Social Investor Meeting on Responsible Inclusive Finance Tuesday - - PowerPoint PPT Presentation

Social Investor Meeting on Responsible Inclusive Finance

Tuesday June 6 2017 SPTF Annual Meeting in Mexico City

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

• One of the most active working groups of the SPTF..
• …with a growing number of investors joining and committing to our

shared objectives - ~400 members from 133 organizations.

• We work together to:

▫ Raise awareness and create ownership among investors of

• ngoing initiatives and developments in SPM

▫ Identify areas of concern in responsible inclusive finance ▫ Take collective action in areas where it can help the market develop in a positive and unified direction

Welcome

3

1. Harmonizing investor due diligence and monitoring on social performance - uptake of SPI4 ALINUS 2. Measuring and reporting on social outcomes – guidelines developed and

harmonized indicators being pilot tested in Latin America and India

3. Aligning efforts with other initiatives in responsible finance and the impact investing sector (including UNRPI, GIIN, WEF, IMP, etc) 4. NEW - Increasing alignment with asset owners 5. NEW - Assessing S&E performance of SME finance 6. Pricing transparency – defining a model to continue to have transparent pricing data

in a “post MFT” era

7. Harmonizing loan agreements covenants in support of responsible microfinance 8. Equity & responsible exits

Current priorities of the SIWG

4

• 2-days of discussions and exchanges
• March 15-16 2017, in Zurich
• 71 attendees – 23% first-timers
• Discussed and shared updates on ongoing work and

identified new workstreams for the group

Recap of last in-person meeting

5

• Current SIWG Co-Chairs

Christophe Bochatay (Triple Jump, SPTF board member) Jurgen Hammer (Grameen Credit Agricole Foundation, Chairman of SPTF board)

• After years of strong leadership, Jurgen will be

stepping off his role as co-chair of the group later this year, but will remain very active in the group discussions

• SPTF will be holding elections this fall for investors

to identify the next board member and co-chair of the social investor working group (to replace Jurgen)

Update on group governance

6

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

• 1. Increasing alignment with asset owners
• 2. Assessing S&E performance of SME finance

– in coordination with eMFP

2 new topics identified

8

• 1. Asset owner panel in Zurich
• 2. Working with the WEF, GIIN, IMP, UNPRI and others

to help accelerate impact measurement and management

▫ WHY:

• Help shape conventions, frameworks that asset owners can use –

based on experience of financial inclusion

▫ WHAT:

• Looking for funding to develop case study featuring financial

inclusion investor and to develop “financial inclusion vertical”

• Coordinating WEF action group on gathering stakeholder input as

part of investment process (more on this later today)

• Coordinating Financial Inclusion Market Map with UNPRI – if

interested in participating of this group let us know

• 3. Outreach to asset owner networks

#1 Increasing Alignment with Asset Owners

9

SOCIAL AND ENVIRONMENTAL

PERFORMANCE IN SME FINANCE: MEASUREMENT SOLUTIONS MAP SPTF, Investor mee0ng Mexico, June 2017

10

Methodology

Objec7ve: Consolidate the informa0on available on how to evaluate SPM for FSPs financing SMEs. Map the relevance and applicability for SME finance of the Universal Standards, MIV due diligence tools and other frameworks. Iden0fy possible gaps and provide indica0ons on how to fill the gaps. Sources: MicroFinanza Ra0ng evalua0ons MIV due diligence tools SME literature Ac7vi7es Kick-off mee0ng, SME literature review MicroFinanza Ra0ng (MFR) SME assessments Analysis of MFR SME client survey MIV due diligence review Processing the informa0on and data collected Interim mee0ng to share the ini0al findings DraV paper, feedback mee0ng and feedback period Final paper and dissemina0on Dura7on: 10-12 months

11

Feedback

Priori0es, preferences, concerns and expecta0ons

12

Thanks

Lucia Spaggiari Business Development Director, MicroFinanza Ra0ng Douala, CAMEROON

13

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

Focus on Social Performance in Mexico

Study on Microcredit Interest Rates in Mexico

• Sponsored by IFC, Fondo Mul0lateral de

Inversión (FOMIN), Programa Nacional de Financiamiento al Microempresario y a la Mujer Rural (PRONAFIM) & Triple Jump

• Conducted by Fundacion Alemana Servicios

(FAS)

• Using por_olio yield as a proxy for APR

15

Mexican interest rates are high and have not decreased substan7ally

PorIolio yield in other countries Peru 22% Colombia 28% Bolivia 19%

16

Opera7ng expenses and loan losses have increased

17 On average globally opera0ng expenses represent 50% of por_olio yield

Opera7ng expenses are higher in Mexico

18

OPEX in other countries Peru 12% Colombia 21% Bolivia 11%

High OPEX is explained by small average loan sizes…

19

… and personnel expenses represent 70% of OPEX

• Staff turnover has been increasing to very high levels, from 31% in 2011 to 57% in 2016
• There is a concern about the level of execu0ve salaries and board expenses, especially in the

case of smaller MFIs, with weak governance and transparency.

