MoMF14 Pro-Poor MFI Awards

by Kate DeYoe

During this Month of Microfinance, we have all been stimulated by the conversations within our community, inspired by the autobiographies of those touched deeply by microfinance, and challenged to dream big about what #Microfinancecanbe. At the crux of all this, of course, are people. The clients who are being served by microfinance institutions so that they can have a more secure financial future.

How are they doing? Have their lives improved as a result of microfinance? How can they be served better? Are there deserving people who haven’t been reached? These are questions not always easily answerable by MFIs even though they are purporting to be in the business of alleviating poverty.

This month we would like to highlight eight organizations that have demonstrated their commitment to reaching and serving people living in conditions of poverty by having systems in place that allow them to answer these questions. We feel that these are the organizations most deserving of the MoMF14 Pro-Poor MFI Awards because they conduct purposeful outreach, design appropriate products and services, and track the progress of their clients. In other words, they are truly focused on the people at the heart of microfinance. They are dedicated to the pro-poor objective of microfinance and walk the talk.

The eight MoMF14 Pro-Poor MFI Award winners are the first cohort earning recognition from Truelift, a trustmark that signifies commitment to positive and enduring change for people living in poverty. Truelift’s framework defines four milestones that MFIs will meet as they move along the pathway towards “pro-poor microfinance” – successful support of clients affected by poverty. MFIs earn recognition at each of the milestones based on performance requirements and the strength of evidence that validates them. All MFIs going through the process of a Truelift Assessment are part of a learning community that shares best pro-poor practices, with those receiving recognition serving as models and mentors for those that are still learning.

THE AWARDS

We hereby announce the MFIs that have completed a Truelift Assessment and were awarded recognition at each of the top three Truelift Milestones:

Milestone 2: Truelift Emerging Practitioners

These MFIs demonstrate transparency and reasonable performance related to sustainability, responsible financial performance, Client Protection Principles, the Universal Standards for Social Performance Management, and the Pro-Poor Principles. Their intent to serve the poor is clear, and through the Truelift Community of Practice they will receive guidance as to what it will take to improve their performance.

Key pro-poor facts: CAURIE is the only MFI in Senegal to offer credit and savings according to the village banking methodology (99%) suited to the needs of the poorest households. No minimum amount for credit and savings, and savings collected in the group can be given in internal credit to generate profits that can then be capitalized in the village bank or redistributed to members in the form of dividends.

From its annual poverty survey on the same cohort of customers, the 2010 pilot survey revealed that as the number of cycles increases, the rate of clients falling below the national poverty line decreased.

  • 46.9% for 1-3 cycles
  • 44.8% for 4-6 cycles
  • 42.9% for 7+ cycles

Key pro-poor facts: While Banco FIE does not specifically aim to reach poor populations, the incidence of poverty 48.2% measured by unsatisfied basic needs in areas of operation is significant, although lower than the national average of 58.6%.

Furthermore, 63.4% of clients are located in municipalities whose poverty rate is below the national average.

Milestone 3: Truelift Achievers

These MFIs have sufficiently met the qualifying standards in the areas mentioned above. With some changes, they are on track to fully meeting them and achieving the Truelift Leader milestone in the near future.

Key pro-poor facts: SEF is committed to enabling clients to make strides against poverty. SEF conducts considerable piloting and adaptation to test client needs; currently there are five credit options offered. 85% of clients use monthly option (6 or 4 months’ term); otherwise fortnightly (expected for new clients, but new clients in existing groups end up paying monthly).

Key pro-poor facts: NWTF shows the highest poverty rate of all the MFIs in the Grameen Foundation poverty calculation research (from 30% to 64%).

A poverty movement report was provided to the Board of Directors, showing poverty change based on the poverty measurement data. The Board established a committee to work more on positive change in clients’ lives and provide direction based on the poverty movement data received, including an increase in the activities of the Client Service Department for non-financial services.

Key pro-poor facts: MFW implemented systems to include poor households. In particular, with each new loan it collected its clients’ income levels and proxies such as access to education as part of its loan appraisal process.

MFW was the only institution in the market that cancelled the up-front fee and voluntarily lowered interest rates while maintaining an above-average Return on Assets for Jordan at 7.4%.

Key pro-poor facts: According to the 2011 client satisfaction survey, 89% of clients rated the financial services received from FINCA Peru as very good or good.

For non-financial services, 82% of customers rate the quality of training as 16+ (out of 20). In offices with the highest concentration of poverty, satisfaction was only slightly less at 80%.

Key pro-poor facts: Grameen Koota uses customer perspective on the goal sheets for staff at all levels.

Their credit offerings are mainly for income generation, with range of loans for diverse needs (festival, emergency, water and sanitation).

New products were recently introduced, including pension and financial literacy, and some adaptations have been made in products (e.g. sanitation loan size was increased and land ownership requirement removed) to better meet the needs of poor clients.

Milestone 4: Truelift Leader

One MFI has been awarded the Leader distinction for fully meeting the qualifying standards related to financial sustainability, the Client Protection Principles, the Universal Standards for Social Performance Management, and all three of the Pro-Poor Principles.

  • Cashpor
    Key pro-poor facts: Cashpor’s annual survey aims at tracking client change over time and is collected by their internal audit team to analyze poverty measurement scores by loan cycle.
    After six cycles, of the 25% of clients who have borrowed continuously:

    • 59% are above the $1.25 line
    • 44% are above the $1.50 line. 

WHO’S NEXT?

If your organization works in a poor region, or if people affected by poverty are your customers, or if you got into business to help vulnerable people, then you would benefit from becoming familiar with the principles, practices and indicators that should be integrated into your operations to successfully support your poor clients. As you travel along the path towards fully meeting the qualifying standards for pro-poor practice, your organization could join the inspiring ones above in being recognized at each of the milestones along the way.

To do this, a good first step would be conducting a Truelift Assessment, which starts with a statement of commitment and then joining Truelift’s “Community of Practice” to learn how you may improve your pro-poor practices.

An easy way for you to reach the first milestone – “Aspirant” – would be to evaluate yourself with the Truelift Indicators Tool. This will help you understand exactly where you are on target and where there is room for you to improve your ability to reach, serve and create positive results for your clients.

You then only need to demonstrate increasingly reliable performance across the qualifying standards to reach the “Achiever” and “Leader” levels and be awarded the Pro-Poor Seal of Excellence. This recognition not only designates you as a trustworthy resource for poor borrowers, it gives you credibility in the eyes of funders and investors who can help you reach more people and increase your impact.

CONGRATULATIONS

Congratulations to each of the eight MoMF14 Pro-Poor MFI Award winners. It is efforts like theirs to ensure that clients’ welfare remains at the heart of their work that is helping to sustain the microfinance industry’s good name.

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