Financial and social performance

Analyse your financial and social performance

The sustainability of an MFI is largely dependent upon its ability to combine its financial profitability and social impact. This means that financial performance and social performance are two closely linked objectives for MFIs.


Financial performance is measured by analysing an MFI’s accounts and calculating profitability ratios. These ratios highlight the MFI’s strengths and weaknesses and enable it to take corrective measures in order to improve its profitability and competitiveness. Knowing and understanding your financial situation is the key to maintaining a sustainable business model.

Social performance is at the very heart of an MFI’s raison d’être and its assessment is becoming increasingly important for the actors in the sector. Universal standards and indicators for social performance which enable MFIs to calculate and therefore demonstrate the importance of the social impact generated by their activities have been developed at the international level.

Financial and social performance in microinsurance

Organizations that offer microinsurance products will find below the Microfact tool and training specifically designed to calculate the financial and social performance of microinsurers.


 

ADA3T Tools

Our financial and social performance tools

  • The MFI Factsheet Microfact: this is a financial and social performance monitoring tool which can be downloaded free of charge.
  • Microinsurance: The MFI Factsheet Microfact Micro-assurance: an instrument calculates the ten main performance indicators applicable to microinsurance. 
  • Based on the MFI Factsheet Microfact, MicroVision is a financial projection tool which enables an MFI to make future projections in order to understand the impact of unexpected events and to determine the best response.

 

  • SPI4: a tool to evaluate an MFI’s social performance
    Evaluate and improve your social performance thanks to the SPI4 tool which has been developed by CERISE on the basis of Universal Social Performance Management Standards.  The MFI Factsheet Microfact may be automatically integrated within the SPI4 tool. MFIs may choose to carry out an SP14 evaluation with a certified auditor who will ensure the quality of the evaluation process. 

     

ADA3T Trainings

Our financial and social performance training courses

Our training courses in financial and social performance are organised in Africa, Asia and Latin America.

Microinsurance: a Microfact training to interpret ratios and analyze financial trends in microinsurance (pre-requisite: organizations must have at least 2 years of microinsurance experience).

In French-speaking Africa, the CGAP has developed a course on the financial analysis of MFIs, as well as a course on the basic principles of accounting for beginners in finance (in French only).

Learn how to interpret financial ratios thanks to the SIMFI training tool, an interactive training course which teaches you how to take the correct decisions by following good management practices through a simulation tool.  


 

ADA3T Technical assistance

Our technical assistance

We offer an SPI4 evaluation supported by an approved ADA auditor who will ensure the quality of the evaluation process. We can also perform an “audit +”, which includes the provision of support for the implementation of the recommendations to improve your social performance.

Our technical assistance is always configured to meet with your needs, so don’t hesitate to


 

ADA is committed to promoting transparency and social performance for more responsible microfinance

For the last fifteen years or so, ADA has been actively investing in the promotion of social performance and transparency in the inclusive finance sector. From 2003 to 2013, ADA coordinated the Rating Fund and Rating Initiative projects which were designed to encourage MFIs to carry out financial and social ratings. These projects involved several donors and allowed the MFIs to apply for co-financing to cover a part of the costs of the ratings. The projects were designed to last for a limited amount of time to allow the ratings sector to become established and some activities were then transferred over to the African Microfinance Transparency (AMT) Forum, which ADA supported with a view to continuing the efforts to strengthen the ratings culture in Africa.

Shortly after the introduction of the Universal Standards for Social Performance Management by the Social Performance Task Force in 2012, ADA took part in the consultations coordinated by Cerise on the creation of the SPI4 tool. Today, SPI4 is the social performance management assessment tool used most frequently both by, and for, MFIs and it is fully aligned with these Universal Standards. ADA has also contributed to the publication of the Universal Standards Implementation Guide which is aimed at MFIs and explains the standards and provides guidance on how to implement them based on examples and case studies.  

Today, ADA is a member of the steering committees of three regional initiatives designed to build the social performance management capacities of suppliers of financial services located in Africa and the Middle East (RMF - Responsible Microfinance Facility), Central America and the Caribbean (FFRIC-CAC - Fondo para las Finanzas Responsables e Inclusivas en Centroamérica y el Caribe) and in South East Asia (RIFF-SEA - Responsible Inclusive Finance Facility South-East Asia). These three initiatives enable the participating institutions to take part in training sessions and/or to obtain co-financing in order to carry out a social performance assessment, certification process or to benefit from technical assistance.

Internally, the ADA Investment team makes systematic use in its analysis process of the SPI4-Alinus tool, which is the version of the tool which has been adapted for use with investors. This means that MFIs are required to prove that they are managing their social performance correctly in order to be eligible to receive financial support from the LMDF, which is the social investment fund established by ADA. The teams which provide technical support to the MFIs and professional networks also regularly schedule social audits based on the SPI4 with their partners. The aim of these initiatives is to encourage MFIs to review their practices in this area and to improve them.

This increasing use of the SPI4 tool has enabled ADA to analyse the social performance management of the MFIs it has supported in 2017 and to compare it to other MFIs which have carried out an SPI4 and about which Cerise has information. The results of this analysis carried out by Cerise show that the MFIs supported by ADA have achieved a higher level of social performance management than the average level achieved by the other MFIs. This confirms the commitment made by the investment team to promote good social performance practices and also makes it possible to identify areas for possible improvement and the potential needs for technical support for the partner MFIs.

