Social Performance Indicators Blog

MFIs’ Financial Products and Services: An Overview of SP Report Data

Posted by: Taea Calcut

As mentioned in an earlier post, MFIs exist first and foremost to provide financial products and services to populations underserved or excluded by formal financial institutions. So, what have MFIs identified as the most important products and services to meet their clients’ needs?

Graph 1: Percentage of MFIs Offering Financial Products/Services (n = 166)

 

Using data from a sample of 166 MFIs that submitted social performance reports to MIX, we find that 100% of MFIs offer credit products to their clients, yet less than half currently offer additional products or services (Graph 1).  Of those MFIs that do offer additional products and services, insurance emerges as the most popular product type.

MFIs’ Environmental Policies: An Overview

Posted by: Taea Calcut

In a world where development discourse is increasingly peppered with terms such as "sustainability" and "green," what initiatives have socially-conscious microfinance institutions assumed to lessen the environment impact wrought by their clients as well as their own operations? Data from MIX Social Performance reports, which feature a "Social Responsibility to the Environment" (SRE) section regarding MFIs' environmental policies and activities, can help us to begin answering this question.

Graph 1: MFIs with SRE Policies Directed at Supported Enterprises (n=163)

First, what percentage of MFIs report having SRE policies directed at clients and client-owned enterprises? As seen in Graph 1, 81 or about 50% of 163 reporting MFIs claim to have written or informal policies, while another 11 or 7% are in the process of developing written policies.

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. 

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.

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.

Defining MFIs’ Gender Mandate

Posted by: Taea Calcut

In the past year, over 200 MFIs around the world have submitted social performance reports to MIX. Among the questions asked in the report are those related to institutional policies and programs that aim to empower both female clients and personnel. How, for instance, do MFIs identify constraints women face in their communities and tailor products and services to women's needs? Do MFIs provide non-financial services that complement and enhance the benefits of financial services offered to women?  How do MFIs challenge gender inequality within their own workplaces, ensuring the skills development and promotion of talented female staff?

Today's post marks the first in a series that will examine some of the issues raised in our analysis of these key gender indicators. We start with assessing an MFI’s social mission. How have MFIs explicitly declared their commitment to serving women and does that explicit commitment affect an MFI’s degree of outreach to female clients?

If social performance is about translating an MFI’s mission into practice, then having a clear mission statement is vital. MIX’s social performance report assesses an MFI’s social mission related to outreach to women in three ways. First, it examines if an MFI mentions women in its mission statement. Second, it asks whether an MFI's target market includes women. Finally, it examines whether an MFI lists women's empowerment among its primary development objectives.

Graph 1: Gender Focus among a Sample of 134 Reporting MFIs

As can be seen in Graph 1, MIX social performance report data reveals that 110 (82%) of 134 MFIs sampled claim to target women clients. 77 MFIs (57%) include women’s empowerment among their development objectives. However, significantly fewer MFIs -- 27 of 134 (20%) -- include the word “women” in their mission statement.