Continuing the Conversation: How to Achieve a Mission of Poverty Reduction

The Seal of Excellence e-Consultation, hosted by Microlinks, included two days of rich dialogue and debate, engaging microfinance practitioners, investors, and industry experts from around the world.  The e-Consultation marks only the beginning of this ongoing dialogue.  We encourage you to join us and remain active in helping to shape the future of the Seal.  The discussion continues on the LinkedIn group for Strengthening the Economic Potential of the Ultra Poor Working Group (STEP UP), a dedicated learning community supported by the SEEP Network that supports microfinance and enterprise development practitioners in their quest to expand, share and apply effective economic strengthening practices for those living in extreme poverty.

As we discussed best and emerging practices for poverty outreach and transformation and the role of the Seal of Excellence, many important questions were raised.  The entire discussion can be viewed on Microlinks, but here are some of the highlights.

The first day focused on best and emerging practices for poverty outreach, key challenges, and the question of how to move beyond outreach to poverty outcomes and transformation. Some of the key questions we began to address include:

  • Why measure poverty?  There are costs and challenges – including having an MIS that can handle the data; but there are benefits in having information to track inclusion of lower income people, and also as business intelligence that helps to identify different market segments that MFIs are serving
  • How do MFIs ensure that they are including poor people?  Targeting, often with a mix of tools and product design are both key. Getting the products right can be the most effective way to target.
  • How do we ensure microfinance products are appropriate and useful – do they lead to positive change for poor clients?  Careful analysis of client satisfaction provides relevant pointers.  Relevant data – including poverty and related data for clients at entry, provides a profile for analyzing client satisfaction, as well as a ‘baseline’ for tracking any change over time – which need not be just income.
  • What role is played by (social) investors?  There have been examples of too many investors funding a limited number of poverty focused MFIs.  But, when neither equity investors nor lenders factor social performance (poverty outreach) in company valuation, then this becomes an external disincentive to MFIs in undertaking social performance management.

In Day 2 we shifted to a discussion of the Seal of Excellence and explored how it can best champion poverty reduction goals in the microfinance industry and other social development initiatives.  The conversation included important questions delving into:

  • how  the Seal can help achieve poverty outreach and positive lasting change
  • balancing investor incentives to pursue financial and social return
  • challenges in social reporting
  • potential applications of the Seal in helping governments and regulators to identify good practitioners

Here is a summary of the discussion or click on each day here for the full discussion threads.

Don’t forget to join the discussion on LinkedIn to continue the conversation and help us shape the Seal of Excellence to best promote poverty outreach and generate positive, lasting change.

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