field note Social Performance Working Group (SPWG) Asia: CERISE SPI Certification in Social Audits for Associations

Transcription

1 Authored by: Khadija Ali & Zahra Khalid, Pakistan Microfinance Network (PMN) field note Social Performance Working Group (SPWG) Asia: CERISE SPI Certification in Social Audits for Associations February 2013

2 Copyright 2013 The SEEP Network Sections of this publication may be copied or adapted to meet local needs without the permission of The SEEP Network, provided that the parts copied are distributed for free or at cost not for profit. Please credit The SEEP Network and Social Performance Working Group (SPWG) Asia: CERISE SPI Certification in Social Audits for Associations. For any commercial reproduction, please obtain permission from: The SEEP Network 1611 N. Kent St., Suite 610 Arlington, VA (tel): (fax): Printed in the United States of America. To access this publication online, visit

3 TABLE OF CONTENTS Acknowledgments Acronyms iii iv 1. Background Theme: Social Audits 2 3. SPWG Asia Regional Meeting: CERISE Social Audit Training 3 Stakeholders 3 Social Audits Action Plan 4 Complete Agenda for SPWG Asia Annual Meeting 5 4. Certification of SPWG Asia Networks by CERISE 5 5. Feedback on the Social Audit Experience 6 SPWG Asia Networks 6 CERISE 8 MFIs Participating in the Social Audits 9 6. Findings and Patterns from the Social Audits 9 7. Next Steps for Social Audits 12 Institutional Backgrounds 14

4 ACKNOWLEDGEMENTS This Field Note was authored by a team from the Pakistan Microfinance Network (PMN), Khadija Ali and Zahra Khalid, the regional facilitator for the Social Performance Working Group Asia. Specific sections benefitted from detailed comments and insights from Marie-Anna Bénard, Mila Bunker, Muhammad Awais Butt, Bai Chengyu, Lalaine Joyas, Cécile Lapenu, Viengnakhone Lovanxay, Melissa Matlock, Yasitha M Munasinghe, Abu Saleh Mohammad Musa, Katherine Oglietti, Therese Marie Rico, Sugandh Saxena, Mehr Shah, Jagadish Tiwari, Cheang Vanna and Lv Yanni. iii

5 ACRONYMS BWTP CAM CDF CERISE CMA CMF LMFPA MCPI MFI MFIN MFWG Lao PDR MFWG Vietnam MIX MONPAK NGO PMN SAMN SPI SPM SPTF SPWG Banking with the Poor China Association of Microfinance Credit and Development Forum Comité d Echanges de Réflexion et d Information sur les Systèmes d Epargne-crédit Cambodia MicroFinance Association Centre for Microfinance Lanka MicroFinance Practitioners Association Microfinance Council of the Philippines Inc. Microfinance Institution Microfinance Institutions Network Microfinance Working Group for the Lao PDR MicroFinance Working Group Vietnam Microfinance Information Exchange, Inc. MicroFinance Organizations Network of Pakistan Non-Governmental Organisation Pakistan Microfinance Network South Asia Microfinance Network Social Performance Indicators Social Performance Management Social Performance Task Force Social Performance Working Group iv

