Cost-effective Social Performance Management: Meeting the Social and Financial Goals of Microfinance
This paper argues that Social performance management (SPM) is an essential tool that MFIs ought to use to improve the quality of their services and to meet their goal of poverty alleviation. The paper presents the results of studies conducted by a global research action program called "Impact" on the efficiency of SPM systems.
As per the paper, the development of a simple, routine, self-directed SPM system would benefit MFIs in the following ways:
- Reduce financial exclusion and poverty;
- Retain clients and grow faster through savings arising from SPM;
- Enhance their reputation, competitiveness, capacity to innovate and resilience;
- Provide external stakeholders with reliable and regular information about the MFIs' social performance.
Studies conducted by "Impact" in collaboration with 4 partners in various countries proved that SPM was cost-effective. The scope of SPM, as revealed by the studies, is as follows:
- It clearly defines objectives for outreach, service quality and anticipated benefits, helping MFIs devise feasible strategies for reaching them;
- It monitors changing client profile over time, helping MFIs evaluate client satisfaction;
- It helps MFIs make decisions about prices, products and operational strategies;
- It helps MFIs implement internal quality control mechanisms, supported by periodic external reviews.
The author concludes with the argument that SPM can be simple and cost-effective, assisting MFIs in better serving their clients, improving operational services and reporting to external stakeholders and should therefore be made an integral part of a MFI's annual planning and budgeting program.
