Issues in Designing Effective Microfinance Impact Assessment Systems

Topic :

This paper is based on work conducted by Imp-Act – a three year action-research programme aiming to improve the quality of microfinance services and their impact on poverty. The paper looks specifically at the benefits of designing and implementing effective practitioner focussed client and impact assessment. It considers the type of questions microfinance organisations should be asking in terms of use of impact assessment tools, such as indicators. It makes the point that impact assessment must be context-specific, taking into consideration the type of information to be gathered and the purpose of this information. It also stresses that impact assessment is an ongoing process, rather than a one-off event which benefits neither the clients nor the organisation.

The authors note that a range of quantitative and qualitative research methods have been applied to provide rigorous analyses of the poverty impacts of microfinance. However, there has often been a strong perception amongst practitioners that formal impact assessment studies do not provide the detailed information about clients that mangers need to improve understanding and microfinance organisation practice.

The first part of the paper reviews the recent move in microfinance impact assessment away from narrow, donor-financed impact assessment events, towards more practitioner-focused processes. The second part offers a guide to an impact assessment process that is determined by context and audience, and allows diversity in purpose and the issues that impact assessment can address. The paper states that clarity in these is more likely to result in appropriate selection from a range of approaches and tools available to meet these objectives.

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