Skeptics of the social performance movement often juxtapose social performance management (SPM) and financial sustainability, asserting that the one can only come at the expense of the other. Naturally, this raises the question of whether a microfinance institution (MFI) with a strong, client-centered approach can also be solvent (or even profitable): is it possible to have both? Analysis of the over 400 MFIs that have reported both financial and social performance data to MIX shows that achieving what the industry calls “the double bottom line” is indeed possible, and that good social and financial performance can peacefully co-exist.
Kiva Field Partners provide some good examples of such practices. To demonstrate, let’s look at a couple in detail: IMON in Tajikistan and Movimiento Manuela Ramos in Peru. Comparing sustainability levels with product diversification and outreach shows that these two MFIs are successfully pursuing their social mission and running a good business at the same time. These two links will take you to Kiva loans from IMON and Movimiento Manuela Ramos.
IMON, Tajikistan
IMON’s stated mission is to ‘promote sustainable economic development and [an] improved quality of life [in] Tajikistan by insuring reliable access to financial services for economically active members of [the] population.’ Its business model involves providing a range of high-quality financial and non-financial products and services to low-income clients, such as:
· Financial: microcredit loans for microenterprises, small and medium enterprise (SME) loans, loans for agriculture, loans for education, housing loans, and microcredit for other household needs/consumption;
· Non-financial: enterprise skills development, business development services, financial literacy education, child and youth education, and leadership training for women.
Among the financial products offered by IMON, their ‘start-up loans’ provide an important boost to women’s entrepreneurship in the country. These loans aim to promote female self-sufficiency and employment through access to education, development of entrepreneurial skills and creation of stable financial resources (the loan amount ranges from roughly $100 all the way up to $7,000). At the other end of the loan spectrum, IMON’s ‘consumer loans’ help households pay for household and office equipment, household maintenance, education and provide a cushion against emergencies. IMON has also received an A+ social rating from Microfinanza in 2010, confirming the effectiveness of the MFI in delivering on its mission statement.
As of December 2010, IMON had almost 29,000 active borrowers and a portfolio of USD 29 million. Approximately 40% of these clients are women and 69% are from rural areas. Meanwhile, IMON’s financial figures demonstrate risk and profit levels that are among the best in the region. Hence, the MFI is not only delivering on its promise of reliable access to financial services for the population, it is also doing so in a financially sound and sustainable way.
Movimiento Manuela Ramos, Peru
With 18,000 female borrowers at the end of 2009 and a gross loan portfolio of USD 4.4 million, Movimiento Manuela Ramos’ gender-focused mission covers all the important aspects of social performance: Facilitar el acceso al credito a servicios financieros ,promover el ahorro de las mujeres emprendedoras de negocios de escasos recursos y vulnerables , de las zonas rurales y urbano marginales, contribuyendo a su crecimiento economico y automomia en la toma de desiciones [To facilitate access to credit and financial services and to promote savings among female entrepreneurs who lack resources and are in a condition of vulnerability, who live in rural areas and marginal urban areas, thus contributing to their economic growth and self-esteem in the decision-making process]. Despite the fact that Manuela Ramos is average-sized by Peruvian standards, a large number of its clients come from the base of the poverty pyramid: 30 percent are below the national poverty line. Not only does this make Manuela Ramos one of the rare MFIs to track poverty outreach - a widely-proclaimed yet seldom-measured development goal (see graph below) – it also means that the poverty incidence among its clients mirrors that of the general population, where 39 percent are below the poverty line.
As the problem of female poverty in Peru has many different dimensions, Manuela Ramos also offers a variety of non-financial services targeted at women. These include: special medical services for women and children, information sessions on gender-related topics, health education campaigns, and legal and psychological assistance for female victims of abuse.
None of the above, however, has prevented Manuela Ramos from having sustainable profit levels or low portfolio at risk, both of which compare favorably with peer institutions in Peru. While Movimiento Manuela Ramos operates under significantly different market conditions from IMON, it has also put its mission into practice and maintained good financial performance at the same time.
Percentage of MFIs with social goals vs. those tracking outcomes
Source: MIX data collection 08-09
