Social Performance Indicators Blog

Policies and Priorities on Social Responsibility to the Community: Determining Factors?

Posted by: Taea Calcut

In our last post, we discussed some of the ways in which MFIs demonstrate and prioritize social responsibility to the communities where they work. Today, we ask what exogenous factors might determine the likelihood that MFIs have formal social responsibility to the community (SRC) policies.

MIX Social Performance Report data on SRC policies remains limited at this time, given the small sample size of self-reporting MFIs.  However, we can explore correlations between MFIs' SRC policies and world region, working environment (i.e., rural, semi-urban, and urban), and regulatory status on preliminary basis.

So, what does the preliminary data reveal?

Table 1: MFIs with Written SRC Policies by World Region (n=133)

 
For the purposes of our review, we have defined MFIs having an SRC policy as those with written policies, rather than informal policies or policies under development. In Table 1, we find that the data  reveals little variation between MFIs with SRC policies by region at this time. (When “policy” is expanded to include written and informal policies, each region reports a majority of MFIs with SRC policies, yet the variations between regions remains similarly small.) 

Policies and Priorities on Social Responsibility to the Community

Posted by: Katherine Oglietti

An MFI can have a relevant impact in the community where it operates not only through the provision of financial services to its clients but also through the implementation of policies and actions aimed to support community development at large. The social performance indicator on social responsibility to community assesses the steps that an MFI takes in this direction. Of the 133 MFIs who reported on social performance to MIX, we find that the majority of MFIs demonstrate concern for their community-level social impact through their formal and informal policies. 

Graph 1: Current Types of Policies on Social Responsibility to the Community, in a sample of 133 MFIs

A combined 74% of MFIs have written or informal policies regarding social responsibility to the community. While only 26% of MFIs have a written policy, an additional 8% of MFIs that have no current policies are in the process of adopting written policies. This leaves only 11% of MFIs who reported on the indicator who do not have policies regarding social responsibility to the community. This data seems to show that the majority of MFIs who reported to MIX value the social impact that they have on the entire community, beyond the impact they have on their clients through offering financial services. 

Innovative approaches to the socio-economic development of communities: Fundación Paraguaya

Posted by: Micol Pistelli

 

Interview with: Martin Burt, Executive Director of Fundación Paraguaya

Founded in 1985, Fundación Paraguaya (FP) is a leading social enterprise that develops innovative solutions to poverty and unemployment in Paraguay and proactively disseminates them around the world. All FP programs promote economic self-reliance through entrepreneurship, and in keeping with this philosophy, FP itself is financially self-sustaining.  In this interview with MIX, the Executive Director of FP, Martin Burt, tells us about his institution’s approach of fighting against poverty in Paraguay by using microcredit and social capital formation as tools for development.

MIX: Mr. Burt, Fundación Paraguaya has developed a multidimensional approach that aims at promoting economic self-reliance through entrepreneurship. Can you give us an overview of these strategies?

Mr. Burt: Fundación Paraguaya runs four programs:

i. a microcredit program which began in 1985, which has 20 offices and serves over 37,000 clients in urban and rural areas throughout Paraguay 

ii. an economic and financial education program (Junior Achievement) which has trained over 150,000 youth since 1995 and, since 2005, 20,000 low-income women

Defining Social Responsibility to the Community: Occupational Safety and Health

Posted by: Dr. Richard Rinehart, Certified Industrial Hygienist

Policies and activities that demonstrate microfinance institutions' social responsibility to the community can take many forms. In this guest post, Dr. Richard Rinehart -- a Certified Industrial Hygienist based in Egypt who has worked for the US National Institute for Occupational Safety and Health, the International Labor Organization, and the International Finance Corporation among other organizations -- presents examples of occupational safety and health threats commonly faced by microentrepreneurs in the developing world. What role, he asks, might the microfinance industry play in mitigating the negative impact of these risks on clients and the community at large?