6 1. Background The Social Performance Working Group (SPWG) Asia was formed in 2009 as part of a SEEP initiative to form regional level working groups for the promotion of the social mission of microfinance, in collaboration with the Social Performance Task Force (SPTF). The SPWG Asia serves as a platform for collective action for networks in Asia to advance social performance management (SPM), through leveraging the networks unique industry leadership and facilitating best practices with their member microfinance institutions (MFIs). The SPWG Asia also promotes peer exchange of information both within the region and across external stakeholders, and draws attention to emerging challenges and opportunities in social performance management from the practitioners perspective. As of 2012, the SPWG Asia comprises twelve national networks from ten Asian countries, which form the core members of the SPWG Asia. In addition to this, there are seven associate members belonging to different stakeholder groups such as regional networks, rating agencies, knowledge networks, and think tanks. Since its inception, the SPWG Asia has seen a yearly increase in its membership, both in its core and associate sub-groups. The SPWG Asia is facilitated by an elected representative of one of the member networks. Between 2011 and 2012, this role was carried out by Zahra Khalid, Social Analyst at Pakistan Microfinance Network (PMN), and actively supported by Khadija Ali, Social Associate at PMN. Based on voting within the group, the regional facilitator position rotates on an annual/ biennial basis to ensure participation of all group members interested in the role. SWPG Asia Core Members 2012 Network Country Membership (# of MFIs) Cambodia MicroFinance Association (CMA) Cambodia 39 China Association of Microfinance (CAM) China 102 Credit and Development Forum (CDF) Bangladesh 870 Centre for Microfinance (CMF) Nepal 34 Lanka MicroFinance Practitioners Association (LMFPA) Sri Lanka 62 Microfinance Council of the Philippines Inc. (MCPI) Philippines 42 Microfinance Institutions Network (MFIN) India 47 MicroFinance Organisations Network of Pakistan (MONPAK) Pakistan 30 Microfinance Working Group for the Lao PDR (MFWG) Lao PDR 23 Pakistan Microfinance Network(PMN) [Regional Facilitator] Pakistan 30 Sa-Dhan India 100 Vietnam MicroFinance Working Group (MFWG) Vietnam 28 SWPG Asia Associate Members 2012 Banking with the Poor (BWTP) Network South Asia Microfinance Network (SAMN) Microfinanza Rating Plan International WaterCredit Planet Rating ACCESS-Assist OkioCredit CERISE 1

7 Theme: Social Audits In order to fulfill its mission of promoting social performance management in the region, members of the SPWG Asia discussed potential themes for 2012 and devised a work plan based on networks voting for themes of interest. The theme of Capacity building on social audits received the highest number of votes by the working group members, while the other themes included: Promote SP with respective national regulators, Promote SP with investors, and Build capacity of networks to integrate SPM into MFI operations. Given the funding limitations faced by all regional working groups, the SPWG Asia decided to use the available funds for a collective activity for the group. The few networks for which conducting a social audit was not a first priority wholeheartedly supported the majority s decision and committed their time and resources for the collective benefit of the region. Moreover, the motivation for working group members to prioritize capacity building on social audits for 2012 was that networks have to be as equipped as possible before pursuing the other themes, such as promotion of SP with national regulators/stakeholders. Social audits provide a good opportunity for microfinance practitioners to diagnose their current strengths and weaknesses in terms of social performance management (SPM). In this respect, social audits are considered an important first step for microfinance networks, and their member practitioners, to identify and effectively integrate best practices in SPM into their operations. A social audit is a good entry point to SPM for MFIs, as it allows the MFI to learn more about SPM, understand the key issues to achieving its social goals and be aware of its major strengths and challenges in institutionalizing SPM. -Lalaine M. Joyas, MCPI Consultant Social Audits vs. Social Ratings Social Audits Help MFIs evaluate their intentions, systems, and actions to determine how well they are achieving their social objectives (e.g. poverty outreach). Focus on processes and systems, while including some information on results and outputs. Identify particular areas of strength or weakness and offer recommendations for improvement in practices. Can be conducted internally by the management of an MFI, or through an external audit team. Audience of social audits may be external (investors and donors), or internal (management teams interested in improving practices). Primary social rating tools currently available: CERISE Social Performance Indicators(SPI) Tool MFC Quality Audit Tool (QAT) MicroSave SPM Toolkit Social Ratings Provide an objective opinion on an MFI s degree of success in translating its social mission into practice. Often look specifically at results and outputs of the MFI in accordance with its social mission. Typically do not provide recommendations, but review documents and assign a rating or score based on findings. Conducted by an external organization; often to verify data that is self-reported by the MFI to MIX. Audience for a social rating is external; generally to attract interest from investors and donors. Primary social rating tools currently available: M-CRIL Microfinanza Rating MicroRate Planet Rating Source: CGAP Microfinance Gateway, Imp-Act Consortium s Social Performance Management Resource Centre, external-audits-and-ratings/ 2

