MIX Social Performance Validation Document Compendium

Transcription

1 MIX Social Performance Validation Document Compendium What follows is a description of MIX s methodology for validating the social performance (SP) indicators that MFIs have reported to MIX. Both this guide and the indicators themselves align with the Social Performance Task Force s (SPTF s) Universal Standards for Social Performance (USSPM). USSPM 1: Define and Monitor Social Goals 1. Poverty Outreach Data This is the list of all poverty outreach data points that are subject to MIX s SP data validation process: 1. The poverty measurement tool used 2. The poverty line of reference 3. The number of clients surveyed during poverty measurement 4. The percentage of these clients below the poverty line of reference at the time of measurement These data points must be validated for every period reported by the MFI (SP results data is always annual there are currently no quarterly SP data points) ALL of these data points must be corroborated in order for an MFI s poverty reporting to be considered validated. Documents the MFI has to submit to MIX for poverty outreach data validation: There are three distinct ways to validate an MFI s poverty outreach data. Any of these three document types can be submitted: 1. A Grameen Foundation PPI Certificate this applies only to PPI implementers and only to those MFIs that have successfully completed Grameen s PPI certification process. 2. A social rating from the last two years from the reporting date. o The entire rating report must be submitted (not just the first page). o The rating must corroborate: (a) The specific poverty tool in use, 1

2 (b) The existence of ongoing poverty measurement activities or, if poverty measurement is not ongoing, the existence of the specific poverty measurement initiative reported to MIX, (c) Whether these poverty measurement activities are/were undertaken for all clients or a specific sample, and (d) The specific poverty measurements reported by the MFI to MIX (does not need to be exact but should be a close fit this means poverty lines of reference should be the same!). 3. The form used by field officers to collect poverty data and a source document showing aggregate client poverty figures o The source document must corroborate: the poverty measurement tool used, the poverty line of reference, the number of clients surveyed during poverty measurement, and the percentage of these clients below the poverty line of reference at the time of measurement o This source document can be any of the following: i. A report generated from the institution s MIS, ii. An extract from a database other than the institution s MIS, or iii. A report created by an external agency, if poverty measurement was carried out by an entity other than the MFI. Example: Poverty outreach data validation The MFI below reported using Grameen PPI and reported number of clients surveyed, typology of clients surveyed, poverty line used, and likelihood (percentage) of clients below poverty line. Self-reported data [This MFI reported implementing the PPI...] 2

3 [... as well as its PPI measurements.] In the absence of a social rating or a Grameen Foundation PPI certificate, the MFI should send MIX a source document of the poverty data collected, as in the example below: PPI poverty data measurement Branch Name TOTAL BRANCHES SUMMARY December 2011 Average Disbursement Average PPI Score Probability of being less than US$2 income One 15, % Two 13, % Three 14, % Four 15, % AVERAGE 14,

4 USSPM 1: Define and Monitor Social Goals (cont d) 2. Enterprises Financed/Employment Creation The enterprise and employment indicators subject to validation are fairly similar. Enterprises financed: 1. Number of enterprises financed during the period 2. Number of start-up enterprises financed during the period 3. Number of clients surveyed for enterprise data o This data point MUST be present for either (1) or (2) to be considered for data validation Employment creation: 1. Number of people employed in financed enterprises ( jobs created ) during the period 2. Number of microenterprises surveyed for enterprise data o This data point MUST be present for (1) to be considered for data validation Important note: enterprise sample is in terms of clients, while employment sample is in terms of microenterprises. Documents the MFI has to submit to MIX for enterprises financed/employment creation data validation: The process for validating enterprise and employment data is similar to the generic option for poverty outreach data validation In order to validate these data points, MFIs must submit a source document containing aggregate enterprise/start-up/employment figures This document must include some corroboration of sample sizes Examples of acceptable source documents are: i. A report generated from the institution s MIS, ii. An extract from a database other than the institution s MIS, or iii. A report created by an external agency, if poverty measurement was carried out by an entity other than the MFI. 4

5 Example: Enterprises and employment creation data validation This MFI reported to MIX that it financed 80,000 microenterprises, 16,009 of which were startups, based on a sample of 100,342 clients surveyed. It also reported the creation of 16,000 new jobs, based on a sample of 80,046 microenterprises. Self-reported data In the absence of a social rating, the MFI can send a source document that verifies this selfreported information. Enterprise and Employment Data AGGREGATE BRANCH STATISTICS JAN DEC 2008 Main enterprises Number of clients Percent All clients 80, % Sari-Sari Store % Retailing % Wholesale Trade % Aqua-based &/or fishing % Agriculture-based % Services % Processing % Manufacturing % Start-ups % Survey Date: JAN DEC 2008 (N=100,342) Employment in supported enterprises Number (N=110 group clients) Total working/supported enterprise Adult family members Children family members hired labor 0.2 % enterprises with hired labor 10% Av.. hired labor in these enterprises 2 Survey Date: MAY JUNE 2008 (N=110 group clients) **10% of enterprises hired 2 nonfamily workers = 16,000 external jobs 5