• Loan officer produc7vity in Mexico is low (96 loans per LO vs. 130 on average globally).

20

Personnel expenses in

• ther countries

Peru 7% Colombia 3% Bolivia 4%

Loan loss expenses increased

21

LLE in other countries Peru 4% Colombia 4% Bolivia 2%

Cost of funds decreased

22

Net margin decreased

23

• The increase in opera0ng and loan loss expenses have been absorbed by a

decrease in profits.

A market concentrated on specific client segments

24

One size fits all?

25

Conclusion and recommenda7ons

Conclusion:

• The microfinance market is young and in a growth stage.
• Group loan methodology has enabled large outreach in areas of high marginaliza0on,

achieving high penetra0on.

• Despite high growth, interest rates charged to borrowers remains very high.
• The high and increasing opera0ng expenses are keeping the interest rates high.
• High staff turnover and the level of execu0ve salaries and board expenses are a concern

and warrant more research. Recommenda7ons:

• Suppor0ng the development of the individual lending methodology would help beier

sa0sfy the needs of an important segment of clients, increase the average loan size and lower opera0ng costs.

• More research needs to be made on salaries and on staff turnover
• Promote compe00on

26

Discussion

How do you approach this market? What is your opinion on salaries and staff turnover? Is pricing transparency and a lack of financial educa0on also obstacles to lowering rates? What is the role of investors? What is the role of regulators? 27

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

Update on SPI4-ALINUS

Photo: A. Alvarado Photo: D. Maurel

The common social data collec0on tool for ALigning INvestors due diligence with the Universal Standards

June 06, 2017, Mexico, SPTF annual mee0ng Cécile Lapenu, Jurgen Hammer and SIWG members

Agenda of the session

• Brief overview of SPI4 / SPI4 ALINUS
• Update on SPI4-ALINUS
• Tes0monies of use by the investors

SPI4 and ALINUS, a brief reminder

As social investors, due diligence is a key part of what you do

33

34

S P I 4 . x l s m

Green Index FSP ID/ Org Info

ALigning INvestors due diligence with the Universal Standards

37

38

Each participating MIV selected from SPI4 the indicators they wished to use during due diligence/ monitoring. CERISE analyzed this list, and asked MIVs to reconsider their choices when they had selected indicators that few

• ther MIVs were interested in.

These iterative rounds of input made it possible to finalize a list of 80 indicators from the SPI4. In July 2016, SPI4 revised, with 20% fewer indicators. ALINUS 2.0 frozen at 68 indicator until 2020.

68

Development of ALINUS

www.cerise-spi4.org

Demo ALINUS

SPI4-ALINUS, Why? Who?

CONCENTRATE CONVINCE COMPILE COMPARE COMMUNICATE

CONCENTRATE

• n what counts

Analyze results through social dashboard Make informed investment decisions

CONVINCE and guide partners to improve

Clear road map Technical resources

COMPILE results at the por_olio level

Aggregate results to iden7fy profiles or TA needs

COMPARE to benchmarks

Use benchmarks to guide investment strategy or set performance thresholds

COMMUNICATE using a common language

MIV/DFIs using ALINUS

• 10 MIVs/DFIs using SPI4 ALINUS:

ADA/LMDF, AFD/Proparco, Alterfin, Blue Orchard, BNP Paribas, Cordaid, GAWA, GCAMF, Incofin, Pamiga finance

• 6 MIVs/DFIs in tes0ng/strategic planning:

Deutsche Bank, European Investment Bank, GrassRoot, Oikocredit, Symbio0cs, Triple Jump.

• About 15 MIV/DFIs in contact with CERISE/SPTF,

for awareness raising, strategic discussions

Interna0onal/Na0onal Networks using SPI4/ ALINUS

• 13 Networks using SPI4 :

7 Interna0onal: ACEP, Advans, Opportunity Intern’l, Oxus, Pamiga, Vision Fund, CIF West Africa 6 Na0onal: Amcred Brazil, Copeme Peru, Finrural Bolivia, RFD Ecuador, MCPI Philippines, PMN Pakistan

• 13 Networks in training or using reduced network op0on:

3 Interna0onal: AgaKhan, Grameen Founda0on, Microcred, etc. 10 Na0onal: AMA Albania, AMFA Azerbaijan, AMFI Kyrgistan, AMFOT Tajikistan, ASOMIF Nicaragua, CMF Nepal, LMWG Laos, Radim Argen0na, RedFasco Guatemala, UCORA Armenia, etc.