Score performance sociale

 

 

 

 

 

 

 

 

 

 

 

 

 

Categories
1: Define and pursue social objectives
2: Ensure that the Board of Directors, the management and the staff are all committed to social objectives
3: Design products, services and models for the provision of services and distribution channels which respond to customers’ needs and preferences.
4: Treat clients responsibly
5: Treat employees responsibly
6: Establish a balance between social and financial returns

Since the end of 2016, ADA has also been engaged in an ambitious project to create an online platform designed to centralise the data taken from a range of tools, such as ratings, SPI4, Factsheet, etc., regarding the social performance of MFIs across all the continents. The aim of this project, which is coordinated by Microfinanza Rating and financed by ADA, the French Development Agency and the Swedish Development Cooperation Agency, is to promote transparency and good practices in terms of social performance management in the inclusive finance sector.


Social Performance Management Data Platform

Context
As a response to the development and increasing diversity of the inclusive finance sector, the sector has developed common standards and tools to evaluate its financial and social performances to enable the stakeholders in the sector to have more homogenous view of the current tendencies and practices.  
There is no centralisation point for the information generated by these various analysis and evaluation tools, which means that it is difficult to establish an overall view of the information or to compare it easily. Although the Mix Market online platform collects data on financial service providers, this data, which is submitted by the providers themselves, is mostly financial and is not always exhaustive or representative.


Objective
The objective of the Social Performance Management Data Platform project is to fill this gap by creating an online platform to collect all the existing data generated by the various tools[1] designed to analyse the social and financial performance of the service providers, as well as the data related to their pricing policy and the transparency of these prices. The intention is for this platform to be complementary to the Mix Market in the sense that the accessible data will relate, for the most part, to social performance and the fact that the users will receive information regarding the degree of reliability of the consulted data will further distinguish it from the Mix Market. 

Therefore, the platform aims, first and foremost, to increase and promote transparency in the inclusive finance sector and to encourage all the actors in the sector to increase their commitment to their social mission. Indeed, facilitating the sharing and access to data regarding the social performance of service providers makes it possible to accord greater value to the most committed actors and to provide guidance to social investors in their decision-making, thereby encouraging the other actors to improve their practices.

Data platform

 

 

 

 

 

 

 

 

 

 

 

 

 


Prototype of the online platform

 
[1] These tools are: audits carried out by Microfinanza Ratings, Cerise’s SPI4 tool, Microfact’s Factsheets, Mimosa’s reports, Microfinance Transparency’s tool for calculating annual rates of charge.

In practice
This platform will enable not only the service providers, but also the regulators, the investors, the donors and even the researchers who have subscribed to it, to consult the social and financial information regarding the service providers and, thanks to a series of functions which have been specially developed for the platform, to analyse the information and to compare it to information about other service suppliers according to a range of criteria (country, region, size, legal status, etc.)  with a view to gathering information, taking decisions or carrying out research.  

Data platform

 

 

 

 

 

 

 



Selection and comparison of data generated by the SPI4 tool


A prototype of the platform was developed in 2017 to test the different functions and the degree of interest of the various parties. The final development phase of the platform has been launched in 2018 based on the evaluation of the first phase and will run through to the end of 2019.

Data platform

 

 

 

 

 

 

 

 

 

 

 

 
 

Example of the results of the comparison function for the SPI4 tool

 

Data platform

 

 

 

 

 

 

 

 

 



Example of the results of the comparison function for annual rates of charge
 
At the end of this phase, the platform will contain data regarding at least 600 service providers from 70 countries, since this data already exists. Thereafter, the intention is to continue to feed data taken from new audits or submitted by service providers themselves into the platform.

 

Stakeholders
The project is coordinated by Microfinanza Rating and CERISE, and financed by ADA, the French Development Agency (AFD) and the Swedish Development Cooperation (SIDA). Other donors also intend to take part in the project during the development phase.


Actualité

ADA takes part in the 2018 Social Performance Task Force annual conference which focuses on Customer Centricity

February 21, 2018

The 2018 SPTF annual conference takes place from 19-22 February in India and focuses on Customer Centricity. One of the major objectives of the conference is to provide guidance to stakeholders in the inclusive finance sector on how to move toward customer-centric business models. To this end, methods, tools, experience feedback and case studies are presented to address crucial issues such as how to define social goals, how to properly analyze data and come up with relevant segmentation, how to select indicators for monitoring clients and tracking the effects of the services offered, or how to turn results into action and improvement of products and services, the overall objective being the maximization of positive effects for final beneficiaries. While the benefits of a client-centric approach are highlighted, the risks of not adopting it are also discussed. For example, the gender issue is regularly raised, since distinguishing between objectives and performance indicators for men and women may be relevant or even necessary depending on the context.

By participating in this event, ADA has the opportunity to exchange best practices on this topic and to collect resources, concrete examples and sources of inspiration to better support its partners on the integration of customer-centric approach. Whether it is training, technical assistance to MFIs and networks, or investment, all the areas of expertise of ADA are concerned and aim to become increasingly customer-centric.


Microfact organized its first training in Ecuador

November 20, 2017

From November 13 to 15, 25 participants from 11 MFIs were trained in Quito. Our 2 trainers, Luis Mosquera and Diego Alvarez, gave their first training to the MFIs that are under the umbrella of the CAAP (Cooperativa de Ahorros y Crédito de Acción Popular).
They presented case studies and explained the indicators of the Microfact Factsheet to empower the cooperatives in their understanding of the data and interpretation of the results.
We thank all the participants for their engagement and their warm welcome!


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