6 USSPM 2: Ensure Board, Management, and Employee Commitment to Social Goals The governance indicators that are subject to MIX s SP validation process are: 1. Whether an MFI s board has had any training on SPM. Training should be interpreted very loosely the real issue is whether board members have had any sort of SPM orientation and/or experience with SPM. 2. Whether an MFI s board has a standing social performance committee. This metric is intended to assess the level of board oversight regarding SPM. While (1) above should be interpreted loosely, (2) should be interpreted fairly strictly: the key word is standing the SP committee must be a permanent structure within the board to qualify. Documents the MFI has to submit to MIX for governance indicator validation: There are three distinct ways to validate an MFI s Board data. Any of these three document types can be submitted: 1. A social rating from the last three years 2. An externally validated CERISE SPI (latest version, compatible with MIX indicators) 3. For Board training: o Detailed information about the orientation that the Board received on the MFI s mission, social goals and SP metrics to be monitored For Board committee: o Board minutes of each meeting. If not available, detailed information about the role and responsibilities of the Board in monitoring social performance information (Board composition and detailed summary of main actions undertaken during the year related to social performance monitoring) Example: Governance indicator validation Self-reported data In the absence of a social rating, the MFI can send detailed information about the orientation(s) Board members have received on social performance topics and Board minutes that verify the presence of social performance as an item on the Board s agenda. 6

7 Board members orientation on social performance July 11 th and 12 th, 2012 Topics Duration (min) 1. The MFI s social mission, vision and goals Strategy for Social Performance Management Monitoring of indicators Poverty score card Exit Monitoring System Staff satisfaction Employment generation in MFIs financed 2.2. Means to Ensure Quality Control Information analysis and communication to Board Board s role in reviewing and discussing SPM during Board meetings Aligning the systems and structures to SPM 120 Total: 480 Number of Board members participating: 7 (over 10) Names of Board members participating: A. Fernández, B. Rodríguez, C. Gonzalez, D. Garcia, E. Diaz, F. Castro, G. Perez. MINUTES OF THE BOARD OF DIRECTORS MEETING December 9, 2012 Directors Present: A. Ahmed, J. Chandra, R. Chopra, D. Desai, S. Gupta Directors Absent: J. Rawat, C. Nayak CEO Report: The CEO reviewed the agenda and discussed the current status of monitoring and evaluating social performance indicators in the MFI. A number of questions were asked, followed by an extensive discussion. [Details ] Social Performance Management Review: The Board reviewed data, including: mission compliance, performance results, human resource policy, social performance-related risks, client protection practices, growth, and profit allocation. Based on this review, the Board identified the following strategy: [details...] Approval of Minutes: The secretary of the Board presented to the Board the minutes of the previous Board meeting held on September 5, 2012 for approval. The minutes were unanimously approved as presented. CEO Report: The CEO reviewed the agenda and discussed the current status of monitoring and evaluating social performance indicators in the MFI. A number of questions were asked [details...] Closed Session: The Board next discussed a number of strategic topics related to social performance evaluation within the MFI [details...]. Questions were asked and answered. Next Meeting: March 15,

8 USSPM 3: Treat Clients Responsibly MIX collects indicators on 6 of the 7 areas of the Consumer Protection Principles. These areas are: Prevention of over-indebtedness Transparency Responsible pricing Fair and respectful treatment of clients Mechanisms for complaints resolution Privacy of clients data Documents the MFI has to submit to MIX for Consumer Protection Principles (CPP) indicator validation: Any of these four document types can be submitted: 1. A Social Rating no older than three years from when it reported on CPPs to MIX 2. A Microfinance Institutional Rating 3. An externally validated CERISE SPI (latest version, compatible with MIX indicators) 4. A SMART Campaign Certification Example: CPP indicator validation Self-reported data 8

