Bienvenue

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Advancing Arab Microfinance Greater Social
Impact through Inclusive Financial Systems State
of the Industry and Presentation of the
Conference Themes Plenary 6th May morning
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• Measuring and Managing Social Impact

Martin Greeley Research Fellow Institute of
Development Studies, University of Sussex, UK
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A key feature of microfinance, one that separates
it from both traditional finance and development,
is the unique way that it seeks to achieve a
social mission using commercial tools.

• Balancing the tension between social and
  commercial objectives is one of the greatest
  challenges for microfinance institutions

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CONTEXT First, the belief, a very reasonable one,
that microfinance has the potential to help
achieve the MDGs/National Development Strategies.
Secondly, the knowledge that to realise this
potential in a meaningful way requires a
substantial scaling up of microfinance service
provision.  
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The challenge scale up the provision of services
in ways that maintain and strengthen progress on
the MDGs and National Development
Strategies. Scale matters and the growth of the
industry is important for poverty reduction and
therefore for the achievement of MDG/NDS impact.
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MFIs with a social performance mandate that do
not focus on direct poverty outreach are reduced
to relying on the unproven argument that the
expansion of financial markets would be inclusive
or would generate pro-poor growth. It is a very
difficult perspective to reconcile with the use
of scarce public funds earmarked for poverty
reduction.
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Why Is Social Performance Important?

• Accountability
• MFIs have a responsibility to be transparent
• about their social performance
• Who are our clients?
• What changes are taking place in their lives?

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Poverty Scorecard distribution in LSMS sample and
Prizma client portfolio
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Without both knowledge of client condition on
entry and monitoring of their socio-economic
status over time, it is not possible to link MFI
performance to poverty reduction attainment or
other social performance criteria.
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Increasingly, access to financial market funds is
being achieved. It is part of a much more general
pattern of attempts to develop commercial links
with under-exploited rural markets. Amongst
leading business thinkers there is a global push
to exploit hitherto neglected market
segments. The notion of the "poor" or of rural
areas in poorer countries as market opportunities
for international capital is widespread.
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It is important to recognise that the standards
used in these northern founded practices bear
little relationship to the MDGs or National
Development Strategies. The Corporate Social
Responsibility literature is little different.
Specific bond issues on behalf of the social
funds sector are framed very generally with
respect to poverty reduction.
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Micro Vest Investment Criteria
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What is Social Performance?

• The effective translation of an institutions
  mission into practice in line with accepted
  social values that relate to
• reaching poorer and excluded clients
• improving the lives of clients and their
  families
• widening the range of opportunities for
  communities.

Social Performance Pathway
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What Does It Mean to Manage Performance?

• Deliberately managing to achieve desired
  results
• Performance is not incidental
• What is explicitly defined and
• measured is what is managed
• Need to define desired
• performance
• Need to measure against
• desired performance

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How Can MFIs Manage Social Performance?

• Apply social lens to performance management
• Translate mission into goals and objectives
• Monitor and assess performance towards goals and
  objectives
• Use information to improve practice
• Build on existing systems and processes
• Appraisal, rewards, communication, training
• Monitoring assessment
• Decision-making processes

Social Performance Pathway
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Where To Go For Further Information?

• Social Performance Resource Center
• http//microfinancegateway.com/resource_centers/so
  cialperformance
• Management training
• Technical Assistance
• Tools
• Rating, audit and other forms of assessment

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• Thank You for your attention!