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Responsible Microfinance: Is there a need to certify the accomplishment of social goals?

This discussion focuses on the certification of social goals accomplishment in microfinance. It explores the role of organizations licensed by the Smart Campaign in certifying social performance, the involvement of microfinance rating agencies, and the implementation of client protection principles.

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Responsible Microfinance: Is there a need to certify the accomplishment of social goals?

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  1. Responsible Microfinance: Is there a need to certify the accomplishment of social goals? Moderator: Laura Foose Speakers: Isabelle Barres, The SMART Campaign Emmanuelle Javoy, Planet Rating November 3, 2011

  2. Who will certify? • Certification will be done by organizations licensed by the Smart Campaign. • In 2011-2012, licenses will be granted to qualified microfinance rating agencies member of the Technical Sub-Committee of the Certification Task Force. • Beyond 2012, licenses will be open to others, provided they meet the licensee criteria.  Note that what is presented here is tentative. The certification proposal is in draft stage.

  3. Rating agencies as certifiers • Experience of Social Performance and Client Protection practices evaluations • Efficiency gains expected for certification by combining it with existing rating exercices • Mechanisms and policies in place to ensure objectivity of the opinion • Work being done on the standardization of the framework • Piloting of indicators / processes to be done in the coming months • Implementation of a global certifying Board, with representatives of all rating agencies, and other stakeholders, to take final decision

  4. State of practice: Client Protection Principles… • … are being implemented in more than 70% of the rated MFIs, but with important room for improvement in 50% of the cases 71%

  5. State of practice: Client Protection Principles… • Higher average grades in Latin America, as well as best performers, with a key and positive role of regulatory frameworks

  6. Other intended outcomes • The certification indicators can serve as a best practice document that clearly describes the minimum standards in regards to client protection. • It is expected that – among others – regulators will be able to use this information to review relevant issues for microfinance and client protection.  Note that what is presented here is tentative. The certification proposal is in draft stage.

  7. How?

  8. How?

  9. Agenda • How did we get where we are today as an Industry? – Why is there a call for programs to certify performance? • Provide an overview of the social performance landscape and the initiatives and tools that have emerged in response to questions we are facing as an industry • Explain what the Universal Standards for Social Performance Management are and how they are being developed • Explain the link with the certification process initiated by The Smart Campaign • Provide an overview of how the Smart Campaign and the Rating Agencies are instrumental in developing and carrying out certification • Discussion

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