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SEPTEMBER 2007
Increasing Transparency on
Social Performance
Presented by: Gema Perez
E-mail: [email protected]
Planet Rating
13 rue Dieumegard 93400 Saint Ouen France
Tél : 33 1 49 21 26 30 – Fax : 33 1 49 21 26 27
[email protected] - www.planetrating.com
Planet Rating: The Global Microfinance Rating Agency
Created in 1999 and became a private independent rating firm in June 2005
Planet Rating has the most extensive global coverage:
 Paris HQ: covering Eastern Europe & Asia
 Lima Office: covering Latin America & the Caribbean
 Dakar Office: covering West & Central Africa
 Kampala Office: covering East & Southern Africa
 Beirut Office: covering North Africa & Middle East
Most diversified rating team in the industry:
 Multicultural: American, Canadian, Colombian, Dutch, French, Lebanese, Senegalese, Spanish, Ugandan,
Peruvian, Vietnamese citizens
 Multilingual: Arabic, Dutch, Italian, English, French, Lugandan, Spanish, Portuguese, Vietnamese, Wolof
speakers
Qualified & experienced team:
 Planet Rating’s Managing Director is the only head of rating agencies that has operational microfinance
experience; he was former General Manager of SPBD – Samoa’s largest MFI
 Each senior analyst has conducted at least 12 rating missions on 3 different continents
 Analyst backgrounds: investment banking, management consulting, non-profit, microfinance
November 16th to16th 2007
Measuring social performance of MFIs
Planet Rating is one of the most experienced microfinance rating agencies
in Eastern and Central Europe and NIS
We have rated MFIs of all sizes, types, legal statuses and stages of development:
 Bosnia and Herzegovina: Mikrofin, EKI, Partner, Sunrise, LOK micro, MI BOSPO,
Benefit, Prizma
 Russia: FFECCC, RWMN, VRFSBS
 Armenia: Aregak, MDF Kamurj
 Mongolia: Khan Bank, Xac Bank
 Moldova: MicroInvest
 Serbia: AgroInvest
 Georgia: Constanta
 Kosovo: KEP
November 16th to16th 2007
Measuring social performance of MFIs
Get rated by Planet Rating means instant recognition and
credibility with investors
Planet Rating and our reports are recognized by microfinance investors
 Many key investors (e.g. FMO, Blue Orchard, responsAbility, Oikocredit,
KfW) prefer our detailed and deeply analyzed reports
 EBRD and EIB – the leading European microfinance investors – are frequent
readers of our rating reports
Wide Report Distribution
 Our reports are distributed to and read by all 76 microfinance funds and
investors and numerous donors such as development banks and bilateral
agencies
November 16th to16th 2007
Measuring social performance of MFIs
We value what we measure: measure your social performance!
For most MFIs, institutional sustainability is only a means to an end: achieving
their social goals.
Transparency on financial performance, with the existence of clear financial
performance standards, regular reporting, external evaluations and ratings, has
played a significant role in the development of strong microfinance institutions. In
order to further strengthen the sector, increased transparency and accountability on
the capacity of MFIs to effectively achieve their social goals is needed.
Social Ratings are now available for MFI that wish to complement their institutional
and financial rating and provide a comprehensive information to their stakeholders
(Boards, Management Team, Fund providers, Supervisory Bodies) for an optimal
decision-making.
November 16th to16th 2007
Measuring social performance of MFIs
Social Rating: A tool to improve your social performance
 Social ratings include an audit of your Social Performance Management systems
conducted with a transparent methodology and in an interactive mode to ensure
an optimal appropriation of the conclusions of the audit
 Interviews with management team, board, field staff
 Verification and validation of social performance information and indicators
 Document review (communication documents as well as internal)
 For institution where social performance management systems are only
incipient, our Social Ratings can be complemented by a one-day training for MFI
staff on concepts and best practices currently being developed in the field of
social performance management (optional)
Social Performance Management is defined as the processes through which you define and
formalize your social goals, design the systems to put these intentions into practice,
measure actual outcomes and use these results to refine systems and improve practice
November 16th to16th 2007
Measuring social performance of MFIs
Social Rating: A tool to communicate about your social performance
Our Social Rating standardized and
comprehensive rating reports are designed to
suit the information needs of all MFI
stakeholders (Boards, Management Team, Fund
providers, Supervisory Bodies)
 Socio-economic environment
 Outreach and microfinance service offering in
the country
 Social performance indicators (with
benchmarking)
 Concise and clear justification of conclusions
November 16th to16th 2007
Measuring social performance of MFIs
Social Rating: Reduce risk, create opportunities
 Improve your social performance management systems
 Identify weaknesses and learn about best practices
 Reduce reputation risks
 Demonstrate efforts made towards client satisfaction and client protection
 Build an image of socially responsible institution
 Differentiate your MFI from competitors to attract skills or funds and enhance
staff motivation
 Increase transparency
 Comply with stakeholders information requests (fund providers, regulators,
clients)
November 16th to16th 2007
Measuring social performance of MFIs
Social Ratings: What do we rate?
