Beirut - May 2009

1. Sanabel 6th Annual Conference Beirut - May 2009 SOCIAL PERFORMANCE MANAGEMENT PROJECT Lassaad MESSAADI

2. As the microfinance industry focuses increasingly on commercialization and scale, there is a growing recognition of the need to ensure that the social mission remains of central concern. At the heart of this is an assertion that microfinance is not just the provision of financial services in small transactions; it is the provision of financial services that contribute towards a social mission. This concern has led to a burgeoning interest in the social performance of microfinance. 1.2a Social Performance and Social Performance Management

3. Defined as the effective translation of mission into practice in line with widely accepted development values (source: International Task Force for Social Performance) Emphasizes the need to consider the process by which social benefits are created, as well as the final results that are achieved This emphasis, on improving practice rather than simply on proving outcomes, echoes debates in the field of impact assessment, and the move towards practitioner-led impact assessment to improve rather than prove impact This focus, spurred by the USAID-sponsored AIMS project and advanced by the Imp-Act action-research program, highlights the importance of internal microfinance institution (MFI) management for achieving social as well as financial outcomes – deliberate Social Performance Management. 1.2b Social performance

4. Is a practical approach, which advocates performance management that prioritizes the social as well as financial performance of an MFI. Attaining social objectives does not happen haphazardly: as with financial objectives, they require a deliberate strategy and a conscious effort to monitor and manage implementation. In the light of competing organizational priorities, and the effective systems needed to set financial objectives and manage performance towards meeting these, it is likely that day-to-day decision-making will favor financial rather than social performance. It is therefore necessary for MFIs to take a more deliberate approach to the management of social performance, integrating social performance concerns into their overall strategic and operational performance management systems. 1.3a Social Performance Management

5. SPM will benefit managers, helping you to: ● Balance your financial and social objectives to make better business decisions based on a more thorough understanding of the trade-offs each involves ● Generate base line information that is invaluable for more in-depth assessment of social performance ● Track performance against targets, both social and financial ● Identify problems at an early stage before they become damaging for the organisation. SPM will benefit clients, giving them: ● Services more appropriate to their needs ● More product choices ● Better customer service ● A greater ‘voice’ in the programme. Benefits of SPM

6. SPM will improve your outreach, services and products, enabling you to: ● Segment your portfolio to examine differences in performance by client characteristics, and thereby identify market niches, opportunities and problems ● Monitor how your clients use services to determine how well they ‘fit’, addressing the question, ‘Are our services appropriate to the needs of our target clients’? If not, how can we adapt them? ● Innovate to improve client satisfaction and loyalty through better products, better customer service and greater flexibility ● Verify the results of programmatic changes to determine if they have made a difference ● Track intended and unintended impacts on clients’ lives and in the wider community and understand the role that your organisation plays in promoting these changes. Benefits of SPM

7. SPM will improve your financial performance, resulting in: ● Higher retention of clients through monitoring of and responsiveness to their satisfaction with your programme.Higher retention rates translate into lower costs and higher profits ● Programme growth by making your institution more attractive to potential clients because of demand driven products and services and word of mouth from current satisfied clients ● Lower operational costs as you begin to use resources more effectively based on better understanding of your best investments ● Demonstration of social performance to stakeholders, thus improving your position in a competitive funding market. Benefits of SPM

8. In the last ten years, the Arab microfinance industry has experienced tremendous growth in outreach and in achieving solid financial performance. At the same time, Arab MFIs have demonstrated their continued commitment to fighting poverty in their respective countries. Like most MFIs, the Sanabel’s members have social missions that seek to serve the poorest and improve their quality of life. Sanabel would like to support its membership in improving the process of defining and measuring progress in achieving social missions and objectives. At the current time, most MENA MFIs have experience in measuring their financial performance using financial ratios and tools but very few have attempted to monitor their achievements against social goals. Through this SPM program, Sanabel would like to provide the tools, training and support for the implementation of social performance management in a range of diverse MFIs in the region. 1.3b Importance of Social Performance Management for MFIs in MENA Region

9. Ultimate Goal The ultimate aim of this program is to improve the effectiveness of microfinance institutions in the MENA region, particularly those being the members of the Sanabel Network, in serving the needs their clients. This will be achieved through promoting, adapting and implementing the practice of social performance management (SPM) by the Sanabel Network. 1.3c Proposed SPM Project