Growing use of SPI4

50

May 2017

• 341 SPI4 audits completed (16

underway and 71 pipeline)

• From 88 different countries
• 298 ques0onnaires in SPI4 database
• 71% are accompanied self-

assessments

• +610 people trained in SPI4 (CERISE &

SPTF)

• 84 qualified auditors

http://www.cerise-spi4.org/#/benchmarking/

ASIA 26% LAC 34% MENA 4% SSA 31% ECA 5%

Audits SPI4 by region (updated May 2017)

NGO 28% Bank 11% NBFI 27% Coop/ Credit union 18% Other 16%

Audits SPI4 by legal form (updated May 2017)

Benchmarks

• For MFIs
• Ex. FUCAC: repor8ng to Board

members & annual report

• For interna0onal networks:
• Ex. Opportunity Intern’l =>

guidance for improvement

• For na0onal networks:
• Ex. Copeme, Finrural, etc.=> country reports
• For research:
• Ex. USSPM & SME finance => paper for the African MF Week
• For Investors :
• Ex. Grameen Credit Agricole Founda8on=> communica8on to

Board, selec8on process, TA focus

ALINUS ASSESSMENT OF MIV PORTFOLIO Example of Grameen Crédit Agricole

• Data collec0on
• Data analysis/selec0on process
• Data benchmarking
• Board Presenta0on on SP and next steps –

Extracts

GCA and SP Evaluation

Social Performance due diligence based on SPI3 since inception in 2009 Continued testing of SPI4 during the development and updating phase (2014/15) Systematic use of ALINUS in DD since Oct 15 End of 2016: 45 partners in standard portfolio

Selection of the relevant CERISE database

FSPs in SSA, MENA, ASIA and ECA Results from LAC excluded, as GCA does not work in LAC SPI4 ALINUS v1.0 database Results are based on SPI4 ALINUS sub-set

• f indicators, not the full SPI4

Some of the assessments were conducted with the full SPI4 but not the Green Dimension, so the Green results on ALINUS may be underestimated (not analyzed).

GCAMF PorIolio: 61 partners for GCAMF (16 African Facility, 45 standard por_olio) SPI4 ALINUS available: TOTAL 39

From GCA due diligences: 24 Completed by GCA partners in CERISE database (=MFI SPI4 evalua7ons): 15 1 from version 2.0 (not integrated in the analysis) 38 come from version 1.3 = basis of analysis

Description of the sample

Nbr SPI4 ALINUS evalua7ons GCAMF porIolio 38 CERISE Database 85*

* Only the highest quality audits taken

into account: done by experienced auditors + 100% complete + include comments to jus0fy scoring * LAC and Europe audits are excluded

• f this sample

Benchmarks by dimension –SPI4 ALINUS

GCAMF Database CERISE N=38 N=85 DIM 1: DEFINE AND

MONITOR SOCIAL GOALS

56% 46% DIM 2: COMMITMENT TO

SOCIAL GOALS

54% 47% DIM 3: PRODUCTS THAT

MEET CLIENTS' NEEDS AND PREFERENCES

61% 57% DIM 4: TREAT CLIENTS

RESPONSIBLY

69% 60% DIM 5: TREAT EMPLOYEES

RESPONSIBLY

76% 68% DIM 6: BALANCE FINANCIAL

AND SOCIAL PERFORMANCE

63% 62% TOTAL 63% 57% GREEN DIM* 14% 26%

0% 20% 40% 60% 80% 100% DIM 1 DIM 2 DIM 3 DIM 4 DIM 5 DIM 6

Average s score b by d y dime mens nsion n

GCAMF Database CERISE

* Only 36 % of MFIs from CERISE database have filled in the green dimension

Benchmarks by SSA region - SPI4 ALINUS

GCAMF (SSA region) CERISE Database (SSA region) N=20 N=49 DIM 1 55% 40% DIM 2 48% 42% DIM 3 57% 53% DIM 4 64% 56% DIM 5 72% 66% DIM 6 56% 57% Total 59% 52%

0% 20% 40% 60% 80% 100% DIM 1 DIM 2 DIM 3 DIM 4 DIM 5 DIM 6

Av Average s score b by d y dime mens nsion n

GCAMF (SSA region) CERISE Database (SSA region)

Benchmarks by Tier 3 - SPI4 ALINUS

GCAMF (Tier 3) CERISE Database (Tier 3) N=20 N=52 DIM 1 55% 42% DIM 2 53% 42% DIM 3 56% 51% DIM 4 64% 55% DIM 5 73% 63% DIM 6 59% 59% Total 60% 52%

0% 20% 40% 60% 80% DIM 1 DIM 2 DIM 3 DIM 4 DIM 5 DIM 6

Average s score b by d y dime mens nsion n

GCAMF (Tier 3) CERISE Database (Tier 3)

Extract from Social Performance Presentation to GCA Board

• f Directors
• n March

11th 2017

Our partners show beher commitment to social goals at Board, Management and Employees level than their peers

Ra#onale: An ins#tu#on’s social strategy is only strong if the Board and all employees understand and uphold it.

