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Responsible Microfinance

Responsible Microfinance

Around the world, about 2.5 billion adults are unbanked or without access to financial services. The poor are often excluded from the financial system because they tend to live in rural areas and have no assets or dependable income. These communities are forced to rely on unregulated moneylenders to help them meet their most basic needs. Without the skills and knowledge to negotiate and manage money, people in poverty are vulnerable to high interest-rates, overindebtedness and bad investments.

Microfinance institutions (MFIs) offer new financial options for people living in poverty, delivering products and services designed to meet their needs. Delivered responsibly, microloans are a powerful tool in the fight against poverty. But responsible microfinance is more than just loans; microfinance includes products like savings accounts, insurance and money transfers.

Good Return only partners with organisations that share our social mission. Our partners also apply our integrated approach of delivering responsible microfinance alongside skills development programs. Our goal is to help bankers deliver financial services that are responsible: safe, affordable, and reliable banking products, and inclusive: available to everyone, particularly those living in remote, marginalised and poor communities.

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Good Return’s Community Bankers Program

“Providing the poor access to financial services comes with it a deep responsibility of ensuring that these will not drive them deeper into debt and more hardship. Responsible microfinance providers prepare the poor by educating them on the intricacies of managing money and how to seize new opportunities to improve their future. Hence, microfinance should promote entrepreneurship rather than consumerism.”

Rico Munoz, General Manager of SPBD Fiji

 

 

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Delivering responsible microfinance

Good Return starts by working with our partners to review their policies, processes, and products. We suggest areas for improvement and help them implement changes. We train their managers in social performance management so they can measure progress towards their social goals in delivering responsible microfinance to their communities.

Believe in a social mission

We select our partners carefully, and only work with MFIs who share our social mission and protect their most vulnerable clients.

Good bankers care deeply about the wellbeing of their clients and willingly put social goals on par with their financial targets.

Adopting new ideas

As a leading adviser in the microfinance sector, we continue to look for new concepts and tools to review, track, and manage our partners’ social performance.

New initiatives we’ve been working on include the Universal Standards for Social Performance Management (USSPM), the Smart Campaign, the Microfinance Information Exchange (MIX) and Progress out of Poverty Index (PPI).

Delivering what’s needed where it’s needed

Good bankers are good listeners. They need to understand their clients so they can recommend products that truly meet their needs, and protect them from financial risks such as over-indebtedness.

Our bankers work in the foothills of Nepal, the jungles of Borneo, and the rice paddies of Cambodia. They travel long distances by motorbike, bus, or boat. They deliver affordable savings, loans, insurance, and other financial services to the doorsteps of people living in some of the region’s poorest and most remote communities.

Good bankers are committed to extending financial inclusion to everyone, making sure no one is left unbanked.

Social Performance Management initiatives

How can we be confident microfinance is helping? One solution is to assess objectively if we are achieving our social mission. This is what we mean by social performance management. It’s a broad term for a suite of tools which allows organisations to measure the social benefits of their work.

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Universal Standards for Social Performance Management (USSPM)

The USSPM (website) is a manual of best practices in the microfinance sector to help financial institutions achieve their social goals. The manual is organised into six dimensions:

  • Define and monitor social goals
  • Ensure board, management, and employee commitment to social goals
  • Design products, services, delivery models and channels that meet clients’ needs and preferences
  • Treat clients responsibly
  • Treat employees responsibly
  • Balance financial and social performance

Watch the video overview of the USSPM »


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Smart Campaign

The Smart Campaign (website) provides microfinance institutions with tools and resources to deliver transparent, respectful, and prudent financial services to clients. It sets out the minimum standards that clients should expect including:

  • Appropriate product design and delivery
  • Prevention of over-indebtedness
  • Transparency
  • Responsible pricing
  • Fair and respectful treatment of clients
  • Privacy of client data
  • Mechanisms for complaint resolution

Microfinance Information Exchange (MIX)

MIX promotes responsible financial services through data analytics and market insight, using the following two platforms:

  • MIX Market (website) is a public data hub where microfinance institutions and supporting organisations share institutional data to create transparency and market insight.
  • FINclusion Lab (website) is an analysis and data visualisation workshop designed to coordinate the delivery of responsible financial services to underserved communities.

Progress out of Poverty Index (PPI)

The Progress out of Poverty Index (website) is a tool to measure poverty through collecting information about a household’s characteristics and asset ownership. Answers are scored and evaluate the likelihood that the household is living below or above the poverty line. The PPI can help identify people who are likely to be vulnerable to poverty. This data can then be used for assessments and strategic decision-making.