8 3. SPWG Asia Regional Meeting: CERISE Social Audit Training The main activity planned within the theme of capacity building on social audits was a SPWG Asia regional meeting and CERISE social audit training. The social audit tool selected by the networks in this case was the Social Performance Indicators (SPI) social audit tool developed by CERISE. CERISE is a microfinance knowledge exchange network based in France, comprised of a diverse group of practitioners, researchers, donors and investors. CERISE and its partners were the first to pioneer a social audit tool for microfinance in 2001, and this tool has since become the most widely used in the sector. 1 The main objectives for the SPWG Asia regional meeting and CERISE social audit training were: To develop a framework to conduct social audits through networks in Asia; To build local capacity of Asian networks and technical committees for quality control in conducting social audits(with potential CERISE certification of networks as SPI users); To encourage the use of SPI tool (commitment of two social audits by each network, by the end of 2012); To build better awareness on SP and improvement of practices in member MFIs as part of the next steps. The 3-day SPWG Asia regional meeting and CERISE social audit training event took place during February 20 to 22, 2012 in Bangkok, Thailand and was financially supported by a number of stakeholders. Stakeholders The SPWG Asia regional meeting and CERISE social audit training saw full participation from all twelve of the working group s core members, with a majority of these networks sending two participants from their country. It was important for the working group to achieve full participation at the training, in order to ensure that all networks would benefit from the work being done by the group. The working group recognized that this was a great opportunity for individual networks to build their capacity and become certified on the SPI tool, for the benefit of their member MFIs. Members of the SPWG Asia took the initiative to reach out to a number of potential co-sponsors for the event, through existing linkages with CERISE and other associate members of the working group. The level of participation and success of the initiative, as witnessed in Bangkok, was possible due to the efforts of multiple donors and sponsors, including: i. The SEEP Network: As founder of the regional group in collaboration with the SPTF, SEEP supported the SPWG Asia s work plan for 2012, and allocated funds to ensure the completion of various activities within the work plan, including contracting CERISE as the trainer, and ensuring participation of at least one individual from each network at the SPI training. 1. For more information on CERISE, please refer to: 3

9 ii. CERISE: The organisation co-financed part of its participation as trainer in the event, as well as for the follow-up activities related to certification of Asian networks throughout the year. CERISE was also instrumental in reaching out to potential co-sponsors for the training. iii. Plan International: As an associate member of the SPWG Asia, Plan International provided extensive support for the SPI training activity, including financial support to ensure that a second participant from each network attended the training. Plan International also helped generate interest among donors to co-sponsor the event, and helped organize the training via their regional office in Bangkok. iv. OikoCredit: OikoCredit has worked in various capacities to promote SPM in the sector, including the use of social audit tools. A Project Officer of the organisation, Theary Taing, shared the investor perspective on why MFIs need to conduct SP assessments to demonstrate their impact during the SPWG Asia Regional Meeting and CERISE Social Audit Training. v. Grameen Credit Agricole Microfinance Foundation: Grameen Crédit Agricole Microfinance Foundation supports and facilitates MFIs through a range of financial products and services, targeting practitioners that adhere to social performance themes of good governance, transparency and consumer protection principles. The organisation was keen to show its support for the national networks seeking the CERISE Social Audit Training. vi. Incofin: Incofin finances and supports MFIs in over 40 countries and aims at a balanced combination of financial and social returns. During the SPWG Asia Regional Meeting and CERISE Social Audit Training, a representative of Incofin, Dina Pons, Investment Manager, shared a brief overview of why SPM evaluation is important for social investors like Incofin. Social Audits Action Plan for 2012 Upon completion of the classroom training by CERISE, the working group drafted an action plan in which all national networks would aim to complete social audits for two member MFIs in 2012, and to encourage SP integration into the selected MFI s operations. This would mean that the working group would complete a total of twenty-four social audits for Asia in Two sub-regional technical committees (TCs) for were formed, to review the quality of the social audits conducted by each network, and to facilitate the network certification process with CERISE: Networks Technical Committee South East Asia CMA, Cambodia; CAM, China; MCPI, Philippines; MFWG, Vietnam; MFWG, Lao PDR Therese Marie Kakay B. Rico (MCPI) [Lead] and Nguyen Ngoc Huong (MFWG Vietnam) South Asia PMN, Pakistan; MON-PAK, Pakistan; Sa- Dhan, India; MFIN, India; CDF, Bangladesh; CMF, Nepal; LMFPA, Sri Lanka Sugandh Saxena (MFIN) [Lead] and Abu Saleh Mohammad Musa (CDF) This action plan ensured that the participating networks would take responsibility and allocate their own resources towards the completion of activities within the collective regional work plan. By committing to carrying out two 4