10. To achieve this overall goal, the program objectives will be focused on: Promoting SPM among Sanabel members; Measuring the true impact of micro credit programs on improving the lives of the poorest and disadvantaged a priority for MFIs; Developing the capacity of the Sanabel’s partners (regional consultants, trainers, Sanabel’s staff) to deliver SPM training and technical assistance to MFIs in institutionalizing SPM; Testing the process in pioneer member MFIs in order to adapt and deliver the training to a wider Sanabel’s membership; Adapting the SPM related tools and documents, as well as experience of other regions of MF sector, to the unique culture, environment of performance and challenges of MENA MFIs Documenting and disseminating the lessons learnt on good SPM practices in the MENA region, among the Sanabel’s membership and the wider industry 1.3d Program Objectives

11. Activity 1: Training of Trainers in Social Performance Management To develop capacity in social performance management training, Sanabel will cooperate with Microfinance Centre to train and certify regional service providers and trainers in the Imp-Act Consortium training on Social Performance Management. Activity 2: Delivery of Social Performance Management Training Course to MFIs As a follow up to the TOT, two SPM training courses will be run. The training courses will be run by 8 regional trainers who have previously completed the SPM TOT (activity 1). The delivery of the courses will be used as a hands-on experience opportunity to the regional trainers and their performance in its delivery will serve as a basis for their certification in SPM. The MFC Master Trainers will act as resource persons during these deliveries. 24 MFIs represented by at least two people will participate in two SPM introductory courses. 1.3e Project Activities

12. Activity 3: Selection of the pioneering MFIs and the SPM Team 13 MFIs and six trainers will be selected to participate in the project based on previously defined and communicated criteria. Sanabel will take into account the diversity of contexts of different MFIs and their capacity to ensure representative pioneering pool for the project. Activity 4: Social Audit TOF (Training of Facilitators) To prepare the SPM Team to support SPM Process in pioneering MFIs, MFC will conduct a Training of Facilitators focused on conducting a social audit with the use of the Quality Audit Tool. The quality audit tool will be used to support the MFIs’ self-assessment of current social performance management practices and to prioritize follow-up improvement activities in SPM (as basis for planning the phase two of the project). 1.3f Project Activities

13. Activity 5: Individual visits to 13 pioneer MFIs The Quality Audit Tool will be used to help MFIs diagnose their current effectiveness of SPM as well as to identify priorities for SPM improvement. Tandems of the trained facilitators will visit each of the 13 pioneer MFIs to implement the Quality Audit Tool. The tool will be implemented jointly by the external tandems and internal SPM Champions. Activity 6: Peer learning meeting of MFIs and SPM Team Towards the end of the first phase of the program, there will be a peer learning meeting organized for all the Sanabel’s member MFIs interested in SPM (but not more than 24 MFIs total). This meeting will allow a wider group of Sanabel member MFIs to learn from more advanced peers. 2.1a Project Activities

14. Activities 7: Dissemination and Scale up The dissemination of the project experience will start as early as the project kick off. On-going learning will be documented and communicated on an on-going basis using the Sanabel’s internal communication channels: updates, newsletters and websites. Sanabel will also organize SPM related workshops. The report summarizing the project will be disseminated after the end of the phase one of the project. Sanabel will keep disseminating its experiences and learning within and beyond the MENA region at different industry events. The training courses will be integrated into Sanabel’s service offering. 2.1b Project Activities

15. Sanabel contracted a number consultants/ trainers (8) for the Social Performance Management project that was implemented throughout 2008/2009 in partnership with the Microfinance Center (MFC) in Poland and funded by Oxfam Novib. Selected candidates (8) attended a TOT on Social Performance Management in English in March 2008 facilitated by master trainers from the MFC. Following the TOT, all trainers/consultants give the SPM course in either French or Arabic to MFI staff selected by Sanabel to participate in this project between June and July , 2008. Most of trainers were successfully evaluated by MFC master trainers and became certified and are then free to offer this course in the marketplace. 2.1c Implementing the SPM project

16. After the SPM training, all the trainers/consultants participate in a Training of Facilitators held in October 2008. During the Training of Facilitators, Trainers learned how to become SPM mentors and how to assist MFIs implement a social audit tool. Following this training, Only 6 trainers were assigned in pairs to work with three MFIs on the social audit implementation. Following these consultations occured between November 2008 and the end of March 2009, Trainers were asked to submit reports of their findings and lessons learned.

17. 10 MFI’s participated in a social Audit exercice Tamweelcom – Jordan AMOS – Morocco ARDI Foundation – Morocco Al Majmoua – Lebanon Ameen – Lebanon DEF – Jordan ABA – Egypt First Microfinance Foundation – Egypt Lead Foundation – Egypt Aden Microfinance Foundation – Yem. OUTPUTS OF THE SPM PROJECT

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