Consider the following scenarios:

(1) A microfinance institution (MFI) client who owns a small grocery shop used a loan to buy a locally made coconut grinder that consists of a powerful electric motor with a mango-size bit that spins very fast. The machine efficiently removes coconut meat from half-shells. Her daughter, who used the machine daily, badly cut her hand because it slipped off a coconut shell and there were no safety guards to protect her from the fast moving part.

Beyond Clients and Staff: Microfinance Institutions' Social Responsibility to the Community

Posted by: Taea Calcut

An MFI can have a relevant impact in the community where it operates not only through the provision of financial services to its clients but also through the implementation of policies and actions aimed to support community development at large. Over the next two weeks, the Social Performance Indicators Blog will examine the ways in which MFIs have demonstrated their social responsibility to the community (SRC), highlighting social performance data reported by MFIs to MIX as well as interviews with leading SRC proponents.

Group Lending and Women’s Empowerment

Posted by: Katherine Oglietti

The solidarity group and village bank loan methodologies are common solutions that microfinance institutions utilize in order to reach clients who do not have the capacity to take out an individual loan. They arguably create social cohesion and build a community support network among the borrowers.

The data from MIX Social Performance Reports shows that the majority of group loans are consistently allocated to women. As we noted in a previous post, 110 of the MFIs surveyed report having women in their target market. Women make up 65% of all clients in those MFIs. When we divide loan methodology according to gender within those MFIs that target women, we observe that 74% of clients served by group-lending are women, while 53% of clients served by individual loan methodologies are women. 

Why do MFIs prefer group lending for women? Here are some common explanations.

1) Alternative for poor clients: Globally, women have lower incomes than men, and therefore are not determined creditworthy for larger, individual loans.

2) Social Collateral: Women may not have the collateral necessary for an individual loan, and the group loan creates social pressure to ensure repayment.

3) Empowerment: Women may benefit from the social cohesion created through group meetings. Solidarity groups are therefore generally considered to contribute to women’s empowerment.

4) Safety nets: Women have a lower propensity to take risks, and taking an individual loan involves greater risk due to the absence of group support. Also, individual loans are usually larger, which involves greater risk of not being able to repay if the investment is not profitable.

An Integral Approach to Women’s Empowerment: ESAF in India

Posted by: Katherine Oglietti

  

Onam celebration by sangam members of the Trichur Branch, ESAF, India

Interview with: 

Benita Sarah Mathew and Sandhya Suresh, ESAF, India

The Evangelical Social Action Forum (ESAF) is a Christian-based non-profit that takes an integrated approach to economic development, incorporating social, environmental, and public health components into their program. ESAF established its Micro Finance Enterprises Development program in 1995, which covers nine states in India. ESAF focuses its efforts on women, youth, and children.

MIX: ESAF has a greater percentage of female middle managers and loan officers than any other MFI reporting from India. Are your high rates of women staff related to gender-specific hiring policies? Are there ways in which women staff can better support ESAF's mission of targeting female clients? If so, in what ways?

ESAF: ESAF believes in providing equal opportunity to the deserving candidates irrespective of their gender, though preference is given to women candidates especially at the level of loan officers. Women are better positioned to establish rapport and build close relationships with the clients that are not merely ‘financial’ in nature. Female loan officers are able to relate to the social, economic, and emotional needs of the client as they belong to the same socio-economic strata of the society. Daughters of the sangam (village bank) members who possess essential and desirable qualifications for a required post are given the priority to serve. ESAF sangam meetings provide a platform for the women members to not only engage in loan operations, but also to share their concerns regarding their homes and communities. We believe that a female loan officer can facilitate an environment of mutual trust and ownership within the groups.

Similarly, female staff can better envision new initiatives for the welfare and overall empowerment of women clients. Thus it has been found that women staff has certainly played a vital role in successfully targeting the women clients.