 Intentions  clarity and consistency
 Clarity and visibility of intentions (translation into clear and binding documents)
 Relevancy given the MFI context and maturity
 Consistency of main decisions with stated goals and intentions
 Implementation  efficiency
 Efficiency of processes
 Availability of necessary resources
 Integration of these processes in the control/ audit / verification cycle
 Results  comparison with benchmarks
 Opinion on the reliability of indicators
 Comparison with national / international microfinance benchmarks
 Comparison with internationally approved Corporate Social Responsibility
objectives (MDG; ILO; Global Compact; UN Charter)
November 16th to16th 2007
Measuring social performance of MFIs
Social Rating Scale
Social Ratings provide an opinion on the capacity of an MFI to achieve its social goals
Rating
Definition
5
Advanced: Long-lasting commitment to social goals. Efficient
management of social performance and social responsibility risks.
Institution very likely to achieve a positive social impact.
4
Convincing: Clear commitment to social goals. Reasonable
management of social performance and social responsibility risks.
Institution likely to achieve a positive social impact.
3
In progress: Clear intent to reach social goals. Social performance
management systems being implemented.
2
Incipient: Clear intent to reach social goals. Low capacity to manage
social performance.
1
Intangible: Intention to reach social goals is non tangible. Low level
of management of social performance.
November 16th to16th 2007
Measuring social performance of MFIs
Synergies between Social Rating and GIRAFE Rating
 Because the sustainability of an institution is key to its social performance (by
allowing it to provide service in a durable way), Social Ratings are only conducted
for MFIs that have already undergone an institutional rating (with Planet Rating or
another reputable microfinance rating agency)
 Social Rating missions can be conducted at the same time as GIRAFE rating
missions, but it is not mandatory
 Stand alone Social Rating mission, depending on the size of the institution and the
type of information available, takes 2-4 days on-site
 Combining both processes provides efficiency gains that are reflected in the prices
November 16th to16th 2007
Measuring social performance of MFIs
Social Rating framework (   )
Institutionalization of the Social Mission
 Social Mission and Strategy
 Does the institution have a clear social goal, shared by all stakeholders? How is it
defined?
 Is the social mission integrated in the main decisions of the MFI?
 Is there a risk that the institution might loose its social focus?
 Social Performance Monitoring
 Has the institution put tools and systems in place to measure and track its social
performance?
 Staff Mobilization
 Are processes in place to involve/motivate staff in/towards the achievement of
social goals?
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Measuring social performance of MFIs
Social Rating framework (   )
Social Rating framework  Outreach
 Client targeting
 Has the institution defined its target population?
 Has the institution put systems in place to know its clientele?
 Has the institution put systems in place to reach out to its target clientele?
 Outreach to the poor and excluded
 Is the institution providing financial services to persons usually excluded from
financial services (poor, rural, specifically disadvantaged groups)?
 Breadth of Outreach
 Is the institution reaching out / likely to reach out to a significant number of
poor or excluded people?
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Measuring social performance of MFIs
Social Rating framework (   )
Social Rating framework  Service offering
 Service design and client satisfaction
 Does the institution have a good understanding of the financial needs of its
clients and does it have processes to tailor the products to these needs?
 Are services adapted to the various financial needs of the target population
(diversity of services, amounts, terms, repayment schemes, collection methods,
guarantees, operational processes)?
 Are client satisfied with the services?
 Cost of the services
 Is the institution actively looking for ways to reduce the cost of the services for
the clients?
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Measuring social performance of MFIs
Social Rating framework (   )
Social Rating framework  Social responsibility
 Customer protection
 Are there systems in place to guarantee that clients will be treated with respect
and dignity? (transparency, fair treatment, prevention of over indebtedness,
respectful collection mechanisms)
 Human resources
 Are all staff recognized equal rights?
 Are all staff receiving a fair compensation (financial and non financial) for their
work?
 Social responsibility to the community
 Is the institution contributing to the community development with other means
than financial services? (fair and responsible behavior on the market; promotion
of fundamental human rights; respect for the local culture)
November 16th to16th 2007
Measuring social performance of MFIs
Planet Rating Social Rating experience
 Our social rating methodology has been refined through on-site testing and
collection of feedback from actors of the sector (MFIs, investors, donors, social
performance specialists) during 2005 and 2006
 The draft methodology was used for the social performance evaluations of six MFIs
in Mali in 2006
 The final methodology has been used for four social ratings in Ethiopia in July 2007
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Measuring social performance of MFIs
Contacts
 Global Headquarters
 West Africa
13 rue Dieumegard
Boulevard Djily Mbaye
93400 St-Ouen Paris – France
Immeuble FADH, 14th floor
Tel: +33 1 4921 2630
BP 5695 Dakar – Senegal
Fax: +33 1 4921 2627
Tel/Fax: +221 821 79 39
 Latin America
 East Africa
Francisco de Paula Ugarriza 813 – Oficina 301
Plot 23b Bandali Rise – Bugolobi
Miraflores, Lima 18 – Peru
PO Box 36179 – Kampala – Uganda
Tel: +51 1 472 5988 / 471 9526 / 470 2666
Tel: +256 414 236 745
Fax: + 51 1 4716816
 Middle East & North Africa
42 Mariam Geahchan Street
Ashrafieh, Beirut – Lebanon
Tel: +961 3 11 96 81
November 16th to16th 2007
Measuring social performance of MFIs