10 social audits in their home countries, the networks were ensuring that the theme of social audits would be carried forward following the training event. For 2012, networks were advised to select MFIs that were small or medium sized compared to the national average, this being their first experience with the CERISE social audit. Complete Agenda for SPWG Asia Annual Meeting In addition to participating in the CERISE social audit training and work planning for 2012, the working group members discussed a number of other issues relevant to SP in the region. This included the following: Brainstorming on how to incorporate social audits into the broader SP strategies at the national network level. Generating feedback on the Universal Standards for Social Performance Management (USSPM). Each network committed to gathering feedback from a specified number of member MFIs for the second round of feedback collection. The regional facilitator shared important information and deadlines related to the upcoming Social Performance Task Force (SPTF) Annual Meeting in June, including a session by The SEEP Network titled Appropriate Product Development, for which networks were encouraged to nominate MFIs from their respective counties. Members of the working group proposed to develop a learning product around the issue of working with regulators, subject to funding availability, as this theme was voted as the second most important for the SPWG Asia in Certification of SPWG Asia Networks by CERISE Following the social audit training in February, networks continued to work on their individual work plans to complete two social audits in their respective countries. By December 2012, eighteen (of the expected twenty-four) social audit reports were submitted to CERISE for review and finalization. A further five social audits were completed towards the end of the year and shared with CERISE in early January, 2013; only one network could not complete its second social audit in 2012 due to limited resources and therefore plans to complete the social audit in the first quarter of CERISE continued to work closely with the networks and sub-regional technical committees to review their social audits, and envisions the completion of all (twenty-four) social audits, followed by a manual of procedures to be adapted by each network to clarify their own strategy for conducting and using social audits. This will help the networks have a clearer vision on SP and SPM going forward, and support their members in identifying their strengths and weaknesses. Many networks have already shared concrete plans around taking forward their work on SP via social audits, which will be expounded further in section 5. At the time of authoring this note, all networks in the SPWG Asia had attained the CERISE Social Audit Training and a majority had conducted at least two social audits for MFIs in their home countries, thereby ensuring that they were well on their way towards becoming certified on the SPI tool by CERISE. The process of certification by CERISE is aimed at creating efficient use of the social audit tool, to ensure the quality of assessments and demonstrate that assessments are being conducted by reliable and certified organizations (please refer to Box 1). 5

11 Box 1: Note on Certification for SPI Social Auditors by CERISE SPI includes Standards of Use and a Certification process for trainers and auditors. The Standards of Use formalize the CERISE SPI application process to ensure quality control and efficient use of the tool. The Standards define optimum conditions in which the SPI tool can be used. Certification is required to be considered an external auditor and to train other organizations on the SPI tool. Rationale for the Certification The CERISE SPI tool, available for free, was designed using an open, collaborative and transparent approach. As of June 2011, almost 400 MFIs around the world have used the tool. The volume of users henceforth impedes the promoters of the tool to maintain in-depth case-by-case quality control. Moreover, the microfinance sector has changed. Scandals and increasing criticism have put it under the scrutiny of media, governments, regulators and the wider public. MFIs both need and want to be more transparent and improve their practices. The CERISE SPI is useful toward this end, but it also creates a potential market for free riders, such as consultants without experience in microfinance. Quality of assessments must be ensured. The certification aims to: avoid inefficient use of the SPI tool by MFIs (bad quality, unreliable information), ensure quality control and potential exchange of information among SPI users by guaranteeing with reasonable confidence the process used for the audit, avoid inappropriate use of the SPI tool by third parties (free riders using SPI for commercial purposes, duplication of efforts, creating unnecessary reporting burdens for the MFIs), ensure reliable reporting to MIX Added value of the certification: For the audit user (MFI stakeholders): ensures rigorous quality control and reliability of the audit, increases external credibility of results, and facilitates trustworthy information sharing For the auditor: grants international recognition, access to updated knowledge and training in the efficient use of SPI For the MFI: ensures high quality data for decision making, boosts credibility of results, demonstrates strong commitment towards social performance. Source: 5. Feedback on the Social Audit Experience As the SPWG Asia networks moved towards certification on the CERISE SPI Audit in 2012, the regional facilitator collected feedback from all the stakeholders: the Asian networks, the SPI trainer/cerise, and the MFIs that participated in social audits throughout the region. SPWG Asia Networks The general feedback from Asian networks on the theme of social audits was very positive, given that this theme was the preference of most networks for The networks recognize the need for capacity building (both of network staff and their member MFIs) on social audits for MFIs with a double bottom-line of financial sustainability and social performance. 6

