Microfinance Focus: Fonkoze is one of the industry leaders in social performance management. How does it benefit Fonkoze?
Anne Hastings: In today’s environment there are many benefits. First of all, you have to start with your mission. There are two types of microfinance institutions. There are those which try to maximize access to everyone. The other type wants to use microfinance as a tool for people making their way out of poverty. If you take the second type, which is what we are, then you need to measure whether you are achieving your goals or not. If you do not know whether you are succeeding in getting people out of poverty, you cannot continue.
Specially in today’s environment where there are so many challenges like claims that microfinance is just over indebting people and making them worse off than they were before, you really need to know whether you are having a positive impact on their lives or not.
We are continuously monitoring information and using it at management levels to make changes in our program. We have three different ways of collecting information. One is using the PPI (Progress out of Poverty Index) and we verify it on our samples of clients coming into the program and every year we go back to the same client and re-measure and see if they are doing better than the year before or if they are doing worse. We are always running focus groups around the country with clients where we actually try to get information from them on what is working well for them and what is not working so well. That is the way we can really get their understanding of what new products we might need or what programs they don’t see as being particularly useful to them.
The third tool that we use is that we do interviews with the clients who exit the program to know what made them join the program in the first place and what made them fall out of the program. The two principal reasons for them to exit the program are unexpected health issues and the fact that their businesses failed. These two things are linked. If they have bad health, their businesses will fail. That also suggests to us that we need to be increasingly involved in strengthening their businesses. You can’t just give poor women a loan and then send her on her way. We need to accompany her and help her decide what business she should be in and how she should be manage it better so that she remains competitive.
So increasingly we are moving towards more involvement in our clients’ businesses, especially those that are just starting out and are among very poorest people