9 The Social rating, institutional rating, CERISE SPI, or Smart Campaign Certification must correspond to self-reported CPP information. SOCIAL RATING Social Responsibility to Clients Mechanisms to check client over-indebtedness is deemed adequate and facilitated through background investigation. The lack of Credit Bureau for MFIs does not allow tracking the overindebtedness of the clients however as an alternative, informal black list exchange between MFIs can be used. Risk of over-indebtedness is especially prevalent in urban areas. This is confirmed by the survey results which showed that overall, 7.3% of clients paid their debts with credit in the past, with all of them urban clients. In order to mitigate such risks, the MFI has a ceiling policy based on the cash flow analysis. The calculation of the repayment capacity is based on the premise that clients should be able to keep 50% of their income, net of expenses and deductions including the loan installment as well as the repayment of other debts. Overall assessment of repayment capacity is good, generally more stringent for loan applications requiring higher loan amount where a business plan is required. The MFI has good systems in place to ensure clients are treated well with respect and dignity. It has adopted its code of conduct for staff which includes fair treatment of clients and abstinence from improper behavior. Furthermore, a formal client complaint system is in place to monitor the treatment of clients by LOs since mid The phone number that clients can call answered by the Internal Audit department is posted clearly in all branches. The MFI has significantly reduced the use of intermediaries used for the housing loan in some communities. Part of the reason was that the MFI felt it could not sufficiently guarantee the fair treatment of clients. 9

10 USSPM 4: Design Products, Services, Delivery Models and Channels That Meet Clients Needs and Preferences MIX collects data on MFI financial product offerings in a number of ways: Through audited financial statements Through self-reported client and portfolio breakouts Through social performance reporting Only product and service data collected as part of an MFI s social performance profile is subject to validation. MIX s SP profile data collects information on four common types of non financial services offered by MFIs: Enterprise services aim to improve clients businesses or business-related skills Education services seek to improve client skills or knowledge in areas not directly related to business or entrepreneurship Health services comprise any and all health care provision Women s empowerment services include anything aimed at increasing the autonomy of women or dealing specifically with crimes against women Finally MIX s SP data asks MFIs to list any financial products and/or services that have been specifically designed to meet the needs of the poor or very poor. Documents the MFI has to submit to MIX for products and services data validation: Financial product and services offering: 1. A social rating from the last three years or 2. An externally validated CERISE SPI (latest version compatible with MIX) or 3. Detailed information on the financial products and services offered to clients (description of terms of each product and service, information on targeted groups and research linking these groups needs to the products/services) Non financial services offering: 1. A social rating from the last three years or 2. An externally validated CERISE SPI (latest version compatible with MIX indicators) or 3. Detailed information on the financial and non financial services offered to clients (description of services and how these meet clients needs and information about the partner organization providing service) Products and services designed for the poor: 1. A social rating from the last three years or 2. An externally validated CERISE SPI (latest version, compatible with MIX indicators) or 3. Detailed information on the products and services designed for the poor (description of market research conducted in relation to the product or service, summary of the client 10

11 needs addressed by the product or service, the rationale for any changes made to the product or service). Example: Financial product and service data validation Self-reported data In the absence of a social rating or a CERISE SPI, the MFI can send detailed information of the financial products it offers. List of products offered as at December 2012 Business Loans This loan gives self-employed women and men access to financing to support their businesses. Features Rs. 6,000 Rs. 15,000 (1st year) Rs. 50,000 max. (2nd loan cycle onwards) Reducing balance 25% p.a. / 24% p.a. ( for repeat loans) 12 months for loans below Rs months for loans above Rs Housing Loans Features This gives women and men financial access Rs.10,000 Rs.50,000 to pay for rental deposits, lease amounts, or 24% p.a. declining for home improvements 6 24 months Example: Non financial services data validation Security Deposit (refundable): 10% of loan amount.. 11

12 Self-reported data In the absence of a social rating or a CERISE SPI, the MFI can send detailed information about the non financial services it offers: Training Schedule for Women Clients in Rural Areas Activity Timeline Trainer Number of clients who attended 1.Specialized training on livelihood 2-4 hours conducted successively one day each week for three (consecutive weeks National Technical University - food vending 90 2.One-time training on different livelihood topics 3 hours Food Corporation hograising, agri-post, egg machine, bread and pastry making 3.One-on one business startup 2 hours Study Center food 50 and expansion consultancy processing and with Non selected financial clients products: on hog raising, operation of an agripost Department of Trade and Industry organic for Courses swine feeds on skills and development egg- and entrepreneurship farming growth for women clients in rural areas layering business

13 Example: Financial products and services specifically designed for the poor Self-reported data In the absence of a social rating or a CERISE SPI, the MFI can send detailed information about the financial products or services it offers that are specifically designed for the poor: Financial products specifically designed for the poor Name Employment grant program Product Type Min. Value Max. Value Repayment Frequency Grant NA NA Max. Term Special youth loan Loan Weekly 40 Weeks How are these products specifically designed for the poor? The MFI s employment grants are targeted at specific market segments and include business training and skills development. This program helps poor people help themselves and is dedicated to reducing poverty by helping economically inactive poor to start businesses that they can plan and manage themselves. Research has shown the MFI that one important obstacle faced by the very poor is a lack of the start-up capital and requisite skills to begin generating an income stream. The MFI s grant program provides clients with a basis for making this shift with no strings attached: clients do not need to pay back any loans and are eligible for regular group loans once they ve satisfactorily completed the program. The MFI s special youth loans target youth between years old from urban slums, giving them a loan coupled with technical training offered by specialized institutions and providing incentives as well to cover their transportation cost. Training material expenses are also covered by the program. Many poor urban youth lack the training and motivation required to become economically independent. This loan program addresses these deficiencies through a combination of training and economic incentives. 13

