Issues in Designing Effective Microfinance Impact Asssessment Systems

This paper is based on work conducted by Imp-Act, a three-year action-research program aiming to improve the quality of microfinance services and their impact on poverty. The paper looks specifically at the benefits of designing and implementing effective practitioner focused client and impact assessments. Such an assessment can help in:

• Improving the understanding of MFOs about their clients;
• generating market information to improve services of the MFOs;
• enabling managers of MFOs to assess performance against objectives;
• aiding donors to make investment decisions.

The paper considers the kinds of questions that MFOs face while undertaking impact assessment:

• Who are the end users?
• What is the impact assessment process expected to achieve?
• Who should conduct impact assessment?
• What are the indicators used for measuring impact?

The paper states that impact assessment must be context-specific, taking into consideration the type of information to be gathered and the purpose of this information. Finally, it stresses that impact assessment is an ongoing process, and not a one-off event.