10 20 30 40 50 60 70 Standard 2a : Board accountability Standard 2b : Senior Management accountability Standard 2c : Staff accountability CERISE Database (N=85) GCAMF Por_olio (N=38) 54% 47% 0% 20% 40% 60% 80% 100%

Dimension 2: Commitment to social goals

61% 53% 53% Tier 1 Tier 2 Tier 3

Dimension 2 by Tier

GCA score

Outperformance especially in Board accountability: 11% above benchmark

60

Grameen Credit Agricole Founda7on

CERISE

Our partners protect their clients beher than their peers

Ra#onale: Ins#tu#ons that seek to bring benefits to their clients must ensure that they “do no harm.”

20 40 60 80 Standard 4a: Preven7on of

• ver-indebtedness

Standard 4b: Transparency Standard 4c: Fair and respecIul treatment of clients Standard 4d: Privacy of client data Standard 4e: Mechanisms for complaint resolu7on CERISE Database (N=85) GCAMF Por_olio (N=38) 69% 60% 0% 20% 40% 60% 80% 100%

Dimension 4: Treat clients responsibly

84% 68% 64% Tier 1 Tier 2 Tier 3

Dimension 4 by Tier

75% 62% 66% 67% SEA West Africa East Africa MENA

Client Protec7on by geographic area

Outperformance especially in Preven7on of over-indebtedness: 12% above benchmark

61

Grameen Credit Agricole Founda7on

GCA score CERISE

Our key strengths: Sub-Saharan Africa, Asia and small size MFIs

0% 20% 40% 60% 80%

DIM 1: DEFINE AND MONITOR SOCIAL GOALS DIM 2: COMMITMENT TO SOCIAL GOALS DIM 3: PRODUCTS THAT MEET CLIENTS' NEEDS AND PREFERENCES DIM 4: TREAT CLIENTS RESPONSIBLY DIM 5: TREAT EMPLOYEES RESPONSIBLY DIM 6: BALANCE FINANCIAL AND SOCIAL PERFORMANCE GCAMF (SSA region) N=20 Database CERISE (SSA region) N=49

0% 20% 40% 60% 80% 100%

DIM 1: DEFINE AND MONITOR SOCIAL GOALS DIM 2: COMMITMENT TO SOCIAL GOALS DIM 3: PRODUCTS THAT MEET CLIENTS' NEEDS AND PREFERENCES DIM 4: TREAT CLIENTS RESPONSIBLY DIM 5: TREAT EMPLOYEES RESPONSIBLY DIM 6: BALANCE FINANCIAL AND SOCIAL PERFORMANCE GCAMF (ASIA region) N=11 CERISE Database (ASIA region) N=25

0% 20% 40% 60% 80%

DIM 1: DEFINE AND MONITOR SOCIAL GOALS DIM 2: COMMITMENT TO SOCIAL GOALS DIM 3: PRODUCTS THAT MEET CLIENTS' NEEDS AND PREFERENCES DIM 4: TREAT CLIENTS RESPONSIBLY DIM 5: TREAT EMPLOYEES RESPONSIBLY DIM 6: BALANCE FINANCIAL AND SOCIAL PERFORMANCE GCAMF (Tier 3) N=20 CERISE Database (Tier 3) N=52

GCAMF vs benchmark by size: Tier 3 MFI – 0<GLP<10M GCAMF vs benchmark by region: Sub-Saharan Africa GCAMF vs benchmark by region: Asia

Our achievements

• Strong ALINUS score for Africa
• 5 out of 6 dimensions above benchmark.
• Well above for Dimension 1: Our partners have a clear social

strategy and properly measure these social goals.

• ALINUS score for GCAMF porIolio in Asia above benchmark for

all dimensions.

• Strong over-performance on staff (5) and client protec7on (4)
• Tier 3 partners of GCAMF PorIolio are well above the

benchmark.

