Social Impact Assessment of Microfinance Programmes - weman

Indeed, Hermes and Lensink (2007) make the important point that, many advocates of
microcredit ‘argue that microcredit can help to substantially reduce poverty’ on the
assumption that ‘access to credit can contribute to a long-lasting increase in income by
means of a rise in investments in income generating activities …; it can contribute to an
accumulation of assets; it can reduce vulnerability due to illness …’ (p. 463), they also
make the crucial point that, ‘it is surprising that there are only a few solid empirical
studies available on the possible poverty reducing effects of microcredit’ (p. 464).
1.3 The Terms of Reference and Aims of the Study
The Terms of Reference for this Study were as follows:
Assessment of the social impact of microfinance programmes (group and
individual lending) of Microfinance Institutions/NGOs/Microfinance Banks on
borrowers, communities and on the institutions themselves, and whether these
MFIs are achieving their social missions.
Microfinance Institutions (MFIs) have predetermined social missions for their
microfinance programmes/interventions such as poverty alleviation, empowering
poor women, provision of financial services to people disqualified from the formal
financial market, development of micro-enterprises for poverty alleviation and
strengthening economic development of the poor. The social impact assessment of
these MFIs will cover the relevance of operations/programmes to their
goals/missions and use this information to improve the social and financial
performance of institutions. The contractor will select SIX (6) MFIs for this
intervention covering at least two (2) provinces and the selection criteria of MFIs
for this action will be as follows:
• At least 3 years continuous work experience in microfinance and a strong
business plan for next 3 years;
• MFI enjoys a portfolio of at least 2000 active borrowers;
• Has audited accounts for the last 3 years;
• Is willing to undergo the social impact assessment of its microfinance operations
and to use the information for performance improvement.
The group of six institutions must cover a range of sizes, ownership patterns,
source of funding, lending methodology, programme area, organizational structure,
borrowers, communities etc.
While the Terms of Reference state clearly, that the ‘the contract’s objective is to
measure the social impact of microfinance programmes (group and individual lending) of
Microfinance Institutions/NGOs/Microfinance Banks on borrowers, communities and
institutions themselves and to assess whether these institutions are successful in their
missions’, we felt that this was a good opportunity to go beyond these goals and make
extensive use of the space available to do research to address numerous issues which are
often overlooked.
Firstly, while looking at the Social Impact of Microfinance Programmes, we will also
looked at Economic Impacts of these programmes, apart from the Social Impact – see
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