Kiva Cerise Spi Feb2010 Methods(Day3&4)


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Kiva Cerise Spi Feb2010 Methods(Day3&4)

  1. 1. Methods for applying the SPI tool
  2. 2. Methods for applying the SPI Methodological options  Internal or external audit  Centralized or participatory approach Depends on: 1) MFI’s objectives 2) who proposes the audit
  3. 3. Applying the SPI Internal vs External  Internal audit  Self-assessment; a stock-taking exercise to get people thinking about SP  Results not validated by an external auditor don’t hold the same value for external communication as those that have been validated  External audit  More objectivity; results more credible in the eyes of outside stakeholders  If MFI not involved, little appropriation of results
  4. 4. Different levels of support for the MFI  Purely self assessment: The MFI fills up the questionnaire alone  Accompanied self-assessment:The MFI fills up the questionnaire with support from an external reviewer  The external reviewer knows the SPI tool and can answer to the questions of the MFI  Final doc= full questionnaire / excel data-graphs  Self-assessment with external audit  The auditor verifies the quality of the information  At least one day for external audit  Final doc= full questionnaire/ Excel data-graphs/2p summary  Purely external assessment: done by the external auditor
  5. 5. Applying the SPI Qualities of an external auditor  Independent from the MFI  Expertise in social auditing / accreditation by CERISE (training on SPI, previous positive experience in using the SPI tool)  Inquisitive  Holistic perspective
  6. 6. Discussion Who can be an external auditor?
  7. 7. Applying the SPI Centralized vs Participatory approach  Centralized  Quick (1.5 days)  Limited perspective (of the auditor and top management)  Low appropriation of concepts (few persons only)  Participatory  More representative of different stakeholders  Greater appropriation of concepts (all those involved)  Takes longer, more organization involved
  8. 8. Applying the SPI What’s the difference in approaches?  Timeframe  Depth of information  Appropriation of concepts  Outputs
  9. 9. Discussion  Which options to choose?  Centralized versus participatory  Internal versus External
  10. 10. Applying the SPI Three phases 1. Preparation (2-3 steps) Number of steps depends 2. Implementation (2-4 steps) on the approach 3. Reporting (2-3 steps)
  11. 11. Applying the SPI Preparation phase 1. Get familiar with the tool  Auditor / reviewer should be familiar with the tool, and able to inform top management or other participating stakeholders on the process 2. Prepare documention  For accompanied self assessment: list given to MFI  For external audit, ask for documents e.g., Portfolio data, annual reports, financial audits; FGD guides (if necessary)
  12. 12. Applying the SPI Implementation phase 3. Conduct interviews to fill in Q  Interviewees depends on approach  External auditor may ask MFI to fill in Q and then discuss the answers. 4. Enter data into Word doc (questionnaire) then Excel file  The word doc should include all the “please specify” sections  Excel generates diamond and radar graphs automatically
  13. 13. Applying the SPI Implementation phase (cont’d) 5. Discuss preliminary findings for feedback Varies with approach:  Internal audit/ Self assesment: may skip altogether  External audit: VERIFIES INFORMATION  Centralized with top management only  Participatory: in workshop with stakeholders optional for internal audits
  14. 14. Applying the SPI Reporting phase  Completed SPI questionnaire (Word doc) Output 1 enhanced with comments, details, feedback from step 5 and graphs (Excel)  Peer group analysis cerise@cerise- Output 2  2 p. summary for external dissemination and reports SPS to MIX Output 3 (optional for internal audits, required for external audits) ALL DOCUMENTS MUST BE GIVEN TO THE MFI
  15. 15. Quality Control
  16. 16. Quality control Preparation and implementation phase  Auditor must know the SPI tool and companion guide, and be accredited by CERISE  MFI management fully associated:  understands the purpose of the exercise  agrees with the objective of the audit  willing to give auditor access to all information sources  Auditor has a resource person to contact if in doubt
  17. 17. Quality control Implementation and reporting phase  Check consistency between responses (checked boxes and “specify” sections)  When possible, cross-check with social rating, data from Mix Market (Social Performance standards)  Open and frank discussion with MFI management for review and analysis  When possible, have the questionnaire reviewed by someone who knows the MFI
  18. 18. Classical consistency checks  Lack of information  Future project  Round number  Over or under estimations  Reference to existing documents  Misinterpretation on targeting  Classical procedures
  19. 19. Quality control Administering SPI to a group of MFIs : transversal elements for quality control  Share experiences/FAQ among different teams  Formalize and document simple procedures  Randomly crosscheck SPI assessments
  20. 20. Feedback from Kiva’s pilot  Not an impact study  Which answer when weaknesses are recorded?  Kiva accreditation  Time for self-assessment and external review  Requests from examples of SPI report / Best practices on key issues  Social impact star rating system?
