Social Performance Indicators Blog

"Fulfilling the Promise: Managing Social Performance"

Posted by: Taea Calcut

What is social performance management (SPM), why is it important, and how does one implement SPM within microfinance institutions (MFIs)? “Fulfilling the Promise: Managing Social Performance,” a short film created by the Imp-Act Consortium, answers these questions while sharing the stories of two MFIs -- the Small Enterprise Foundation in South Africa and AMK in Cambodia -- committed to strong SPM practices. Responses to the film are welcome in the comments section below.

Innovation Meets Financial Education: Swadhaar in India

Posted by: Katherine Oglietti

Interview with: Preeti Telang, General Manager – Programmes and Operations, Swadhaar FinAccess

Swadhaar FinAccess (SFA), which currently operates in Mumbai, India, was founded in 2005 with the objective of providing the urban poor increased access to financial services, bridging the gap with the formal banking sector. In  2008, the promoters of Swadhaar FinAccess transferred the existing microcredit portfolio of SFA to its newly created Non-Banking Financial Company, Swadhaar FinServe Private Ltd. (SFPL). SFA, the nonprofit entity, focuses on a financial education and savings program, facilitating savings accounts to its clients through Citibank. We spoke with Preeti Telang of FinAccess, who offered her insight as to the importance of combining financial education with the facilitation of savings products.

MIX: What are the major obstacles preventing women who live in urban informal dwellings from being able to save?

Preeti Telang: There are three major obstacles that prevent Indian women from saving:

1) Lack of knowledge about savings. I strongly believe that our female clients would like to save. It is not that they do not want to save; it is that they do not know how to save.  They find it very difficult to set aside money from their limited incomes and put it into savings. Savings essentially becomes the last thing on their agenda, as it is for most of us, so they have to learn that savings should be a high priority.

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.

Ethical Staff Behavior and Overindebtedness: The Philippine Context

Posted by: Katherine Oglietti

Last week, Kate McKee at the CGAP Microfinance Blog posted an excellent article, "The struggle to be responsible - what leads good providers down the road to bad practices," which comments on growing industry discussions of responsible finance and client protection and challenges to the implementation of these goals. She notes the tension between ensuring both financial viability and customer service, paraphrasing a common response from MFIs:

“We need capital to grow and our investors are also pushing us on growth, efficiency, and profitability, sometimes with short time horizons that make it hard to prioritize quality of products, operations, and customer service.”

This difficult situation may be exacerbated in an increasingly competitive microfinance market. During plenary discussions at the Dialogue Group on Client Protection at the Center for Financial Inclusion, participants from the Philippines described a situation in which a flooded microfinance market led to client overindebtedness. According to MIX Market, the Philippines is home to the second highest number of MFIs per country, with 109 MFIs serving the 24.4 million people below the national poverty line. If it is true that the market is saturated, then supply for loans exceeds demand. Clients have the ability to shop around at different financial institutions for the best loan terms. This creates a competitive environment among MFIs, which is arguably good for clients because it puts downward pressure on interest rates and motivates MFIs to improve their programs. However, the abundance of MFIs may also tempt clients  to make payments from one loan with funds from another loan, easily becoming overindebted.