176(11-12) mix understanding mfis report(eng) 11-08-11
TRANSCRIPT
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Written by:Bryan Barnett, Ph.D., Consultant
Understanding MFIs Reporting Burden
A study of the reporting burden for micronance providers
in sub-Saharan Africa
Micronance Information Exchange
Understanding MFIsReporting Burden
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MicroBanking Bulletin August 2011 Page 2
Table of Contents
Acknowledgements........................................................................................................................ 3
Executive Summary ....................................................................................................................... 4
Introduction ................................................................................................................................. 5
Methodology 5
The Reporting Process 5
I Collecting Data 6
II Aggregating the Data 7
III Extraction and Summarization 8
IV Consolidation and Formatting 8
V Delivery 10
VI Improving the Reporting Process 10
Conclusion ................................................................................................................................. 13
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MicroBanking Bulletin August 2011 Page 3
Acknowledgements
A special thank you to Audrey Linthorst (MIX) for support of the data collection efforts and review of the report
Thanks to Normand Arsenault, Tiphaine Crenn, Clara Fosu and Cyrus Ngoma for fostering the relationship and conducting
interviews with the participating MFIs
We would like to extend a special thank you to the MFIs in Sub-Saharan Africa that took part in our research study
We would also link to thank The MasterCard Foundation, who is committed to strengthening the micronance industry,particularly in Africa
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MicroBanking Bulletin August 2011 Page 4
Executive Summary
To better understand the burden that external reporting places on MFIs, MIX conducted a research study focused on Sub-
Saharan Africa The study included interviews with MFI executives, an online survey, and narratives collected from MF
staff involved in report preparation It focused especially on the collection and management of data related to loan/
savings portfolios as well as accounting and nancial data, and addressed reports to regulators, funders and investors,
and networks or associations. Key ndings of the study include:
Computer systems for portfolio management and accounting are widespread, with commercial off-the-shelf
systems now predominating over custom built applications
While many specialized applications combine portfolio management and accounting functions, many institutionsstill use different applications from which data must be merged and manually reconciled for reports
Most institutions use multiple methods to move data from branches to home ofces, with more than a thirdrelying on some combination of email and hand delivery Even institutions which have fully networked real-time
systems in place often do not have these systems in place at all branches
For slightly more than half of respondents, automated reports from IT systems were no more than a startingpoint in the preparation of reports, which required substantial additional effort to nalize.
Our data suggest that half of all respondents are preparing more than 28 separate reports annually, with many
preparing substantially more than that
All stakeholders tend to be interested in the same information in their reports, which must nevertheless besubmitted in varied formats, which accounts for a substantial part of the time spent on report preparation
Respondents reported that on average 3-5 people are involved in the preparation of stakeholder reportsresulting in a conservative estimate of 57 person-days of effort expended annually on report preparation for
the median MFI (or roughly one-quarter of a full-time employees workload)
Email is the dominant method of submitting reports, while paper forms delivered by post or hand delivery arestill a signicant percentage, particularly for reports to regulators.
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MicroBanking Bulletin August 2011 Page 5
Introduction
It is widely accepted that better reporting of operational
and nancial data by micronance institutions would
benet both the institutions themselves and other
stakeholders Ask almost any MFI, though, and they will
tell you that reporting is a real burden, especially when
many have to prepare twenty or thirty reports a year Of
course, no one is going to stop requesting reports merely
because its a burden for the MFIs If the burden could bereduced though, it would increase the both the quality and
timeliness of reports while allowing MFIs to devote more
resources to building their business
With this goal in mind, MIX set out to better understand
the reporting process from the MFIs perspective The
study focused on sub-Saharan Africa because reporting
among institutions there is less consistent than other