• Our Tier 3 partners are in par7cular highly commihed to social

goals and their Boards, management and staff are aligned with these goals

SUB- SAHARAN AFRICA ASIA TIER 3

62

Grameen Credit Agricole Founda7on

Our areas for improvement: West Africa, social goals in Tier 1 and 2

0% 20% 40% 60% 80%

DIM 1: DEFINE AND MONITOR SOCIAL GOALS DIM 2: COMMITMENT TO SOCIAL GOALS DIM 3: PRODUCTS THAT MEET CLIENTS' NEEDS AND PREFERENCES DIM 4: TREAT CLIENTS RESPONSIBLY DIM 5: TREAT EMPLOYEES RESPONSIBLY DIM 6: BALANCE FINANCIAL AND SOCIAL PERFORMANCE GCAMF (West Africa region) N=11 CERISE Database (West Africa region) N=21

0% 20% 40% 60% 80% 100%

DIM 1: DEFINE AND MONITOR SOCIAL GOALS DIM 2: COMMITMENT TO SOCIAL GOALS DIM 3: PRODUCTS THAT MEET CLIENTS' NEEDS AND PREFERENCES DIM 4: TREAT CLIENTS RESPONSIBLY DIM 5: TREAT EMPLOYEES RESPONSIBLY DIM 6: BALANCE FINANCIAL AND SOCIAL PERFORMANCE GCAMF (Tier1) N=6 CERISE Database (Tier 1) N=8

0% 20% 40% 60% 80%

DIM 1: DEFINE AND MONITOR SOCIAL GOALS DIM 2: COMMITMEN T TO SOCIAL GOALS DIM 3: PRODUCTS THAT MEET CLIENTS' NEEDS AND PREFERENCES DIM 4: TREAT CLIENTS RESPONSIBLY DIM 5: TREAT EMPLOYEES RESPONSIBLY DIM 6: BALANCE FINANCIAL AND SOCIAL PERFORMANC E GCAMF (Tier 2) N=12 CERISE Database (Tier 2) N=22

TIER 2 GCAMF vs benchmark by region: West Africa GCAMF vs benchmark by size: Tier 2- MFI – 10M<GLP<100M GCAMF vs benchmark by size: Tier 1- MFI –GLP>100M Areas for improvement

• Performance of Sub-Saharan Africa is due to East Africa.
• West Africa below benchmark for dimension 2

(governance), 3 (product adap7on) and 6 (balancing financial and social objec7ves).

• Tier 2 partners’ social performance globally just at

benchmark

• Tier 1 partners globally at or below benchmark
• Main area for improvement is defining and monitoring of

Social Goals

TIER 1 West Africa

63

Grameen Credit Agricole Founda7on

Grameen Crédit Agricole Founda7on 64

End clients focus

• Introduce specific funding products for agriculture
• Focus on vulnerable clients, such as refugees (project in partnership with the UNHCR)

Social Performance Management

• Strengthen our partner selec7on based on social performance through the implementa0on of

social covenants and performance targets

• Monitor the poverty level of our partners’ clients and their social outcomes
• Offer Technical Assistance missions to reinforce social performance

Keep the momentum and strengthen our social performance requirements

Global Social Performance score (All six dimensions)

• TIER 1 > 50%
• TIER 2 > 45%
• TIER 3 > 40%

Client Protec7on score (dimension 4)

• TIER 1 > 70%
• TIER 2 > 60%
• TIER 3 > 50%

Preven7on of over- indebtedness

• TIER 1 > 70%
• TIER 2 > 50%
• TIER 3 > 50%

Tes0monies from other users

• Deutsche Bank
• INCOFIN
• Locfund
• Banco Pyme Ecofuturo
• Opportunity Interna0onal
• Others…

Feedback from the groups and Q&A

Thank you! spi4@cerise-microfinance.org

Resources available

• ALINUS Step by Step (for guidance on the SPI4

tool usage)

• ALINUS toolkit (for strategic planning and

implementa0on)

More info on ALINUS

www.cerise-spi4.org/alinus

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

Data Pla_orm

Validated data on Financial Service Providers’ pricing, SPI4 and ESG

SPTF, Investor mee0ng Mexico, June 2017

72

Outline

• 1. Why
• 2. What
• 3. Who
• 4. When
• 5. How: simula0on
• 6. Q&A, Feedback

73

Why

74

What

Data of investees and benchmarks for Due diligence and por_olio monitoring Annual Percentage Rate (APR) SPI4 ALINUS Client protec0on Financials, RIM Outcomes, green index IRIS, ESG, UN SDG

75

Who

Free: visibility, guide, consistency check,

• verview report.

