Whither the new development finance? Reflections on the third Frankfurt seminar
This report summarizes and reflects upon proceedings of the third annual seminar on New Development (NDF) held in Frankfurt in September 1999. It starts by defining the NDF as both a critique of state sponsorship of financial services, and a defence of market-driven financial innovation. It then reviews current issues addressed by the seminar at organizational, client/product and financial system levels. This suggests greater acceptance of a diversity of approaches to promoting financial development, and lower expectations of what microfinance on its own can achieve. The review concludes that it is no longer easy or helpful to distinguish 'new' development finance from the mainstream.
Implementing impact assessment and monitoring systems in Zambia
This article describes the process by which an impact monitoring system was designed and built into a fairly recently launched Zambian microfinance organization, CETZAM. Developed with funding from DFID and initial technical assistance from consultants, a system was designed to monitor impact through a means test for all new clients, an annual impact survey and an exit survey for dropout clients. The first results from the system have fed into CETZAM's decision-making on loan size, repayment frequency and new products. This article describes the lessons learned, and assesses whether this system matches up to the principles of an 'impact audit'.
Social performance assessment of microfinance – cost-effective or costly indulgence?
This article and the other articles in this edition originating from the ImpAct programme ask the question: is it cost-effective for MFIs (microfinance institutions) to measure the outreach and impact of their services upon their clients? Apart from fulfilling the social impact obligations of their mission statements, the case studies indicate that social performance assessment (SPA) can steer changes in policy and practice that result in measurable financial benefits to the institution. This article discusses what is meant by SPA. It then sets out a costbenefit framework for evaluating SPA. Costs per client served are also compared for the different MFIs. The main measurable financial benefits arose from faster growth and reduced client exit rates.
Cost-effectiveness of microfinance client assessment in Honduras
After the positive experience of one of their members in pilot testing the SEEP/AIMS client assessment tools, the Covelo Network, an association of microfinance institutions in Honduras, sought funding to be trained in the use of these tools. A series of workshops was held between 2001 and 2004 covering the use of: exit surveys; client satisfaction focus groups; the use of loans, savings and profits; empowerment interviews; and impact surveys. This article describes some of the changes that the MFIs adopted as a result of implementing some of these tools, principally to reduce client exit rates and to permit faster and more flexible lending. It then provides cost estimates for the client assessment work and estimates the 'break-even' induced increase in profits (from whatever source) required to cover them. More specific cost-benefit models are then presented, based on more precise assumptions of the induced organizational changes. The client assessment work is shown to have been highly costeffective for the participating MFIs in Honduras during this period.
Reviews and resources
‘Randomized control trials are the best way to measure impact of microfinance programmes and improve microfinance product designs.’
Microfinance Impact and Innovation Conference 2010: Heralding a new era of microfinance innovation and research?
What do randomized control trials (RCTs) tell us about the impact of microfinance? This article reports on presentations at a three-day conference in New York in October 2010, ‘Microfinance Impact and Innovation Conference’, which provided evidence from RCTs on the impact of micro-insurance, asset-transfer programmes, savings and other aspects of microfinance. The article also raises questions about control over research into microfinance impact and innovation, and how far findings can be generalized.