regions, suggesting that the challenges of reporting are
particularly signicant. As shown in Figure 1, our research
looked at four types of information commonly reported
and the three groups of external stakeholders that
most commonly receive reports1 We placed specialemphasis on the two important categories of information
that all MFIs must track and report (abbreviated as
follows):
Loan/savings portfolio data (abbreviated as L/Sin this report)
Financial/accounting data (abbreviated as F/A inthis report)
As Figure 1 shows, regulators, funders and investors,
and networks and associations, all requested similar
information, with regulators and investors somewhat
more interested in nancial and operational data and
networks or associations relatively more interested in
social performance data But overall, the differences
are not that great All external stakeholders tend tobe interested in the same types of information Inthis report, we pay relatively little attention to audited
nancial statements because they are prepared and
delivered by independent auditors and therefore are not
prospects for adjustment or improvement All other types
of reports (and the processes that generate the data
behind the reports) are considered here
Methodology
For our study we conducted a series of interviews with
senior staff at a representative group of institutions,
followed by an online survey The survey was sent to
over 1000 contacts at MFIs across the continent and
received 160 responses Finally, we asked a number of
staff engaged in preparing reports to provide us withnarratives describing the process within their institutions
The result is a composite picture compiled from these
sources
The institutions in the online survey were not a random
sample They were nonetheless selected to be generally
representative of different types and sizes of institutions
across SSA Results, therefore, are only illustrative But
taken as a whole, the results offer a good overall picture
of the challenges and opportunities for improving the
reporting process
Responses were roughly evenly distributed among small
medium and large-scale MFIs, with a similar number
of unknown either due to non-identication by the
respondent or lack of data on outreach
At least 75% of the responses were from MFIs that do not
maintain proles on MIX Market. The survey distribution
list covered some 600 institutions, including MIX Market
participants and non-participants
The survey was delivered in English and French for a two-
week period in each case The English-language survey
received 93 responses, while the French version received67 responses
The Reporting Process
Submitting a report to an external stakeholder is the nal
step in a complex process in which data on customers,
transactions, MFI personnel, and the like originates with
customers and staff and moves through the organization in
a series of ve stages.1 In charts throughout this report percentages often total to more than 100%
because respondents selected multiple responses to the question
0%
Audited Fin.
Unaudited Fin.
Operations
Social Performance
What types of information do you report to external
stakeholders?
Networks Investors Regulators
20% 40% 60% 80% 100%
Figure 1: Types of Information Reported
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MicroBanking Bulletin August 2011 Page 6
1 Collection: Data is generated as clients areenrolled, loans disbursed, repayments made,
savings deposited or withdrawn, etc Crucially,
some data must be manually collected (such as
client proles and nancial history), while other
data is generated more or less automatically in the
course of processing loan or savings transactions,enrolling employees, etc
2 Aggregation: From the point of collection(normally interaction with a loan ofcer or teller)
data is entered into some form of record-keeping
system, possibly paper or spreadsheets, but most
often computerized portfolio management and
accounting systems (which may be combined in a
single application) This step also involves moving
data from branches to the head ofce.
3 Extraction & Summarization: Once gatheredinto one or more centralized repositories, data
are selected and rolled up into summary totals
or calculated ratios In principle, this process
can draw data from a single comprehensive
repository, but, in practice, data are often pulled
from multiple systems or sources, producing
several interim tallies
4 Consolidation & Formatting: The specic setof information required by each particular
stakeholder is then taken from interim reports
and consolidated into the specic report format
required by each stakeholder This necessarilyinvolves reformatting data, but may also involve
recalculation
5 Delivery: Finally, the completed stakeholderreport is delivered, by hand, by post, by email, or
by direct submission to a stakeholders website
In the pages that follow we look in more detail at each of
the ve steps outlined above in light of the information
gathered in our interviews and surveys with MFIs in Africa
with special attention to feasible changes that can make
the process more efcient and less burdensome.