  21. 21. Examples of application  MFIs  ASC Union Albania = self-assessment  CVECA Mali = accompanied self-assessment with TA  Networks  Red Financiera Rural = collective self-assessment  Investors  F. Mujer/ Fudecosur Costa-Rica: external assessment from MIV regional office  Selfina Tanzania: external assessment from MIV in due diligence process
  22. 22. ASC Union in Albania – MFI self-assessment Context and strategies • Previous communist period: need to “build the economic chain” • Rural, microenterprise, • Not the „poorest‟ as a target • Mature Cooperative network SPI Results and strategy • Not a strong focus on poverty (but in line w/mission) • Strong links with the clients/members • Could develop services, SR Towards community/ environment
  23. 23. How ASC Union used results…  Clarify overall social performance strategy and indicators to be used  Set priorities for improving social performance: improvement of diversity and quality of services  Pilot-test PAT to see profile of clients (but low value-added)  Conduct client satisfaction survey: main demand on housing loans  Reaffirm a shared vision of governance with local branches
  24. 24. Example from Mali: CVECA Kayes Context and strategies • Village Bank, intervening in poor rural zone • Relatively young but growing fast • Proximity to members is essential for MFI SPI results • Scored well in client benefits (participative approach) • Results more diversified in different sub-categories
  25. 25. Example from Mali
  26. 26. How CVECA-Kayes used results…  Introduce client studies to track profiles and monitor client satisfaction  Develop training on social performance among different stakeholders (elected reps and technical staff at HQ and branch levels)  Create strategy to federate individual village banks so as to reach the critical mass necessary to develop SR practices (ex.: salary scale, code of conduct) Logo other partners
  27. 27. A professional trade association - RFR - Equator
  28. 28. RFR - Equateur  Context  Mature microfinance sector: NBFIs and banks (regulated) and Coops and NGO-MFIs (self- regulated)  2006, strong populist movement discredits MF, gvt threatens interest rate ceilings  Red Financiera Rural, member of ForoLac network (working on SP since 2005) launches a series of social audits (12 in 2007, 25 in 2008) Logo other partners
  29. 29. How RFR used results… COOP NGO  Crossed data among network members, published results, offered support for MFIs to improve social performance  Internally: share experiences and good practices  Externally: demonstrate MF’s diversity and that MF’s mission cannot be reduced to interest rates Negotiated more flexible regulation on interest rates
  30. 30. SPI used by the MF investment vehicles  Due diligence process  SPI (accompanied self-assessment)  A simplified social scorecard based on the SPI framework / MIV social objectives  Monitoring  Full SPI with external audit (see 2page summaries)  Workshop/ exchanges with the MFI to give feedback and identify axis of improvement  Entry point for capacity-building in SPM  Aggregation  Country reports  Portfolio analysis (peer groups)  SP/FP analysis
  31. 31. How investors use the results  Overview of the practices of their partner MFIs  Quality of the process/ Coherence between mission and activities for the MFIs  Shared internal vision on objectives and approach / Common language  Trust, transparency  “Baseline” to measure changes/ trends
  32. 32. Using results What happens after the social audit?  For MFIs  Moving forward with Social Performance Management (SPM)  For networks:  lobbying/ advocacy with government  SPM for members  For investors/ donors  Use influence as governing stake/shareholder to support social performance and defend social mission  Technical support or advices for SPM tools -- do not exclude the poor performers--help them improve practices!  Better loan conditions for strong SP
  33. 33. Reporting the SPS to the Mix Market  The SPI questionnaire allows to report 18 out of 22 SPS indicators  The 4 remaining SPS indicators deal with results (school attendance and clients out of poverty)
  34. 34. SPS Part one SPI SPS Part Two SPI (i) Basic details MFI Part 1 (ii) Respondent INTENT 1. Mission and social goals Part 1 2. Governance Part 1 STRATEGIES SYSTEMS STRATEGIES SYSTEMS 3. Range of products P1+Dim 2 14. Poverty assessment D1+D3 4. Training of staff on SP Dim 3 5. Staff appraisal incentives Dim 3 6. Market research Dim 2 7. Client retention Dim 2 POLICIES COMPLIANCE POLICIES COMPLIANCE 8. SR to clients Dim 4 15. SR to community Dim 4 9. Cost of services Dim 2 16. SR to environnment Dim 4 10. SR to staff Dim 4 ACHIEVEMENT OF SOCIAL GOALS ACHIEVEMENT OF SOCIAL GOALS 11. Geographic outreach Dim 1 17. Outputs of services Dim 2 12. Women outreach Dim 1 18. Employment NO 13. Outreach by methodo/ethnic P1 + D1 19. Children in school NO minorities 20. Poor at entry Dim 1 21. Clients in pov after 3-5 y NO 22. Clients out of poverty NO
  35. 35. SELECTED CORE SOCIAL PERFORMANCE INDICATORS FOR ANNUAL REPORTING OF MIVs I Number of active borrowers II Number of currently voluntary savers III Number of women active borrowers IV Number of women currently voluntary savers V Number and percentage of clients living in each geographic area (urban, semi- urban, rural) VI Percentage of portfolio in each category of loans (microenterprise, SME, housing, emergency, etc.) VII Which of the following financial products/services does your institution offer (credit, savings, insurance, services)? VIII Which of the following non financial products does your institution offer to its clients? (enterprise services, adult education, health services, women empowerment) IX What does your institution do to avoid client over indebtedness? X How does your institution ensure transparent communication with clients about prices, terms, and conditions of financial products?
