Joost de la Rive Box 26 November 2009

1. MicroScoreA scanning tool for assessment of graduation performance in connection to MFI capacity development Joost de la Rive Box 26 November 2009

2. MicroScore tool

3. Purpose of the tool • MFOs; to assess and measure the success of MFI capacity building support • MFOs (external); to justify the use of public funds for MFI capacity building • MFO (internal/PO); to see whether identified weaknesses have been addressed and performance improved  performance based portfolio management • MFI; to better understand the ‘path ahead’ in order to graduate towards maturity status

4. Methodological challenges • To align the rating methodologies along one measuring rod • To get a more universal framework for measuring graduation • To develop a more transparent rating/scoring in which observations are linked to recommendations and preferably to agreed action points (MFO-MFI partnership).

5. Score 1-9 • Emerging MFIs: 1-3 (no best practice yet, limited service scope & outreach, poor efficiency & financial performance) • Developing MFIs: 4-6 (implementing best practice standards, improving service scope & outreach, reasonable efficiency & financial performance) • Mature: 7-9 (full compliance to best practice standards, excellent service scope & outreach, excellent efficiency & financial performance)

6. Development of the average scores for the portfolio

7. MicroScore tool • 5 scans (e.g. five year period) • Score (rating) for: • Governance (4 score items) • Institutional (8 score items) • Services and SPM (3 score items) • Financial performance (4 score items) • Extensive help functions; key questions, characteristics of maturity stages, frequently observed weaknesses) • Ready reports – per scan and 5Y overview

8. Preconditions for application of MicroScore • MFI or program must be gradable, i.e. SMART business plans & reports • Documentation must be available (problem decentralized operations) • MFI Status must be clear; • MF versus promotion/social services/innovation research • Retail, wholesale, multi-tier network • Cooperative network v.s. informal SACCO networking and promotion

9. Let’s see…..

10. Similarities with “rating” • An absolute score is applied (= different from a relative score; i.e. relative to the stage of development) • Comprehensive: • Governance • Institutional aspects • Services and SPM • Financial performance • ≈ Same number of score grades

11. Applications • Annual monitoring instrument for PO’s (scan report) • Annual ‘rating’ instrument for local consultants or local staff (scan report) • Graduation performance assessment after 3 – 5 years by MFO • Portfolio assessment - 5 years historic (requires compilation tool)

12. Development of the average scores for the portfolio

15. Cost effectiveness of capacity building & seed capital investments Three types of ‘returns’ (HIVOS): • Increase in outreach during the seed capital period has been 28,000 clients per MFI, out of which some 7,000 clients (25%) can be attributed to HIVOS. • The increase in maturity level is a good 2 points on the rating scale: graduation from an emerging to a developing MFI • As most rated MFI scored 4 or above, the majority have become eligible for debt funding. These “returns” were generated with an average HIVOS investment in seed capital amounting to US$ 240,000.

16. Range: $2 - $2000 / client

17. Thank You