Introduction WEEK 3 – Preliminary analysis: use and interpretation of the results

Last week, we discussed the ways to improve the questionnaire. A new version will be provided by early 2005.
We would like to present this week how the tool could be used and interpreted. For the moment, we will not present the results as such:
-	the results can only be analysed once the external reviews are finalised, i.e., once the MFI and the external reviewer agree on the responses and find that the results reflects (approximately) the reality of the social performance of the MFI. We have just finalised the external reviews last month.
-	we would like, as much as possible, to analyse the results using the new version of the questionnaire. We do not really need new information : the new questionnaire will be simplified and clarified but the sources of information will generaly remain the same. A rapid exchange with the MFI partners will allow for a verification of the accuracy of the information.

The objective of this week is then :
-	to present how we can use such type of tools, how the results could be interpreted, 
-	to discuss what are the advantages and the risks, to see how to foster the positive points and limits the risks.

Individual analysis

The four dimensions represent four clusters of 25 points, or a total of 100 points for each MFI.
The total of the score can be taken into consideration, but as each MFI has its own strategy regarding the dimensions the institution wants to focus on, it is more appropriate to analyse the results by dimension.
With the new version of the questionnaire, the first part will clarify the historical and institutional contexts and the socio-economic environment of the MFI in order to explain the reasons of the choices on the 4 dimensions of the questionnaire.

It will then be possible to see, if the main focus is on poverty outreach for example, if the results are high or not (and why), in terms of social performance for the first dimension.

Analysis by dimension

The analysis by dimension can show the main orientation of a MFI.

Figure 1: MFI with main focus on poverty outreach
		
Poverty outreach 	Score 	22	88%
Quality of services	Score 	16	64%
Social capital	Score 	15	60 %
Social responsibility	Score 	16	64 %
Total		69	

Figure 2: MFI with main focus on social capital

Poverty outreach	Score 	13	52%
Quality of services	Score 	14	56 %
Social capital	Score 	19	76 %
Social responsibility	Score 	15	60 %
Total		61	

Figure 3: MFI with focus on social responsibility and social capital

Poverty outreach	Score  	14	56%
Quality of services	Score  	14	56%
Social capital	Score  	20	80%
Social responsibility	Score  	23	92%
Total		71	

Figure 4: MFI with balanced approach

Poverty outreach	Score	19	76%
Quality of services	Score	16	64%
Social capital	Score	18	72%
Social responsibility	Score	15	60%
Total		68	

Figure 5: Comparison between two MFIs

MFI	MFI 1		MFI 2
Poverty outreach	Score  19	76%		Score 17	68%
Quality of services	Score  21	84%		Score 20	80%
Social capital	Score  15	60%		Score 20	80%
Social responsibility	Score  16	64%		Score 20	80%
Total		71				   77	

At this stage, the comparison should be done between two similar MFIs: same socio-economic context, same institutional type for example, and it can help understand the differences in the strategy implemented by each institution. 
For the SPI2, this type of comparison helped determine if the questionnaire was discriminatory : given the different strategies of the two institutions, do we observe any difference in the results of the survey? This has been one way to improve the questionnaire during the external reviews.

Analysis by sub-dimension

[The sub-dimensions will be reformulated with the new version of the questionnaire. Each sub-dimension will have more or less the same weight.]

The analysis by sub-dimension can visualize the strength and main focus of the MFIs for the different dimensions. 

Figures 6 & 7 : Two MFIs with major focus on different dimensions

			MFI 3	MFI 4
		Maximum	Score obtained	%	Score obtained	%
Outreach of the poor 	Mission	7	5	0,71	6	0,86
	Targeting	11	4	0,36	9	0,90
	Propoor methodo	7	4	0,57	7	1,00
Adequation of services	Range	11	7	0,64	6	0,73
	Quality	10	6	0,60	8	0,80
	Non financial	4	1	0,25	2	0,50
Social capital	Transparency	4	4	1,00	3	0,75
	Client representative	11	9	0,82	7	0,64
	Empowerment	10	6	0,60	5	0,50
Social responsibility 	HRP	9	6	0,67	4	0,44
	Responsibility client	7	4	0,57	6	0,86
	Responsibility community	9	5	0,56	6	0,67

Given the number of subdimensions, the graphic representation becomes more complex, but it can help visualise the strengths and focus of the MFI, reading clock-wise from the mission to the responsibility towards the community.
 
Analysis by group of peers

Further analysis will be conducted with the results of the 25 MFIs, based on the conclusions of the external reviews.

Global score and scores by dimension and subdimension can be analyzed:
-	by type of MFIs: is there a link between institutional type (NGO, Cooperative, for-profit organization, etc.) and social performance?
-	by geographical context (wealth of the countries, continents, rural/urban): is there any particular focus on some dimension or subdimension by geographical context?
-	by size of the MFI: can the size of the institution influence its social performance?
-	by age of the MFI: is there an evidence of mission drift?

Links between social performance and financial performance

Social performance must remain connected with financial performance. High social performance may not tempt the MFIs to neglect or under-estimate the financial sustainability.

Some financial indicators such as the repayment rate, ROA, ROE, productivity of the employees, self-sufficiency, etc. could be analysed with the results on social performance.

Figure 8: Links between social performance and financial performance

MFI with both low financial performance and low social performance
MFI with low financial performance and high social performance
MFI with both high financial performance and high social performance
MFI with high financial performance and low social performance

The analysis could be done by type of institution, socio-economic context and age of institutions.
Over time, it would allow to see if there is a mission drift (improved financial performance but decreasing social performance) or to understand in which conditions we can observe that financial performance and social performance can go together.

Place of this type of tool among other

The objective of the SPI tool is to measure social performance based on this question:
“What are the social objectives of the MFI? Does the MFI give itself the means to achieve these objectives through the actions implemented and the corrective measures taken in case of negative feedback?”

This tool should be seen as another and new piece of the puzzle of tools that gives a clear idea of the role and impact of an MFI:
It is complementary to the tools measuring financial performance and as an auditing tool, it could be applied regularly (every one or two year for example). However, it is not a “compulsory” tool: purely commercial MFIs, MFIs that are not subsidized and do not receive “ethical” funds, MFIs that do not have social objectives as a priority can choose to follow only their financial performance.
Over time, the audit of social performance focusing on the MFI should be linked to the tools for impact analyses, and tools measuring the evolution of the status of the clients (see CGAP/Ford initiative). How the actions implemented by the MFI play a role on the situation of the clients?

In this framework of complementarity,  exchanges and close collaboration will continue in 2005 with CGAP intiative and Imp-Act (Institute of Development Studies) supported by the Ford Foundation.

Questions for the partners of SPI that can be discussed during this third week

Which internal use can we imagine for the tool? Which constraints does it imply on the MIS?
How can one use the results and visualize them? Which type of analysis can we make to keep on improving the microfinance sector?

The next steps

Finalisation of the new version of the questionnaire
Finalisation of the companion manual
Results for the 25 MFIs with the new version of the questionnaire
Meeting in March 2005

We want to conclude these three weekly synthesis with warm thanks to the Swiss Development Cooperation, FPH Foundation and Argidius Foundation for their financial support and their direct involvement in the reflexions and the progress of the initiative.