14 USSPM 5: Treat Employees Responsibly MIX s SP profile data contains multiple categories of HR policy and staff incentive basis. HR policy categories: (1) transparency on salary, benefits, (2) protection at work, (3) equality, (4) other (write-in) Staff incentive categories: (1) ability to attract new clients from target market, (2) outreach to rural/remote communities, (3) outreach to women, (4) quality of interaction with clients, (5) quality of social data collected, (6) client retention/drop-out rate, (7) portfolio quality, (8) other (write-in) Documents the MFI has to submit to MIX for HR policies and staff incentives validation: Any of these three document types can be submitted: 1. A social rating no older than three years 2. A CERISE SPI (latest version compatible with MIX, externally validated) 3. A document containing the following information: a) For HR policies: The original human resources policy document and documentation detailing employees rights (i.e. wages, benefits, working conditions, safety at work, non-discrimination, freedom of association, grievance resolution, etc.). These documents should be written and operational by September b) For staff incentives: o The staff incentives policy document (if available) describing the type of incentives offered (i.e. bonus, team incentives, or other forms of compensation). This document should be written and operational by September 2012, or o A summary of the incentives given to current employees (bonus, team incentives, or other forms of compensation). Example: HR policy data validation Self-reported data 14

15 In the absence of a social rating or a CERISE SPI, the MFI can send a copy of the staff manual section related to the HR information reported: Staff Manual Page 5 RECRUITMENT POLICY / PROHIBITION OF ALL KINDS OF DISCRIMINATION: No discrimination is permitted in the work place made on the basis of race, color, sex, religion, age, family status, political opinion, national extraction or social origin, language or union membership which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation. Any distinction, exclusion or preference in respect of particular job bases on the inherent requirements therefore shall not be deemed to be discrimination. Discrimination against a disabled person, who s prospective of security, retaining and advancing in suitable employment, is substantially reduces as a result of a duly recognized natural or mental impairment, is prohibited. Discrimination, direct or indirect, against a female employee arising from her pregnancy or childbirth is prohibited. Harassment i.e. sexual of an employee is also a form of discrimination and is prohibited... Example: Staff incentive data validation Self-reported data 15

16 In the absence of a social rating or a CERISE SPI, an MFI can send MIX detailed information about its staff incentives policy: Quarterly bonus compensation for loan officers: Areas of performance assessment Proportion of total Incentive Productivity: Loan portfolio, number of clients, 30% number of new loans per period Portfolio quality: Portfolio at risk (PAR) > 30 25% days, delinquencies > 90 days Client retention rate 25% Quality of service: Client satisfaction, number of 20% complaints 16

17 Additional Data Validation (Not Part of USSPM): Environmental Policies Although there are no USSPM covering protection of the environment, MIX s SP profile indicators also contain environmental policy data. MIX collects information on whether an MFI: 1. Raises client awareness about environmental impacts 2. Trains/educates clients on environmental improvements 3. Includes specific clauses in loan contracts to mitigate specific environmental risks 4. Identifies enterprises with environmental risk 5. Offers lending lines linked to alternative energies 6. Offers lending lines linked to environmentally friendly products. Documents the MFI has to submit to MIX for environmental policy data validation Any of these three document types can be submitted: 1. A social rating no older than three years ago 2. An externally validated CERISE SPI (latest version compatible with MIX indicators) 3. A document containing the following information: o A policy document describing any pro-environment activities (e.g. training, education, lending lines linked to alternative energies, etc.) or o Information on the list of activities the MFI does not finance because of potential harm to the environment. Example: Environmental policy data validation Self-reported data 17

18 In the absence of a social rating or a CERISE SPI, the MFI can submit a copy of the environmental policy in place: Program Administration Manual October 2011 PROHIBITED INVESTMENT ACTIVITIES LIST Projects that involve conversion or degradation of critical forest areas or related natural habitats. Projects involving the construction of dams that significantly and irreversibly disrupt natural ecosystems, alter natural hydrology, inundate large areas, impact biodiversity or displace large number of inhabitants or impact local inhabitants ability to earn a living. Projects involving commercial manufacturing of ozone-depleting substances or the production or use of organic pollutants. Extraction or infrastructure projects in or impacting protected areas. 18