  36. 36. SPI and SPS  Reporting to the SPS gives visibility to the MFI and support the definition of benchmarking for the sector  The SPI audit tool should help in the near future to verify the quality of the SPS reports  Does the MFI want to report on SPS/ Kiva’s position = SPI may have optional questions
  37. 37. Using SPI Results Reporting and summarizing information
  38. 38. Using results General outputs 6 Internal dissemination of findings Output 1  Completed SPI questionnaire (Word doc) enhanced with comments, details, feedback from step 5 and graphs (Excel) 7. Send Q and Excel file to SPI database  CERISE conducts peer group analysis Output 2
  39. 39. Applying the SPI Reporting phase (cont’d) Output 3 8. Auditor prepares 2 p. summary for external dissemination and reports SPS to MIX optional for internal audits, required for external audits, with recommendations ALL OUTPUTS MUST BE GIVEN TO THE MFI (Questionnaire, Excel file, 2p. Summary)
  40. 40. Using results Output 3: 2 page summary report  Communicate on SP in a transparent, standardized manner  Orient SP priorities based on strengths and weaknesses  Make operational decisions
  41. 41. Further possibilities  Social Performance report  Ex of CIF: by MFI, by network  Social dashboards  Ex CIF, AMK  Lobbying with social data/report  Ex RFR
  42. 42. Example of Social Performance Report  Consolidated annual social report for a network of member MFIs = CIF in West Africa
  43. 43. 48
  44. 44. 49
  45. 45. Complementarities SPI + other assessment tools
  46. 46. Complementarity in Assessment tools Main questions Process Results Intent - Activities SPI-CERISE tool Impact tools Q1: Who are the Dim 1: Poverty Assessment Tools: clients? Targeting and Outreach PPI, PAT, scorecards Q2: Are the products Dim 2: Products Services AIMS/SEEP tools: adapted? N°2: client drop-outs, N°3 Use of services; N°4: client satisfaction; Q3: Do the clients Dim 3: Eco and social AIMS/SEEP tools: N°1: Impact; N°5: benefit from the benefits to clients Empowerment products? Combi quanti – quali: HH strategies budget / typologies / Participation / role of elected members (CERISE) Q4: Does the MFI do Dim 4: Social responsibility Consumer protection no harm ? Decent work Wider Impact; socio-anthropologic studies; environmental approaches
  47. 47. SPM Path 1 Expanding outreach Poverty Assessment Tools  Internal or external tools to estimate client poverty profile  PA Tools  PPI (Progress out of Poverty Indicator, Grameen Foundation)  PAT (Poverty Assessment Tool, IRIS-USAID)  Own MFI’s poverty scorecard (ex: Busaa Gonofaa in Ethiopia)  Other aspects: rural finance, exclusion (PwD, minority groups) SPI + PAT = Full assessment of Dimension 1- Outreach = Useful for MFI with poverty focus
  48. 48. SPM Path 2. Understanding clients and Market Studies  Internal or external studies to assess client needs, demands, satisfaction  Qualitative tools (questionnaires, focus groups, mapping exercises) that reveal client perspective  Client study tools  Microsave Market Research for Microfinance toolkit.  Microfinance Opportunities’ Listening to Clients series. SPI + Client studies = Full assessment of Dimension 2-Products Services and criteria 2, Dimension 4-SR to clients
  49. 49. SPM Path 3 Benefits for the clients and Impact Studies  Usually external studies that measure changes to clients’ situation and determines if they can be attributed to the MFI (requires a baseline)  Impact Tools  Operational: Learning from Clients (SEEP, AIMS): combination of quanti and quali indicators; free toolkit on Microfinance Gateway.  Research: new approaches with “randomization” SPI + Impact studies = Full assessment of Dimension 3-Benefits to Clients
  50. 50. SPM Path 4 Measuring social responsibility  Consumer protection = level of awareness (repayment, price, grievance procedures, etc.) / satisfaction of clients  Decent work: work conditions for staff  Environmental audits: example from the FMO approach SPI + verification SR= Full Assessment of Dim 4
  51. 51. Complementarities with social ratings  Ex post: External verification  Ex ante: Same framework allowing to « pre- fill » the SPI questionnaire
  52. 52. With SPI, priorities are identified, what’s next?  SPI and other assessment tools identify strengths and weaknesses as well as priority areas  How to define the next steps to end up with a concrete workplan to improve practices?  What can be the role of Kiva in SPM?
