Guidelines for Impact Monitoring & Assessment in Microfinance ...

MONITORING & ASSESSMENT IN MICROFINANCE PROGRAMMES
length of programme participation is associated with impact and whether loan site
and terms are associated with impact.
We will present impact domains in detail following the presentation of impact
hypotheses.
Core Impact Hypotheses at the Family/Household Level
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Participation in microfinance programmes leads
to improved long-term economic and social security
through wealth creation.
• Surplus income from income-generating activities and other productive
investments enables households to accumulate assets and thereby diversify
their holdings more effectively. This may result in higher returns for a
given level of risk exposure. Purchase of additional assets expands the
household economic base and allows for more predictability, control and
flexibility by generating a resource base for basic consumption and for future
planning while reducing vulnerability through improved risk management
strategies.
• Households are able to accumulate savings to improve their security
level, especially in a period of stress. Savings, whether in the form of cash or
other physical assets (such as livestock or jewellery) can be used to meet
consumption needs rather than disposing of other productive assets.
Surplus income also allows households to stabilise their income
sources through reinvestment in other income-generating activities, thus aiding
households to cope with seasonal or other short-term periods of stress.
• Households have the possibility of additional expenditures in human capital
such as improved nutrition, health, housing and children’s education, thus
leading to improved household viability and welfare long-term.
Possible Negative Impacts of Microfinance Services on Households:
• Under some circumstances, credit may aggravate the indebtedness of
households if the cash flow of the enterprise(s) is insufficient to cover loan
repayments, and no other sources of income are available. For households
at the margin of survival or in a period of stress, the level of indebtedness
may increase due to lack of other opportunities for productive investment.