12 i. The Social Audit Training Experience In terms of attending the social audit training conducted by CERISE, networks found: The training event was comprehensive, well-organized, and an overall good learning experience. The program was helpful in building greater understanding on the social audit approach, as compared to social ratings or other types of assessments (Sa-Dhan India). The trainers were successful in outlining how the CERISE social performance indicators (SPI) tool should be applied practically (CMA Cambodia). The event was a good opportunity for networks to build peer learning and share experiences with each other, especially those who had previous experience with conducting social assessments (PMN Pakistan). An additional element in the training program could be added on data verification guidelines, so that networks are prepared for any possible challenges when verifying the data reported by MFI s (LMFPA Sri Lanka). A longer, five-day training would allow the trainees to practice using the SPI questionnaire in detail, under the supervision of CERISE and other facilitators (CMF Nepal). ii. Using the CERISE Social Audit Tool In terms of usability of the CERISE social audit tool, participants found: The social audit questionnaire was well structured and convenient to use. The SPI Guide and other supporting material (SPI Standards of Use, SPI Terms and Conditions) developed by CERISE were helpful in writing up the analysis for the social audit reports (LMFPA Sri Lanka). Certain indicators or dimensions within the SPI tool could be considered less relevant to the country-specific context in some countries, in which case it may be useful for networks to have more flexibility in terms of the scores and weightages applied to each SP dimension within the tool (MFIN India). iii. Mainstreaming Social Audits Networks appreciated the potential benefits of integrating social audits into overall network strategies for social performance, specifically in terms of: Advocacy and Communication Capacity Building Information Dissemination Policy advocacy with government / regulators Identify / address gaps in MFI performance Awareness raising among member MFIs Funding requests to potentional investors Documentation of best practices / benchmarking Case studies / publications on members The network participants appreciated the fact that CERISE certifies organizations as opposed to individuals, and were keen to have their networks certified, so that this can be included as one of the innovative services provided to their members in the future. 7

13 i. Challenges and Opportunities Going Forward The issue of funding for regular and systematic audits of all member MFIs was highlighted as a particular challenge for networks. While at the SPWG Asia regional meeting and CERISE social audit training, all networks committed to covering the costs of the two social audits for 2012, the feasibility of conducting similar assessments in the coming years depends on each networks capacity to procure funds specifically for this function, as well as how social audits fit into the network s overall strategy on SP. On a related note, it is important to recognize that networks in Asia are at various stages of growth, outreach and complexity. While some networks are well poised for carrying out social audits, collecting data and encouraging greater participation from member MFIs, others may not be at that same level, which would have implications on the quality of subsequent social audits conducted. Networks are the best stakeholders to carry out social audits, considering that networks can provide capacity building to member MFIs to enhance their SPM practices -Mila Bunker, Chairperson MCPI and President Ahon sa Hirap (ASHI) In terms of mainstreaming social audits at the individual network level, some networks (MCPI Philippines, LMFPA Sri Lanka, MONPAK Pakistan, CMA Cambodia, and Vietnam MFWG) plan to conduct the CERISE social audit for additional MFIs in Other networks (CMF Nepal and MFWG Vietnam) are keen to generate financial support for such activities, as their MFIs are interested in the analysis but are not in a position to pay for such services themselves. MFIN India has chosen to incorporate elements of the CERISE social audit tool into its own, country-specific index for social performance, while PMN Pakistan has taken a client protection focus for 2013 to 15, and has acquired funds to conduct the Smart Campaign s Client Protection (CP) assessments for all member MFIs. For 2013, Sa-Dhan India is devoting its resources to promote a Code of Conduct for Microfinance Institutions in India, which encompasses guidelines on client protection and institutional conduct for MFIs seeking to create social benefits and promote financial inclusion. While Asian networks have different SP strategies going forward, it is essential that these networks address prevalent issues faced in the wider microfinance sector vis-à-vis unregulated growth, increased competition, and client over-indebtedness. To this end, networks are keen to understand where their member MFIs stand in terms of globally accepted SPM standards, and appreciate the initiatives taken by the SPWG Asia. Networks are particularly appreciative of the capacity building on social audits, which are crucial resources for networks to employ locally in lieu of hiring expensive, external consultants for this purpose. CERISE In terms of conducting the SPI training in Bangkok, CERISE valued the demand-driven basis for the initiative, and the networks commitment to improving their capacities for social assessments and supporting their member MFIs on SPM. It was a positive experience for CERISE to work with twelve networks from 10 countries, representing a significant subsection of the microfinance sector. In this regard, it was important for CERISE to work with networks, as this creates the potential to reach many MFIs and promote responsible finance widely. This initiative, coming from the networks themselves, is a huge push for social performance in Asia. -Cécile Lapenu, CERISE The social audit tool was developed to complement financial analysis with the social audit of an MFI, in order to help the institution become more financially sustainable while genuinely contributing to their social missions. The SPI tool has become one of the most widely used social audit tools in the world, with more than 500 MFIs audited globally, though the Asian region was previously under-represented in this area. 8

