Imp-Act

IMPROVING THE PERFORMANCES OF MICROFINANCING INSTITUTIONS

For many people in developing countries, owning their own business is the way to escape poverty. Yet many do not have the collateral to be able to get the necessary start-up loans from a normal bank. That is why the development sector is seeing an increase in the number of institutions that provide small loans (microcredit) with no collateral requirement. This makes an impact, but there is always room for improvement.

That is precisely what the Imp-Act Consortium has in mind: the improvement of this service. This Hivos partner achieves their goal by persuading the institutions that lend microcredit (so-called MFIs) to adopt Social Performance Management (SPM). SPM is a variation of the already widely implemented Financial Performance Management, explains Imp-Act coordinator Anton Simanowitz. ‘The MFIs often evaluate their policies based on financial quality: on efficiency, effectiveness, points for improvement, that kind of thing. Thanks to these daily, simple and even inexpensive checks, they improve their financial results.’

‘The funny thing is,’ continues Simanowitz, ‘that the MFIs hardly do any research into the social impacts of their policies – that is to say that they don’t look at how their policies alleviate poverty, let alone how they can be improved in this area.’ According to Simanowitz it is as if they assume that social achievements are the automatic results of financial achievements. ‘But according to Imp-Act, that is not at all the case. Social achievements deserve special attention.’

Hivos supports the Imp-Act Consortium in promoting Social Performance Management, in the hope that through this the MFIs will gain more insight into the social environment of their clients. In this way the MFIs can deliver better products to their clients and as such contribute to a better life for their impoverished target group. ‘We don’t just want to make financial services available to people who would otherwise not have access to them,’ says Hivos employee Caroline Mol. ‘We also want to improve these services. The introduction of SPM is just the kind of improvement we aim for.’ With the support of Hivos, the Imp-Act Consortium ensures that SPM trainers receive proper instruction and that the experiences with the new management system are documented.

‘Furthermore,’ says Mol, ‘we like to see MFIs publish reports with hard data demonstrating how they contribute to alleviating poverty. This proof makes it easier to obtain financing for the MFIs. This in turn makes it possible for even more people to independently, through microcredit, escape from poverty.’

ABOUT THIS PARTNER (IN ENGLISH)

'Imp-Act' started as a 5 year action research program, funded by Ford Foundation, with 30 MFIs, with the objective of making more useful impact assessments. Gradually the program moved from the idea of proving impact to improving impact, and from impact as an end-result to impact as a process that can be managed. From the group working - largely voluntarily - on the Imp-Act program, the Imp-Act Consortium evolved: a group of seven organisations active in promoting and supporting social performance management (SPM). Since October 2005, the Consortium has been working to create the conditions for the successful mainstreaming of SPM. The Consortium has partners spread over many regions of the world: IDEAS (for Latin America),CARD MRI (for South East Asia), EDA Rural Systems (for South Asia), Freedom From Hunger (India and Africa), MCPI (Phillipines) and MFC (Central & Eastern Europe and New Independent States). The Imp-Act consortium is hosted by the Institute of Development Studies (IDS), which houses the Secretariat. The vision of Imp-Act is to see the social mission at the centre of microfinance. They believe that Social Performance Management (SPM) provides the foundation for assessing and promoting social performance in the microfinance industry. Their mission is to see a growing number of microfinance institutions actively managing, and reporting on, their social performance. The Consortium was formed to ensure consistency, quality control and collaboration among 7 leading organisations working internationally in the field of SPM. Over the past 12 months, consortium members have worked together to develop a training course in SPM, piloted with 50 MFIs in four regions. This collaboration has led to the development of a single SPM training course, which can be applied globally.

Building on members' expertise in research, training and advocacy, as well as their commitment towards the social performance agenda, the Consortium has articulated the following goals for the next 3 year period:
Build capacity for SPM training and support;
Document evidence and learning to advance good practice in SPM;
Promote an enabling environment for SPM.

The Imp-Act Consortium supports microfinance institutions (MFIs) who actively manage their social performance through training and mentoring, lateral learning, action-research and advocacy work.

Type of organisation

Intermediary development organisation

Sector

Financial Services

Country

Worldwide

Founded

2005

Hivos partner since

2006

Website

www.imp-act.org, www.ids.ac.uk

More information

» | About this partner (in English)

» | About this partner's projects (in English)

CONTACT

Imp-Act

» | Address:

The Institute of Development Studies
University of Sussex
Brighton
East Sussex BN1 9RE
United Kingdom

» | +44 (0)1273 873 733

» | imp-act@ids.ac.uk

» | http://www2.ids.ac.uk/impact/

LINKS

» | http://www.imp-act.org, www.ids.ac.uk

Scaling up Social Performance Management and Reporting: Phase II (September 2009 - August 2011)
DAC-sectors	Banking and financial services
Location	Worldwide
Beneficiary	not relevant/other
activity	Supporting Consortium Work
Direct outreach	8 - Intermediary level
Indirect outreach	300 - Policy level/ institutional
activity	Learning from practice
Direct outreach	8 - Intermediary level
Indirect outreach	300 - Policy level/ institutional
activity	Building SPM capacity
Direct outreach	60 - Intermediary level
Indirect outreach	300 - Policy level/ institutional
Contract total	235.083
Contractperiod	01-09-2009 until 31-08-2011

Description

With this contract MicroNed, with Hivos as lead agency, will support the Imp-Act program that consist of three parts: a) Building Social Performance Management (SPM) capacity by improving trainings and training material, and integrating SPM into mainstream microfinance training, b) Learning SPM from practice by organizing international SPM learning meeting and developing an online SPM resource centre, and c) Supporting consortium work with technical assistance and supporting practical information exchange between the consortium members.

With these activities Imp-Act aims to increase the number of MFI's doing SPM worldwide, and in making them successful to implement their social mission and vision. Imp-Act expects an increase of MFI's having a social vision and mission, an increased number of MFI's that have included measurable social objectives and have developed a monitoring system.

Hivos support Imp-Acts because the program will enable MFI to create more access for the poor to financial services and that MFIs are better equipped to improve the quality of their services, with products that are better adapted to the clients' needs. Besides 'improving' their performance, MFIs will also be able to 'proof' their added value in reaching the poor, serving them well and facilitating change in their lives.