Prioritizing Women in Middle Eastern Microfinance: Jordan’s Microfund for Women

Posted by: Taea Calcut

Microfund for Women staff discuss operations in a meeting

Interview with:
Nina Robertson, Marketing and Non-Financial Services Manager, Microfund For Women

Since its inception in 1994, the Microfund for Women (MFW) in Jordan has assisted microentrepreneurs - and in particular, women - to improve and expand their enterprises through a range of financial and non-financial services.  In this interview with MIX, MFW Marketing and Non-Financial Services Manager Nina Robertson details how MFW prioritizes the hiring and skills development of female staff and provides trainings to bolster the business acumen of female clients, all while operating in a country where women’s participation in the labor force remains among the lowest in the Middle East and North Africa (MENA) region.

MIX: MFW’s Board and staff feature more women on average than any of the other 13 MENA MFIs reporting social performance data to MIX. For example, 56% of your Board is composed of women while the average for MENA is 26%. Likewise, 73% of your staff is female, with the majority of both management and loan officer positions filled by women, while the average for the region is 47%. What are some factors that have contributed to women being so widely represented among MFW leadership and personnel?

Ms. Robertson: MFW does not have a quota for female staff; however, it is our intention to employ more women than men for a number of reasons. First, and perhaps most importantly, our mission is to empower women economically and socially. Therefore, we strive to achieve our mission by not only targeting female clients but also by ensuring that a majority of women are represented across all levels of our staff. Second, in the cultural climate in which we are operating, it is preferable that our female clients are served by female staff. Finally, hiring women enables us to gauge the real needs of the women we serve, build strong working relationships with them, and develop carefully targeted, gender-sensitive products and services.

Non-Financial Services in Microfinance: Necessary for Women’s Empowerment?

Posted by: Taea Calcut

In a previous post, “Defining MFIs’ Gender Mandate,” we noted that 77 MFIs from a sample of 134 MFIs submitting social performance data to MIX reported that “women’s empowerment” ranked among their top objectives. This begs the question – what are some concrete steps MFIs might take in order to empower women?

The MIX Social Performance Report identifies non-financial “empowerment services” as a way in which MFIs can meet their women’s empowerment objective. Empowerment services include:

• business training to enhance women's market opportunities
• women's leadership training
• training on rights and responsibilities as leaders in participative models
• women's rights education or gender issues training for men and women
• counseling and/or legal services for women victims of violence

An “other” category is also available for MFIs that provide a different service than the options listed.

Graph 1: Women’s Empowerment Services by Type from a Sample of 59 MFIs

 

Our recent analysis of MIX Social Performance reports indicates that 59 (77%) of the 77 MFIs claiming to have a women’s empowerment objective offer a total of 163 different non-financial services.  As shown in Graph 1, the most common service is business training (provided by 45 MFIs), followed by leadership training (provided by 35). Counseling and/or legal services for women victims of violence is the least common empowerment service, offered by only 13 MFIs. 19 MFIs also report offering a different type of service than those listed within the report. Some of these services include literacy and IT classes as well as workshops on accessing government services.

Announcement: 2nd Microfinance Summit in New York City

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IQPC’s Microfinance & Sustainable Development Conference: The Investment Opportunity

Harnessing Market Forces to Catalyze Poverty Alleviation & Human Development:
Broadening the Scope of Impact Investing
January 25-27, 2009
Millennium Broadway, New York, NY

 

Program highlights:

• Compare and contrast successful distribution channels and models for reaching the Bottom of the Pyramid
• Identify meaningful and profitable microfinance and other social enterprise investments in 2010
• Mitigate risks such as foreign exchange and credit risk associated with investing in emerging markets
• Update on innovative financing and equity structures used in recent microfinance transactions
• Leverage advancements and lessons learned from investing in microfinance to invest in other sectors that deliver essential public and private goods and services to the poor
• Benefit from unparalleled networking opportunities
  

Participating organizations include: ROCKEFELLER FOUNDATION, FORD FOUNDATION, MICHAEL & SUSAN DELL FOUNDATION, CLINTON FOUNDATION, TIAA-CREF, UNITUS CAPITAL, DEUTSCHE BANK, MORGAN STANLEY, ACUMEN FUND, MFX SOLUTIONS, TRANSFERCEL, TRILINK GLOBAL AND MORE!

For more info, please visit www.microfinanceconference.com or view the conference brochure here.

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