14 MFIs Participating in the Social Audits In the majority of social audits conducted in 2012, the MFIs were selected based on their interest to volunteer for this service at the national network level. Networks briefed their member MFIs on the work proposed in this area, and asked the interested parties to nominate a relevant point-person and schedule a time for the social audits in The two MFIs ultimately selected by each network represented various peer groups: Microfinance Banks, specialized MF institutions, Non-Government Organizations (NGOs), government supported as well as privately managed MFIs. Most of the MFIs that volunteered for the social audit did so based on their desire to find out what their current strengths and weaknesses are in social performance. An overwhelming majority of the MFIs stated that they face a lack of resources to conduct social audits assessments internally, and therefore were grateful for the opportunity to have their networks conduct these social audits of their institutions. Some of the advanced MFIs had prior experience with social assessments, and already had in place an internal strategy for SPM (Philippines), while others used this as an opportunity to learn more about SPM and how to incorporate SP into their institutions overall goals and strategies (Pakistan, Sri Lanka, Cambodia). For the MFIs still considered to be in their early days in terms of implementing SPM, there was an understanding that follow-up activities would be necessary for their member MFIs to track their progress of SPM over time. These activities could include social audits using the CERISE tool, as well as other complementary tools (such as ratings or client protection assessments). The challenge these MFIs face is a lack of funding for such activities, which are often not considered part of the core operations of the institution (Lao PDR, Vietnam, Nepal).Funding continues to be a challenge for MFIs when attempting to build their capacity and rectify the gaps and weaknesses identified during their social audits. 6. Findings and Patterns from the Social Audits Following the completion of social audits in 2012, a number of common trends were seen in terms of the areas of strength and areas in which Asian MFIs would need to improve upon their SPM. While detailed findings from individual social audits will not be presented in this report due to the confidentiality offered to all MFIs taking part in the social audits, some common trends are highlighted below. Overall, four different categories of MFIs were identified during the process of conducting social audits in Asia: those that are champions of social performance, those that have a focus on social responsibility and poverty alleviation, those that are new to social performance, and MFIs with a commercial focus. The charts on the next pages portray the findings of the MFIs who underwent the social audits as part of this initiative, grouped as an average for each category. 9

15 SP Champions Poverty + SR Focus 10

16 SPM Incipients Commercial Profiles 11

17 Some of the common characteristics and challenges identified within these four categories of MFIs are as follows: Category Social performance champions Participating MFIs in this category Common SP characteristics 35% Strong and balanced social performance Poverty and SR focus 15% Focus on Targeting and Social responsibility, but with basic products/services, weak client participation and follow-up. SPM Incipients 35% Average and balanced social performance. Commercial profiles 1% Diversification, Social responsibility towards staff and towards clients (client protection) Challenges Some punctual gaps (depending on each case) Need to improve quality and diversification of services and track clients benefits Prioritization and TA to strengthen practices. Client protection is a point of attention (good for most, but in some case quite weak). In general targeting of poor-excluded persons is low. CERISE found that the scores were generally representative of the regional/national averages in Asia. In a few cases, the results were significantly different. For example, in Lao PDR, Bangladesh, and Sri Lanka, the results were generally below the average, due to lower exposure to SP for those MFIs and less mature microfinance markets (for example in Lao PDR and Sri Lanka), while in some countries (Philippines, Vietnam, and India), there seems to be greater awareness and more advanced SPM practices by MFIs. Box 2: CERISE recommendations for Asian networks taking the social audit initiative forward: Results by countries could be shared with the regulators to discuss the strengths and opportunities in terms of SPM and value the actions implemented by the MFI. In terms of knowledge exchange, the audits conducted reveal good practices in some countries and MFI s that could be shared among networks. The social audits can also help to strategically prioritize support by networks. 7. Next steps for Social Audits The networks that are now CERISE SPI certified are currently evaluating the financial viability and cost structure of conducting future social audits for their MFI members. Financing is the primary constraint that they face in conducting the social audits, as often times their members lack the financial resources necessary to cover the costs of the social audits. However, there are cost advantages to employing local resources to conduct the social audits, and an adequate pricing model may be feasible. Despite of these constraints, a number of networks plan to conduct additional social audits in 2013 for member MFIs following a pattern similar to that of 2012, including: MCPI, LMFPA, MON-PAK, CMA and Vietnam MFWG, as well as new SPWG Asia associate member, Good Return. Additionally, the SPWG Asia is discussing strategies of us- 12

