management and employee commitment to social goals3. Treat clients responsibly4. Design products, services, delivery models and channels that meet clients’ needs and preferences5. Treat employees responsibly6. Balance financial and social performance
    19. 19. ExampleStandard2a Members of the Board of Directors are committed to the institution’s social missionEssential Practices 2a.1 The institution provides Board members with an orientation on the social mission and goals, and the Board’s responsibilities related to the social performance management of the institution and confirms that each member agrees. 2a.2 The institution requires Board members to adhere to the institution’s code of ethics. Standard: statement of what should be achieved Essential practices: individual practices towards meeting the standard
    20. 20. ExampleStandard3a The institution determines that clients have the capacity to repay without becoming over-indebted and will participate in efforts to improve market level credit risk management.Essential Practices 3a.1 The Institution’s loan approval process requires evaluation of borrower repayment capacity and loan affordability. Loan approval does not rely solely on guarantees – whether peer guarantees, co- signers or collateral – as a substitute for good capacity analysis. 3a.2 The institution’s credit approval policies give explicit guidance regarding borrower debt thresholds and acceptable levels of debt from other sources. 3a.3 When available, the institution checks a Credit Registry or Credit Bureau.. 3a.4 The institution’s internal audit verifies employee compliance with policies and systems to prevent risk of client over-indebtedness Go to: http://sptf.info/spstandards1
    21. 21. OIKOCREDIT PARTNERSASSISTANCE TO STRENGTHEN SOCIAL PERFORMANCE- SOCIAL PERFORMANCE AUDITS- TARGETTING POOR- PROMOTE TRANSPARENCY- CAPACITY BUILDING
    22. 22. CERISE SPI (social audit) Tool FUNDACION MUJER - COSTA RICA Exercise par Dimension Geographical Targeting 100% Social Responsibility Individual Targeting Community 75% 70%Social Responsibility- Clients 50% Methodological Targeting 33% 67% 50% 20% 25% 75% HR Policy 0% 50% Diversity of Products, Services 50% 75% Enhancement of social capital Quality of Services 63% 78% Client Representation Services Plus 100% Transparency
    23. 23. AUDITS IN LATIN AND CENTRAL AMERICA Number of SPI audits Number of MFIs Bolivia 26 14 Honduras 14 9 El Salvador 11 11 Guatemala 11 7 Costa Rica 7 7 Ecuador 7 5 Nicaragua 7 6 Dominican Republic 6 6 Argentina 5 4 Peru 5 5 Brazil 2 2 Paraguay 2 2 Uruguay 1 1 Total 104 79 44 – Costa Rica RDC 15 – Uruguay RDC
    24. 24. CAPACITY BUILDING PARTNERSDonors:- Dutch Ministry of Development Cooperation- IFC- Rabobank- ICCO- Church of Sweden- Members- USAIDAround 2.5 million Euro up till 2015
    25. 25. HIGHLIGHTS INTERNATIONALActive participation in boards, debate and developments:Smart Campaign: - fine tuning of the client protection principles (CPP) - adherence to principlesSocial Performance Task Force - developing general standards for social performanceInvestor Principles - reporting on principles/adherence - promoting the principlesDevelopment tools - standardizing SPI (Cerise) - critical review PPI with Grameen
    26. 26. CLIENTSClient protection principles• Appropriate product design and delivery• Prevention of over-indebtedness• Transparency• Responsible pricing• Fair and respectful treatment of clients• Privacy of client data• Mechanisms for complaint resolution
    27. 27. MONITORING DATABASE Data collected: • Number of clients • Average loan size • % Rural clients • Gender policy • Monitoring changes • ….
    28. 28. Sharinginformation withinvestors
    29. 29. CHALLENGE YOU HAVE TO BE JUST ASPROFESSIONAL TO ACHIEVE SOCIALRETURN AS TO ACHIEVE FINANCIAL RETURN
    30. 30. Thank you
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