I. Collecting Data
Most of the key business data in a micronance institutionoriginates with customers It often starts with paper records
used by loan ofcers to collect customer information or
record cash transactions At this stage, the greater concern
is not for the efciency of collection, so much as for the
accuracy of the information collected Pre-printed forms
and ledgers are virtually universal, but the opportunity fo
error is great, so substantial manual re-checking is typically
required before anything is entered into a computer The
initial manual verication and reconciliation takes place
at the branch, before the information is passed on to
intermediate regional ofces or the head ofce, and it
can take several hours a day depending on the caseload
of loan ofcers and the procedures required. Speeding up
this process frees up more time for loan ofcers to spend
serving customers, which translates into greater loan
ofcer efciency. But greater efciency should not come
at the price of accuracy or completeness of the data
Technology offers an obvious strategy to improve this
process Laptop computers are generally not practical in
the eld, but mobile phones, especially so-called smart
phones with the ability to run fully functional applications
have the potential to automate some of the paper process
and produce greater accuracy These phones are still not
widely available in much of SSA, but recent announcementsby RIM (makers of Blackberry phones) and others on the
planned release of lower-cost smart phones in Africa
suggests that these devices will soon come within reach
of MFIs2 Software makers will be eager to take advantage
Table of Respondents to Online Survey
# of respondents MIX market status
Scale Visible No prole (Unknown) Grand Total
Large 46 46
Medium 30 30
Small 45 45
(unknown) 6 12 21 39
Grand Total 127 12 21 160
2 See: Mobile Marketing Trends: Smartphones Conquering Africa?, retrieved
from http://internationaldigitalmarketing.com/2010/10/29/mobile-marketing-
trends-smartphones-conquering-africa/On 5/4/2011. Also http://www.brightstarcorp.com/news-room/press-releases/
brightstar-rim-africa/
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MicroBanking Bulletin August 2011 Page 7
of this opportunity and applications for the phones that
integrate with portfolio management and banking systems
will doubtless follow But for many institutions this willnot change life very much if the next step in the process
remains unchanged
II. Aggregating the Data
After data is collected or captured at the point of customer
interaction it has very little value, until it is pooled with
data from other customers and interactions As loan
application forms, collection sheets, cash receipts and the
like are gathered at branch ofces, they are assembled,
consolidated and passed on to the home ofce, where they
are further consolidated into various storage repositories
How easily this happens depends on telecommunications
and technology, either of which can be a challenge for
many MFIs
We asked respondents in our survey how they transmitted
both loan/savings (L/S) data and nancial/accounting (F/A)
data from branches to their head ofce. The combined
results are shown in Figure 2
While internet connectivity is nearly universal at head
ofces, the situation in branch ofces is often much
different As the chart shows, about one third of institutions
are using networked applications to transmit data in realtime Yet, email and hand delivery are nearly as common
Most important, nearly one in three institutions is usingmore than one method, with email and hand deliverybeing the most popular combinationThe lack of consistentuse of networked software applications (which deliver data
in real time) is only partly the result of poor connectivity
Many software applications require a separate license for
each user Deploying the software other than at the head
ofce or regional ofces is often too expensive. MFIs have
long wished for a change in the vendors business model,
and this may come about through the spread of so-called
SaaS (Software-as-a-Service) as internet connectivity
continues to improve For the moment, MFIs are forced
to be inventive and move data to the head ofce as best
they can
The situation described by Sinapi Aba Trust illustrates
the problem They cannot afford the USD 5,000 license
for Temenos eMerge at all branches, so they use it onlyat a limited number of anchor branches Data from the
remaining branches is recorded in spreadsheets and sent
to the anchor branches via email, where it is validated
(sometimes requiring phone calls to the originator) before
being entered into Temenos
One signicant consequence of the varied ways that data
travels to the head ofce is the time required for this to
happen Undoubtedly, this partly explains the variation in
frequency of transmitting data In our survey, nearly 40%
of respondents indicated that either loan and savings or
nancial and accounting data were transmitted to the head
ofce monthly. This is a very surprising result that invitesfurther investigation monthly transfer of information
makes rapid response difcult, at best. Interviewees
described instances where data were hand carried by
bicycle, requiring many days travel to reach the head
ofce. Under those circumstances monthly transmission is
understandable (if not at all desirable)
Though perhaps not quickly or easily, essential data does
invariably arrive at the head ofce where it is gathered
into one or more centralized les or repositories. In our
survey the vast majority of respondents report using some
type of computer software for consolidation
At one time many of these applications were custom
built, but as Figure 3 shows, today the majority of MFIsuse some type of commercial off the shelf (OTSapplication. This is signicant because these applicationsare much more likely to have robust reporting capabilities
Figure 2: How Data is Transmitted to the Head Ofce
0% 5% 10% 15% 20% 25% 30% 35%
Real time (Networked Application)
Email
Hand Delivery
Network & Email
Network & Hand Delivery
Email + Hand delivery
Network, Email & Hand Delivery
F/A Data L/S Data
Paper
Spreadsheets
Custom application