18 ing the results of the social audits as a mechanism for engagement with regulators and demonstrating the social performance of social mission driven organizations that provide financial services in their countries. These strategies will be included within the working group s discussions for the coming year. 13

19 About CERISE (Comité d Echanges de Réflexion et d Information sur les Systèmes d Epargne-crédit) CERISE is a knowledge exchange network for microfinance practitioners. Founded in 1998, CERISE is richly diverse, bringing together a variety of practitioners, researchers, donors and investors from the North and South. CERISE and its partners were the first to pioneer a social performance assessment tool for microfinance, in Developed in collaboration with global networks, the Social Performance Indicators (SPI) is one of the most widely used social audit tools in the sector today. In addition to the Social Performance Indicators (SPI), CERISE has also developed innovative methodologies for assessing impact. CERISE has spearheaded a whole new facet of performance assessment to complement financial analysis. The goal of CERISE is to help MFIs become sustainable while genuinely contributing to development. About the Pakistan Microfinance Network (PMN) The Pakistan Microfinance Network ( is an industry association of 30 retail microfinance providers dedicated to improving the outreach and sustainability of microfinance services in Pakistan. The PMN s member organizations collectively account for over 98 per cent of the total microfinance outreach in the country, and cover a diverse group of service providers, ranging from Microfinance Banks (MFBs) regulated under the State Bank of Pakistan, Microfinance Institutions (MFIs), Rural Support Programs (RSPs) and others. The PMN s mission is to support the sector to enhance scale, quality, diversity and sustainability in order to achieve inclusive financial services. This mission is pursued through the primary functions of the PMN, to serve as an information hub for the industry, to promote an enabling environment and to support capacity building of stakeholders. About SEEP The SEEP Network is a nonprofit network of over 120 international organizations that believe in the power of enterprise to reduce global poverty. SEEP members connect in a global learning community to increase their impact in over 170 countries, where they collectively serve over 89 million microentrepreneurs and their families. Through SEEP s learning initiatives, microenterprise development practitioners co-create and exchange strategies, standards, and tools for building healthy economies with a sustainable income in every household. About the Social Performance Working Group for Networks (SPWG) The SEEP Social Performance Working Group for Networks (SPWG) was created in 2009 in collaboration with the Social Performance Task Force (SPTF) to help networks leverage their unique strengths in promoting the social goals of microfinance. The purpose of the working group is to advance social performance management (SPM) through networks, building capacity at the network level so that they can work more proactively and effectively with their member MFIs on this topic. The working group promotes peer exchange of information, both among its 50 members and across regions, and draws attention to emerging challenges and opportunities in social performance from the practitioners perspective. 14

20 About the Social Performance Task Force (SPTF) The Social Performance Task Force (SPTF) consists of over 1,000 members from all over the world and from every microfinance stakeholder group: practitioners, donors and investors (multilateral, bilateral, and private), global, national and regional associations, technical assistance providers, rating agencies, academics and researchers, and others. The vision of the SPTF is that social performance management is standard business practice and considered fundamental to achieving the social promise of microfinance. The mission of the SPTF is to engage with microfinance stakeholders to develop, disseminate and promote standards and good practices for social performance management and reporting. 15

21 The SEEP Network 1611 North Kent Street, Suite 610 Arlington, VA Phone: Fax: info@seepnetwork.org Website: