From Intent to Action: Resources to Pursue Responsible Inclusive Finance

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Organized in partnership with the Responsible Inclusive Finance Working Group

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Track: Partnerships Building a National Ecosystem
Date: Friday, October 11th
Time: 11:00 – 12:30 hrs
Speakers: Dina PonsSocial Performance Task Force (SPTF) & Investment Manager and Social Performance Management Coordinator, Incofin IM, Belgium
Gilbert Maramba, Research and Development Department, Negros Women for Tomorrow Foundation (NWTF), Philippines
  Yasir Ashfaq, Group Head, Financial Services Group, Pakistan Poverty Alleviation Fund (PPAF), Pakistan
Mila Mercado-Bunker, President, Ahon Sa Hirap, Inc. and Chair of the Microfinance Council of the Philippines
Michael Krell, Social Performance Analyst, Microfinance Information Exchange (MIX), USA

Introduction

Dina Pons of Incofin IM, the moderator of the workshop, started the presentation with the following description of Responsible Inclusive Finance:

Every institution along the value chain of “responsible inclusive finance” – whether socially or financially motivated – employs responsible, client-centric practices at every level of its business and demonstrates commitment to fulfilling its mission.

Pons provided an overview of the Responsible Inclusive Finance initiatives which complement each other thereby reducing duplication of efforts while assuring transparency. The workshop presented three tracks: social performance, client protection, and poverty focus. The five steps of the roadmap to responsible inclusive finance were presented, each step having a resource or tool to help the MFI, and the workshop concluded with these final messages:

  • Responsible financial inclusion is an overwhelming process so take it one step at a time to improve.
  • Merge data collection into daily activities.
  • Training staff entails costs but benefits performance. From the perspective of the investors it is costly and not worth pursuing but it is part of a gradual process.
  • There is a universal tool available to MFIs. Social investors do not require certification but need rating on social performance for better delivery of services and social impact.

Roadmap to Responsible Inclusive Finance

Step 1: Choose a track

There are several ways to approach improving practice in responsible inclusive finance. Some ways are more comprehensive than others, such as improving social performance. All financial institutions should at least complete the client protection track, and all financial institutions with a double-bottom line should complete the social performance track.

Organizations should follow the Social Performance track if they want to improve their overall social performance. Institutions with a double-bottom line should follow this track. Following this track will include client protection and pricing transparency.

Organizations should follow the Client Protection track if they want to ensure no harm comes to clients. This track applies to all financial institutions and includes pricing transparency.

The Poverty Focus track is for organisations that have a social mission focused on poverty or have many clients living in poverty. There are resources that apply a poverty lens to client protection or social performance.

Step 2: Follow the Roadmap, based on your track

For each of the tracks, there are five stages of the Roadmap: Learn, Assess, Plan, Implement, and Demonstrate. Each step has a resource or tool to help your financial institution along the way. Each resource and tool has a link, which will help you access that resource.

5 stages Roadmap

Click here to find out what resources are available for each of the steps in the roadmap.

Learning from the Practitioners

Yasir Ashfaq of Pakistan Poverty Alleviation Fund highlighted the following points:

  • Take a holistic approach.
  • Governance is important; the Board should be trained.
  • Have a clear mission and core values.
  • Monitoring is crucial.
  • Financial literacy is important at client level.
  • Assessment must be done at client level.

Pons and the other speakers reiterated these ideas and described how their institutions are following the Roadmap to Responsible Inclusive Finance.

Gilbert Marimba of Negros Women for Tomorrow Foundation (NWTF) talked about how to assess the client, minimize the risk, and ensure the clients can pay. To address these challenges, NWTF changed the target clientele, the tools for assessment, and the type of business and loan matrix.

Mila Mercado-Bunker of Ahon sa Hirap, Inc. (ASHI) explained that many MFIs are using the Progress out of Poverty Index (PPI) and ASHI is mentoring MFIs on using poverty measurement tools like the PPI and are working with the Central Bank on pricing and interest rates. One challenge regarding governance is the need to develop a standard of reporting to the Board. Advocating social performance should cut across from the staff to the Board to come up with standard reporting.

Open Forum

How do we help lower poverty if we have to pass on the cost to clients for expensive assessment?

It is important to collect data and it is not too costly to integrate this into daily activities. Staff can be trained to administer the tools. MIX may also develop a standard for reporting. Mike Krell of the MIX said they are working to address and lessen the reporting burden (at the levels of the funders and MFIs), particularly streamlining reporting with a one page reporting form, by streamlining the number of indicators and eliminating overlaps.

From experience shared by speakers, the data collected helped increase the number of clients, raised repayment rates into a more viable operation, and product adjustments attracted clients. It is a choice an institution has to make: weigh the impact on social performance against the costs of administration.



Tools for the Roadmap to Responsible Inclusive Finance

LEARN

Social Performance Client Protection Poverty Focus
Universal Standards for Social Performance Management Smart Campaign Client Protection Principles Truelift Learning Guide
Principles for Investors in Inclusive Finance MFT 10 Steps for Pricing Transparency

ASSESS

Social Performance Client Protection Poverty Focus
SPI-4 Audit Tool (launching in January 2014) Smart Getting Started Questionnaire Truelift Self-Assessment
MIX Market regional reports, cross-market analysis, and SP analysis MFT Calculating Transparent Pricing Tool v2.2

PLAN

All tracks
Develop an action plan. What would you address first? This includes:

  • Clearly defining mission, target clients and goals (here)
  • Incorporating SPM plan into the overall business plan (here)
  • Incorporating the plan into the board agenda (Choose CEO-Board Workshop)
  • Collaborate with networks for training and peer-learning (here)
  • Connect with technical assistance providers (here)

IMPLEMENT

Social Performance Client Protection Poverty Focus
Universal Standards Implementation Series Smart tools Truelift Community of Practice
SPTF Resource Center (e.g., case studies, templates) Report data with MFT Data Collection Tool
Report data to MIX

DEMONSTRATE

Social Performance Client Protection Poverty Focus
Social ratings and Microfinance Institutional Rating Smart campaign Client Protection certification Truelift Milestones (Aspirant, Emerging, Achiever, Leader)
MIX Star MFI Recognition MFTransparency Seal of Transparency

One thought on “From Intent to Action: Resources to Pursue Responsible Inclusive Finance

  1. Reblogged this on Truelift and commented:
    Take a look at the resources available for MFIs with a poverty-focus. Truelift Executive Director, JD Bergeron is part of the Responsible Inclusive Finance (RIF) group. Here are the details from the RIF session held in Manila as part of the Partnerships against Poverty Summit this past October.

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