Service: training, valida0on, award. Subscrip0on Service: peer group data, tailored reports, APR model DFIs, Founda0ons Regulators Standard se{ng bodies MIVs Research ins0tutes Users Steering commihee: SPTF, SMART, Cerise, MFT, ADA, MIMOSA, John Owens Advisory board: AFD, Swedish Agency (Sida) Data Ra0ng agencies MIVs and DFIs FSP networks Cerise Individual FSPs Manager: MicroFinanza Ra0ng Data providers SMART cer0f. & assessment

76

III Ongoing 2019 0 Concept 2016 √ I Pilot 2017 Prototype development Simula7on & feedback Value & viability review Start-up plan & fundraising II Start-up 2018

When

77

How

Simula0on

Q&A Feedback

78

Thanks

Data Pla_orm project Aldo Moauro Execu0ve Director, MicroFinanza Ra0ng Data Pla_orm Steering Commiiee member Milan, ITALY Lucia Spaggiari Business Development Director, MicroFinanza Ra0ng Data Pla_orm Project Manager Douala, CAMEROON

79

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

Overview WEF Effort: Accelerating Impact Measurement and Management

81

AG1 and 2: Evidence & Cases Translate and synthesize the existing evidence, and develop additional case studies AG3: Stakeholder Voice Capture the voice of all those who are affected by the impact/ intervention (both during design and throughout the investment) AG4: Conventions and Norms Establish shared conventions and norms based on case studies and existing content AG5: Resource Hub Explore common IMM practices that align to norms; Connect users to tools, techniques, and resources AG6: Training & Capacity Building Create a training program to build capacity within

• rganizations

AG7: Training & Safeguardin g Integrity Explore inclusive ways to safeguard and maintain integrity of measurement and management practices 2018 Kicking off now

• Work of all action groups will be connected and coordinated
• And integrated with other ongoing initiatives (IMP, Navigating

Impact, etc)

SPTF is leading Action Group 3

82

• Lead contacts:

SPTF (Laura Foose & Leticia Emme)

• Contributors

Anton Simanowitz (Independent) Acumen (Kat Harrison) BBVA FM (Stephanie Garcia Van Gool) Bamboo Finance (Ximena Escobar de Nogales) CERISE (Jon Salle) Claremont Eval. Center (Deborah Rugg) EDA Rural (Frances Sinha) Ellen Carey (Independent) GIIN/Navigating Impact (Kelly McCarthy) Impact Mgmt Project (Clara Barby) American Evaluation Association (John Gargani) Julian King & Associates (Julian King) LIEDERSHIP (Carl Liederman) Mercy Corps (Michael MacHarg) Microfinance Opportunities (Monique Cohen) Social Value Intl (Jeremy Nicholls) Social Value US (Sara Olsen) The Good Economy (Sarah Forster) UBS (James Gifford, Andrew Lee) UNPRI (Kurt Morrisen)

Why is SPTF involved and how is this relevant to you?

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• Share the experience of financial inclusion

▫ Collaboration, working towards common objectives ▫ Development and implementation of standards, common audit and monitoring tools, advancement of outcomes management work, etc

• Financial inclusion can help pave the way of less-mature sectors – seen as

“example”

• Opportunity to shape frameworks and tools that can be used by asset owners

and investors throughout the broader investments sector

▫ Can help investors differentiate themselves

• Help avoid impact-washing – gathering the voice of the stakeholder is at the

core of impact management... and something SPTF has experience with (standards, outcomes)

• Provide guidance on best ways to get stakeholder input to

promote resource allocation decisions that would be endorsed by all those who may be affected by impact investment/intervention

• Engage all affected stakeholders in the design phase and

throughout the impact investment/intervention

• To create value that stakeholders affected want and need
• To understand the user experience and the intended and un-

intended effect of the impact investment/intervention

Action Group 3: Objective

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• What do we mean with stakeholders? – all affected
• Beneficiary/end customer
• Those not included – but still affected by intervention
• Levels of impact
• Direct effect on direct beneficiaries (target of the intervention)
• Direct effect on other stakeholders (not the target, still affected)
• Indirect effect -- harder to measure
• Creating value = understanding what the stakeholders want and need (not

just what the investor wants)

• Gathering input should be an iterative, “multi-touch” process
• Impact investors might not engage on this process themselves – but should

ask/require of it from their investment managers

Key definitions/clarifications – let’s make sure we are all on the same page

85

MINIMUM BAR IDEAL

• 1. Outline of ideal process to engage

stakeholders

• 2. (Self-assessment) checklist/rubric for

investors to assess extent to which investments align/achieve to “ideal process” (#1)

• 3. Document that provides guidance for

improvement (add-on to be used after results

• f #2 in order to get closer to #1)
• 4. Business case for the impact investor (i.e. why

engaging and understanding all stakeholders is key to delivering impact)

Action Group 3: Proposed Deliverables

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CORE DELIVERABLES PHASE 1 (May-December 2017, pilot testing 2018) ADDITIONAL RECOMENDED DELIVERABLES PHASE 2 (Jan-June 2018- depending on funding)

The work of AG3 is aligned with the IMP , Navigating Impact, and the WEF agenda

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Understanding the user experience is at the core of managing impact

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• 1. What can investors do, via direct

and indirect investments, to support the gathering of stakeholder input as part of the investment/intervention?