OTS application
0% 20% 40% 60% 80%
F/A Data L/S Data
Figure 3: How Data is Stored
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MicroBanking Bulletin August 2011 Page 8
3 In addition to the built-in reporting capabilities in many portfolio management
or accounting applications, there are separate specialized reporting applications
that provide enhanced capabilities and can be used with many common business
applications Crystal Reports or Pentaho (an open source reporting application)
are examples
4 As a consequence of this type of difculty, Adok Timo is moving to an
integrated system
which are a signicant advantage at this stage of
report preparation3 While there are now a number
of commercially available applications that combine
functions, a signicant number of institutions still useseparate applications for both portfolio managementand accounting information In our survey, 71% of thoseresponding said they used a single integrated package
for both accounting and portfolio management, while
another 29% use different applications (or perhaps a single
computer application combined with spreadsheets)
Where separate applications are used for portfolio
management and accounting, data are often moved
between them manually Thus, as described by Adok
Timo, their accounting system (Quickbooks) is not
integrated with the MIS system and the IT staff has to
print all accounting entries from the MIS and give it to
the accounting department for them to manually post4
Even where portfolio management and accounting are
managed in the same application, care must be taken
to insure that the two systems are synchronized As one
interviewee commented regarding their (integrated)
system, gures pulled from different reports sometimesdiffer. For example, the portfolio gure in the balance
sheet is different from that in the portfolio report
With the raw data gathered into one or more central
repositories, and discrepancies identied and addressed,
an MFI is in nally in position to begin creating reports to
stakeholders To turn raw customer and transaction data
into information that anyone can use, it must be sampled,
extracted and summarized As simple as it sounds, the
process occupies multiple people and substantial time
III. Extraction and Summarization
A report is nothing more than a summary of a selected subset
of all the data available. Reports are potentially innitely
variable depending upon different needs and preferences
MFIs compile a large number of reports annually, forboard members, regulators, investors, funders, networksand associations For each of these, the MFI must pull aselect subset of required data available from each of the
several systems mentioned above For those institutions
using specialized software packages, the process starts
with running one or more automated reports from these
systems As noted above, where separate software is used
for portfolio management and accounting respectively,these intermediate reports originate in different systems
and must subsequently be combined manually This, in turn,
requires verication that data is consistent between the
two systems, which must be determined through a manua
audit process, as noted earlier
Depending on the requirements of the stakeholder report
being prepared, data may have to be collected from other
sources as well, including audit reports, bank statements,
regulatory lings, human resource systems, or systems
used for tracking social performance What results is a
series of partial or intermediate summaries from differentsources that constitute the raw material from which a na
report will be constructed
IV. Consolidation and Formatting
With initial summaries and tabulations of data from any
required sources in hand, this information must then
be organized into the form and format required by the
specic recipient. In an ideal world, all the data required
for any stakeholder report would be housed in a single
repository and the process of preparing reports could be
almost completely automated
In reality, this is not the case today In our survey we asked
respondents to tell us how much they relied on automated
reports from portfolio management or accounting systems
The results are shown in Figure 4 Nearly half saidthat standard automated reports were mostly, if notcompletely, sufcient. But for slightly more than half ofrespondents, automated reports are at best a startingpoint, requiring additional work
The required forms and formats of external reports
vary widely and invariably require manual preparation
Data are consolidated from different sources andtabulated or summarized in the form required byeach stakeholder in what is perhaps the most labor-intensive phase in the preparation of external reports
10.1%
41.1%
40.3%
8.5%
Little or None - Manual
A Starting Point
Mostly sufficient
Sufficient
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
Figure 4: How much Reliance on Automated Reports
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MicroBanking Bulletin August 2011 Page 9
In the words of the CEOof one MFI (that employs a very
advanced information system based on Microsoft Dynamics
software), their system does not meet the requirements
in that, although all data is available in it, it requires to
be pulled from the system and then prepared manually
to t into the template and forms required to report to
different stakeholders If this problem affects those with
very advanced systems, it can only be worse among those
with less sophisticated technology
Whatever effort is required to produce a single report, the
real impact of reporting is caused by the large number of
5 For this calculation we included only those MFIs that reported data for all
categories of stakeholders
reports that most MFIs are required to prepare annually In
our survey we asked MFIs to provide the total number of
investors and funders as well as the number of networks
or associations to which they submitted reports in the past
year We then applied these totals to the MFIs estimate
of the average frequency of ling to each category of
stakeholders For example, sending reports to 6 investors
and funders, on a quarterly basis, means an estimated tota