  53. 53. SPI and SPM SPI with other SP management tool An MFI wants to… SPM Path 1. Expand outreach to the very poor Poverty score / specific products 2. Understand high drop-out rates Market research 3. Protect clients Financial Education CPP tool kit 4. Verify decision making processes integrate SP data Governance analysis 5. Improve overall SP - Avoid mission Scorecard for decision- drift - Track SP progress making
  54. 54. Social Performance Management Ex of SPM in practice for better outreach  Strategic planning  Identify better target group  Tools trainings to reach target group incorporated in procedures  MIS and SP data monitoring  Regular data on client profile (scorecards)  Information used for decision-making  Products and services development  New products/ adaptation of current products to fit constraints demand by target group  Client-focused management  Physical access for PwD / Material for illiterate clients  Staff training and incentives
  55. 55. Social Performance Management Example of SPM in practice for better products and services  Strategic planning  Identify needs of clients and develop product diversification strategy  Mix of widely used classical products + innovative products  MIS and SP data monitoring  Monitor client satisfaction / use of products  Staff training and incentives  Training on new products  Incentives to diversify loan officer portfolio
  56. 56. Social Performance Management Ex of SPM in practice for better impact  Strategic planning  Reduce operational costs  Share of profits  MIS and SP data monitoring  Track change on client status  Products and services development  Reduce interest rates  Diversity of products for range of needs of clients  Adapt products if negative impact  Staff training and incentives  Staff put client first
  57. 57. SPM in practice for better social responsibility  Strategic planning  Human resource policy linked to decent work conditions  Integration of the consumer protection principles in business plan  MIS and SP data monitoring  Client and staff satisfaction monitoring  Products and services development  Exclusion lists for decent work and for environment  Specific products for environment and climate change  Client-focused management  Financial education to clients  Microfinance Transparency: disclosure on effective interest rates  Staff training and incentives  Training to loan officers on CPP
  58. 58. From SPA to SPM: the main actors Governance Analysis Governance: all the mechanisms by which stakeholders define and pursue the institution’s mission and ensure its sustainability.  Diagnostic tool for identifying the key actors  Evaluates key elements of good governance  Determines bottlenecks in decision-making processes, gaps between intention and results  Governance Analysis tool  CERISE’s Handbook for Analysis of the Governance of MFIs SPI + Governance = full assessment of the decision making processes that must integrate SP data
  59. 59. Process for Kiva with the SPI tool  Collection of data  Management of data  Communication
  60. 60. Collection of data  Due Diligence  accompanied SPI?  social scorecard based on SPI?  key indicators?  Monitoring/ Verification process  role of Kiva Fellows  role of local staff/credit analysts  Using SP data for becoming a Kiva active MFI?  Links with other MIVs/networks using SPI/other SPA tools (SPS, ratings, etc.)  Coordination  Economies of scale
  61. 61. Management of data  For Kiva:  analysis of portfolio, peer groups, trends  rating scale,  used in strengthening relationship with field partners? How?  For the MFIs:  Feedback on results, next steps  accreditation
  62. 62. Communication  Aggregating information at Kiva’s level  Reporting data on MIV disclosure guidelines  Communication on
  63. 63. Where To Go For Further Information?  Social Performance Resource Center  Management training, Technical Assistance, Tools, Rating, audit and other forms of assessment  Social Performance Task Force  SPTF meeting minutes since 2005, SPS, blog on SP, tool reviews  CERISE‟s website  SPI tool, Governance tool, Learn more about ProsperA, Case studies  SEEP social performance Map – chapter on audit tools pdf  Imp-Act SPM practice guide:  Mix SPS reports  European Microfinance Platform (eMFP )  European Dialogue on the role of the Social Investors, MF Award 2008