Social Performace Management (SPM): A Necessity for Responsible Institutions
All organizations across the globe have been created for a noble cause which goes beyond the financial gains of the creators or promoters.
This cause is usually symbolized by the organization’s mission and constitutes the reason for its being. The analysis of the performance management system of the organizations and more specifically that of microfinance institutions show that most of them do not measure to or abide by their mission. They often satisfy themselves with measuring their financial performance which is, of course, important and critical, but it is not the sole objective of an organization with a social mission.
Social performance is currently defined as the effective implementation of the organization’s mission. As defined, social performance is not achieved fortuitously, there must be a real will and clear intentions to convert the mission into positive changes for the client, motivation for employees and social returns for investors.
Justification and importance of social performance management to the microfinance industry: During the last 5-10 years, the microfinance industry has been marked by increased interest in the concept of social performance and the social impact of microfinance institutions. There are many reasons for this tendency:
- Parting from mission: Initially, microfinance institutions had been created to include, as much as possible, those excluded from the traditional financial system (including the poorest of the poor) in the financial system but for various reasons (donor and regulator pressure, need for profits, lack of a clear vision for social impact), many institutions have increasingly withdrawn from the poorest zones and target beneficiairies to focus on a richer clientele while sometimes ignoring their very mission.
- Performance management problems: The majority of microfinance institutions continue to evaluate their success by focusing almost exclusively on financial indicators whereas they have – as stated by their mission statement – an essentially social mission.
- High reputational risk: In certain countries, it is common today to hear that microfinance institutions are rather helping to downgrade the living conditions of the poor instead of helping to improve them. There was (and there still is) a real need to improve the industry’s image by proving that it is significantly helping to increase social inclusion and reducing poverty.
SPM Initiatives: Success and Challenges in Africa
For a number of years, many initiatives have been created to deal with these huge challenges. I would, among these challenges, like to highlight the Social Performance Task Force which plays a key coordination and standards development role.
MISION Africa project (Microfinance Institutions Improve their Social Impact and Outreach through Networks in Africa) is one of these initiatives which focuses on the promotion of social performance management on the African continent. This project translates the common commitment of the Catholic Relief Services (CRS), African microfinance networks (AFMIN) and national microfinance networks in Benin, Senegal, Burkina Faso, Ethiopia, Uganda and Kenya and that of donors (the Ford Fondation and Mastercard Foundation) to transform microfinance into an effective and sustainable tool for financial inclusion and human development.
It is a capacity building project which helps partner microfinance institutions integrate the social component into their performance management system and improve their key processes with a view to achieving better financial and social results. This can be done through the provision of technical assistance in strategic management.
Regarding the sustainability and efficiency of operations, MISION Africa has strategically opted to provide technical support only through local consultants whose work is coordinated by national associations.
To date, significant results have been achieved by MISION Africa: in two years, more than 50 African microfinance institutions (in the 6 target countries) have undertaken the implementation of the concept of social performance management by clarifying their mission and defining clear social objectives and indicators. The objective is to extend to the entire Sub-Saharan Africa in five years. Another important aspect is that national authorities (for example, Burkina Faso) are increasingly committing themselves to the promotion of social performance management by including it in their national microfinance strategies.
However, there are still major challenges. The lack of visionary leadership in certain institutions is of course the biggest challenge for the promotion of social performance management in Africa. Some institutions have a tendency to focus on sourcing funds instead of seeking quality technical assistance to strengthen their management systems. The lack of coordination among promoters of social performance management is a huge challenge. Initiatives and tools are increasing and sometimes target the same associations and institutions. That sometimes creates real confusion instead of creating a multiplier effect. The third challenge stems from the lack of resources to promote social performance management on the continent where only about ten countries are receiving financial support in this regard. There is a need for greater state and donor commitment to promote this concept.
is a Microfinance Expert with over twelve years experience in the microfinance sector. He is currently the Director of MISION Africa project. He is also the Regional Technical Advisor - Microfinance for Catholic Relief Services - CRS’ West Africa Regional Office.
Prior to joining CRS, Mr Diallo was Regional Director, West Africa for Freedom from Hunger.
He also worked as a teacher and researcher with the University of Mali (Faculty of Economics and Law) and the Center for Development Policy.
He holds a postgraduate degree in Economics from the University of Ouagadougou in Burkina Faso, a Master in Economics from Ecole Nationale d'Administration in Mali, and a Master in Microfinance from the State University of Bergamo in Italy.