• 2. What should be the “minimum”

effort and what is the “ideal” effort”? (e.g., direct vs. indirect impact, iterative process/multiple touch-point)

Discussion: Key elements of an “ideal process” to engage stakeholders

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Action Group 3: Timeline & Milestones

90

July: Chicago GSG meeting Awareness & Update September: NYC WEF Forum Report on

• verall progress

& share draft of #1 December: Europe TBD Report on progress & share #1-2 (ready for pilot) Dec ‘16-Jan: WEF sets action agenda to advance IMM June 2018 Final versions of #1-2 #3-4 (if funding) In-person events (voluntary) and sharing of work/ deliverables with external audiences Group activity & Milestones

May:

• Group Kick-
• ff, agree on

scope and timeline

• Ongoing

gathering of input June:

• Group call

#2

• Draft of #1

started and discussed July-Sept:

• Monthly

calls

• #1 refined

(with expert review)

• #2 started

Oct-Nov:

• #1 finalized

and ready for pilot

• #2 refined

(with expert review) Jan-June:

• #1 and #2

piloted and refined

• #3-4

developed (if funding) Dec:

• #1 and #2

finalized and ready for pilot

• Plan for #3-4

in place

Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

The Future of Microfinance

• Discussion about the role of investors, challenges, and
• pportunities given the emergence and growth of DFS and

Fintech

• Perspectives from

▫ Investors (Grassroots) ▫ FSP (Fundacion Genesis Empresarial) ▫ Smart Campaign ▫ CGAP

• Open discussion with participants

FUTURE OF MICROFINANCE

Grassroots’ Experience

• 2 financial inclusion equity funds in India and Latin

America; 1 multi-sector debt fund in India

• Investment in fintech has been lagging in LAC compared

to other regions, despite higher potential:

Financial access in LAC (only 51% of adults own an

account) pales in comparison to both the East Asia and Pacific region (69%) and rest of OECD countries (94%)

• In our portfolio:
• India – all MFI portfolio companies using fintech/ DFS;
• LAC – adoption more nascent/ limited

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DFS Initiatives – India

Clients:

• Repay their weekly, bi-weekly or monthly

loan installments with their mobile phones

• Visit digital micro payment provider in
• wn villages, rather than traveling up to

reach a branch

• Gain critical time-saving bridge to access

financial services, and knowledge of mobile money products and services Loan Officers:

• Process loan applications on tablets or

phones

• Paperless loan processing by operations

& credit departments saves time, costs

• Shorten underwriting process at the

branch level

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DFS Initiatives – LAC

• Mobile Points of Service reach

rural, remote clients

• Portable computer system at

the client's business or property to:

• 1. Make a preliminary credit

assessment of the loan application

• 2. Collect loan repayments
• 3. Conduct client surveys

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• Complement, not replacement
• Keep client at the center

DFS and Microfinance: Opportunities

New Product Launch Cost Reduction Customer

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• Due diligence: MFIs’ abilities to effectively embrace and

leverage fintech is key

• Take long-term view and provide the guidance and capital

for investments in new technologies, products and services

• Monitor fintech risks and protect clients: often

unregulated, charge higher rates, may not participate in credit bureau, over-lending, lower operating costs mask higher write-offs

DFS and Microfinance: Investors’ Role

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Discussion / Q & A www.grassrootscap.com

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ELECTRONIC MODEL OF CREDITS ORIGINATION

SEGMENTATION DERIVED ACTIONS

CLIENTS BY SEGMENTS

Creation of a Segmentation system for:

• Segments parameterization
• Allocate products to segments where a financial or social needs are

satisfied

• Customer monitoring by segment and by product.

SEGMENTATION DERIVED ACTIONS

Client

• 1. Gathering Customer Data
• Credit score
• Psychometric

Score

• Segmenta0on
• 3. Deployment of products
• 2. Credit Factory
• Financial products
• Social Products
• Taking into

account segment and financial capacity Preven8on of over-indebtedness Design of appropriate products and channels Fair and responsible treatment

• 4. Product Selec0on
• 5. Credit Factory
• 6. Customer credit delivery

Transparency Preven8on of over-indebtedness Transparency and responsible prices

• Customer

selects product and condi0ons.

