Microfinance for Decent Work – Enhancing the Impact of Microfinance: Evidence from an Action Research Programme

This report shares findings from a research project undertaken by the ILO to encourage microfinance practitioners, researchers, policymakers, and donors to undertake innovations, and evaluate their impact in order to enhance results. The project involved a collaboration with 16 MFIs to test a range of innovative approaches to foster social impact. The innovations were specific for each MFI, with three MFIs launching a new financial service, nine introducing a non-financial service, four offering a package of financial and non-financial services, and one restructuring its operations. The innovations were implemented in a pilot study and the impact was analyzed. Key findings include:

• Coverage of the entire family by a microinsurance product decreased child labor incidence for by almost 7% and lowered the risk of hazardous occupations by 5 - 6% in Pakistan;
• Interventions increased the awareness about formalization by 93% and formalization itself by roughly 70% for clients in India;
• Emergency savings reduced taking a loan to repay another loan by 22%, plus resulted in a 7% drop in repayment difficulties and a lower level of indebtedness of clients in the Philippines;
• Package of women entrepreneurship training and start-up loans resulted in increased self-employment and business expansion for female microentrepreneurs in Tajikistan.