Social Performance Commitment…, It is for your benefit!!!

Vikash Kumar |Editor-in-Chief | Microfinance Focus

Most MFIs might not have consciously evolved SPM as their key objective to measure their performance but none of them could evade their responsibility to do good to the society as their sole objective is to fund the poor who are denied access to fund from other financial institutions and that itself leads to transformation of the society by empowering poor people to earn their livelihood by pursuing some business. or farming.

However it is true most of the MFIs in their vision statements emphatically brought out that they primarily aim to alleviate poverty and empower poor people to become self dependent, “sustainability” mantra, by an emphatic group of stakeholders, or such as” increasing efficiency” or “providing a good return to private equity investors of-late, with all positive connotations that it is good for MFIs , however it caused a stiff challenge and apprehension to strike the balance between two bottom-lines. And of-late it drives to create strategies for their commercial success rather than to achieve much desired social objective of poverty alleviation. It has therefore become imperative to highlight the SPM as a measure of success of MFIs rather than solely depending upon their vision and mission statements, as most of them have emphatically highlighted this objective in their mission and vision statements.

It is obvious therefore to highlight the need to give stress on SPM and accordingly to enhance efficiency, reducing charges including interest rate and helping poor to be engaged in a sustainable business or farming. No doubt it is a stiff challenge but it also provides healthy competitive edge to serve the poor. In this regard I would like to quote Katherine (Institute of Development Studies), in her emails to some of the popular list -serve, she said “The data reveals that in poorer regions, branch operating costs per client are not necessarily higher…”

Similarly another Asian MFI has gathered informal feedback that those branches that do not consistently implement “social development” training tend to have a higher portfolio at risk than those branches that did.” In view of these it is obvious that more and more MFIs should strategies for social development in their economic activities. In fact it has to be clearly understood that need not pursue social activities separately as their economic activities itself if appropriately strategies would yield social benefits by ameliorating poverty. In this context, it would be necessary to develop tools to measure SPM and keeping this growing need in view it has been decided that this journal should bring out more vividly the concept of SPM and also the various types of measures developed to assess the progress in this regard.

However one should not take it amiss as we acknowledge that many of our MFIs have already pursuing much more than what we would highlight in our magazine or in general a discussion going on. In fact we would be drawing heavily from their experiences. In fact an attempt would be made to make it universal and constantly improving compared to an agreed standard measurement. We also recognize that all other important stakeholders in Microfinance have a major role to create an enabling environment.