• Completes

digital form requirements.

• Evalua0on of

credit policies.

• Verifica0on of

requirements

Development promoter

• 7. Customer Satisfaction

Assessment Mechanisms for resolu8on of claims

• 8. Analysis of results
• 9. Design and development of

new products

• Sa0sfac0on

surveys

• Customer

service

• Free line
• Sa0sfac0on

surveys

• Customer

Development Monitoring Privacy of customer data Design of appropriate products and channels

2017 RESULTS

FINANCIAL SEGMENT CHANGES SOCIAL SEGMENT CHANGES FINANCIAL QUALIFICATION CHANGES SOCIAL QUALIFICATION CHANGES

FINANCIAL SEGMENT SEGMENT DECREASE NO CHANGE SEGMENT INCREASE MEDIUM COMPANY 17% 83% 0% SMALL BUSINESS 18% 78% 3% ABOVE BASIC VITAL LINE 11% 70% 19% UNDER BASIC VITAL LINE 10% 69% 21% POVERTY 1% 66% 32% EXTREME POVERTY 0% 17% 83% SOCIAL SEGMENT SEGMENT DECREASE NO CHANGE SEGMENT INCREASE DEVELOPED 26% 74% 0% DEVELOPING PROCESS 5% 89% 6% VULNERABLE 1% 72% 27% POVERTY 0% 60% 40%

CUSTOMER PERCENTAGE BY QUALIFICATION CHANGE

LATE PAYMENT CUSTOMER PERCENTAGE BY CHANGE IN PAST DUE

Smart Campaign DFS Projects: Focus on Digital Credit and Agent Management

• Digital Credit:
• Jumo
• CFI Fellow John Owens
• CFI Fellow Patrick Traynor
• One-Off Assessments
• Responsible Agent Management

Digital Credit: Who is Doing What?

Milestones on Digital Credit Who is Doing it Conduct research and/or absorb evidence on client protec7on risks for low-income, vulnerable clients CGAP, CEGA, MicroSave, BFA, CFI/ Smart Campaign Ar7culate high-level guidance on iden7fied risks ITU (for regulators); IFC RFF Develop and/or document examples of good prac7ces or tools on how to mi7gate key risks CGAP for Data Privacy Build a community of like-minded prac77oners and relevant stakeholders No one Build consensus-building on where to ‘set the bar’ for good prac7ces No one Test drav standards No one Roll-out in assessment and cer7fica7on programs No one

Smart Campaign Prospective Approaches

• Briefs on Responsible Mobile Credit to Articulate Risks and

Provoke Conversation

• Public Goods and Tools
• Case Studies on Good Prac8ce
• Hacking Transparency: Cracking the Info-Interface

Challenge in Mobile Credit

• Consensus Building/Community of Practice
• FintechProtects: Community of Prac8ce

Role for investors

• Explore extent to which current investees abide to consumer

protection standards/ fund pilots to advance guidelines and standards

• Share experience from their own due diligence
• Participate in risk mapping exercises
• Require that portfolio companies share info about their products

and practices

Discussion

• Do you currently evaluate DFS in your investment

process? (FSP selection, due diligence, monitoring)

• Is DFS an evolution or a disruption?
• What should be the role of investors to ensure DFS

is done responsibly and keeping clients at the center?

• Are you considering Fintech in your investments?
• What risks and opportunities do you see?
• What role should SPTF play in the development of

guidelines and standards for FinTech? Is there need to develop guidance beyond client protection?

• ….

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Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions

Discussion on SPTF fee/membership model

• Being 100% donor-dependant is no

longer an option

• Brainstorming different fee/membership

models

▫ Support whole organization ▫ Support investor-work only

• Value proposition

▫ What would be valued and critical for you to get your organizational support? ▫ What key messages should we consider?

• Other ideas and suggestions

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Agenda

• 9.00-9.30am: Welcome and Updates
• 9.30-10.15am: Update on new workstreams identified at last investor meeting (Zurich)
• 10.15-10.45am: Coffee Break
• 10.45-11.45pm: Opportunities to improve SPM in Mexico
• 11.45-12.45pm: SPI4 and ALINUS
• 12.45-1.45pm: Lunch
• 1.45-2.45pm: Simulation on Data Platform
• 2.45-3.30pm: Gathering the stakeholder voice throughout investment process
• 3.30-4.00pm: Coffee Break
• 4.00-5.00pm: The future of microfinance
• 5.00-5.30pm: Discussion on SPTF membership model
• 5.30-6.00 pm: Wrap up and conclusions