Non-Financial Services: SP Report Data Findings

Posted by: Taea Calcut

In keeping with our current theme of non-financial services, today’s Social Performance Indicators Blog post examines the services offered by 208 microfinance institutions (MFIs) from 69 countries worldwide, each of which submitted MIX Social Performance reports in 2008. (As explained in previous data posts, we draw readers’ attention to the fact that our current sample size remains too small to draw definitive conclusions. However, we present what information we have in the hopes of encouraging greater numbers of MFIs to submit Social Performance reports as well as to aid the formulation of research agendas in the future.)

Graph 1: Non-Financial Services Offered by MFIs (n=208)

First, we looked at the type and popularity of the services MFIs provide to their clients. As  Graph 1 illustrates above, we found that women’s empowerment services which aim to alleviate social inequalities and constraints faced by women rank among the most popular services and are offered by 98 (47%) of the reporting MFIs. Within this category, MFIs are most likely to offer business (82%) and leadership trainings (59%) to their female clients. The next most popular service offered by MFIs are enterprise services (95 MFIs; 46%), followed by adult education (77 MFIs; 37%) and health services (60 MFIs; 29%).

Graph 2: Providers of Non-Financial Services (n=137)

Next, we asked who provides these non-financial services. Does the MFI provide the services directly to its clients, or does it partner with a third party provider? As shown in Graph 2 above, of the 137 MFIs responding to the question, we found that 60 MFIs (44%) provide services directly to their clients. 31 MFIs (23%) have partnered with a third party to deliver services while the remaining 47 MFIs (33%) offer services simultaneously alongside a third party.

Finally, we examined the outputs of non-financial services provided to clients – specifically, what percentage of MFIs’ clients participate in the women’s empowerment, enterprise development, adult education, and health services described above? While a smaller number of MFIs were able to answer this question due to current constraints on their  social performance data collection procedures, we found that an average of 31% of clients at 40 reporting MFIs participate in women’s empowerment services (note that the percentage of women served by these MFIs varies), 37% of clients at 53 reporting MFIs participate in enterprise services, 41% of clients at 41 reporting MFIs participate in adult education, and 21% of clients at 26 reporting MFIs participate in health services.

So, what can we learn from the data at this time? Keeping in mind the limitations of our sample, we see three general trends. First, less than half of all reporting MFIs stated that they offered non-financial services of any category. This leads us to ask the following questions: are MFIs not providing these services because of budget constraints, lack of skilled staff, reluctance to depart from their core business of financial service provision, lack of perceived demand, or some other reason? Moreover, what accounts for the greater prevalence of women’s empowerment services as opposed to, for example, health services? (Is women’s empowerment perceived as more urgent or perhaps more pertinent to MFIs’ activities or missions?)  Second, the breakdown of service providers  reveals no clear preference towards direct provision of non-financial services or third party service arrangements. In regards to this latter point, we ask our readers: What, in your experience, are the costs and benefits of direct versus indirect service delivery? Third, the average number of clients participating in any given non-financial service remains less than half of the total clients served by an MFI. Again, as in the case of general service provision, is this fact the result of budget constraints, a lack of skilled staff, reluctance to depart from their core business of financial service provision, or another reason? Or are low participation rates the result of clients not valuing the quality or goal of these services or being unaware of their existence? Is there a benefit to mandatory participation by all clients in these services, and if so, are there trade-offs involved in such an arrangement?   

Be sure to join us over the coming days as we explore this topic further in interviews with Initiative Development-Ghana and Microfinance Opportunities.