of 18 lings per year to this group of stakeholders. Applying
this methodology across all categories of stakeholderswe estimate that the MFIs in our survey are submitting
an average of 39 reports annually5 The median for this
was 28 reports annually, meaning that fully half of MFIs
reporting are estimated to be ling more than 28 reports
each year
Beyond just the total number of reports led, our survey
sought to gauge the amount of time actually spent
preparing reports after all data were initially aggregated
at the head ofce. Estimating the time required is difcult
though Asking respondents to estimate time spent on a
task for which they typically do not keep records is too
subjective, while precise time-and-motion studies are tooexpensive We have therefore followed a middle path to
arrive at an estimate, combining data from our survey
with some conservative assumptions based on interviews
and sector knowledge The survey asked respondents
about the number of reports they submit to each of three
external stakeholder groups: 1) regulators; 2) funders and
investors; 3) networks or associations. We also asked how
frequently (on average) each type of report is submitted
From these two gures, we can estimate the total number
of submissions made annually For example, reporting to
Estimating the Total Reporting Burden
A signicant majority of respondents suggested that at least three people were involved in report preparation generally,
with three to ve people being the most common. In our analysis of the survey results, we calculated separately
for each respondent the number of reports, frequency and number of people involved In all instances, where the
respondent indicated a range for the number of staff involved (for example 3-5 people), we use the lowest (ie, most
conservative) gure. Combining these different gures together resulted in an initial formula as follows:
[Number of stakeholders receiving reports] X [frequency per year] X [Number of personnel contributing to the report]
What was missing then was an estimate of the actual amount of time spent by each individual on preparing a single
report Here we are required to make an assumption, but one informed by conversations with MFI personnel ininterviews On this basis, we estimate that the average person involved spends perhaps one half to one day on average
preparing each report. So our nal estimate looks like this:
[Number of stakeholders receiving reports] X [frequency per year] X [Number of personnel contributing to the report]X [Days per person] = [Total person-days of labor spent on reporting]
1-2 people
3-5 people
6-8 people
>8 people
On average how many people participate in creating reports?
0% 10% 20% 30% 40% 50% 60%
Regulators Investors/Funders Networks/Associations
Figure 5: The Number of People Working to PrepareEach Type of Report
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6 See: http://www.mixmarket.org/data-center/reports/xUzfouRF
7 See: http://www.mixmarket.org/data-center/reports/SnX775Ai
three funders on a quarterly basis would mean submitting
12 reports a year At the same time, we asked respondents
to estimate the number of people engaged in preparing
each type of report
Using the formula from the sidebar, applied to all
respondents who provided data, we obtain the results
shown in the table below In line with our assumption about
the range of time spent on average by each participant, we
provide three estimates assuming 05, 075, and 10 daysof effort per person, respectively In addition we provide
both average and median estimates because the average
is inuenced by several outliers.
Fully half of those reporting spend the equivalentof one full-time staff working for several months In
practice, many MFIs devote considerably more person-days This calculation also only looks at time spent on
report preparation It excludes any time spent collecting,
aggregating or scrubbing data before the process of report
preparation begins
While allocating something more than 57 person days
to report preparation might not seem signicant,
especially when considering the relatively low cost of
labor in developing countries, there are several reasons
not to dismiss this impact Reporting requirements are
independent of an institutions size, so for smaller MFIswith limited central staff this will be a disproportionatelylarge impact Moreover, MIX data show that averagesalaries for micronance staff in Africa are almost fourtimes what they are in other regions,6 reecting the factthat skilled labor is scarce and more expensive in AfricaBecause the nance staff involved in report preparation
are among the more highly-paid employees of an MFI, the
resources allocated to reporting have a disproportionate
impact on the bottom line Finally, yields in Africa havenot declined much in recent years,7 suggesting that evena small reduction in costs could translate into lowerinterest rates and greater access to affordable credit
V. Delivery
The last stage in reporting is to deliver the results to the
intended recipient The survey asked respondents how
they delivered reports to different stakeholders The
results are shown in Figure 6 It is perhaps not surprising
that email dominates, as most reports are deliveredin the form of a spreadsheet or a scanned documentMoreover, email is most commonly used with funders and
investors because they are least likely to be located in the
same locale, or even the same country, as the MFI More
surprising is the high percentage of respondents who saythat they le regulatory reports in person or by mailingpaper documents Most interesting of all perhaps is therecent appearance of web-based methods of submitting
reports, either by completing an online form or uploading
a le (usually a spreadsheet) to a web site.
VI. Improving the Reporting Process
Taking a step back to view the reporting process as a
whole, the picture that we now have looks something like
the diagram in Figure 7
Data originates with customer interactions in the eld
at a group meeting or a clients home for example, and
then moves to the branches From there it moves to the
head ofce by any of several different methods, shown
by the different types of arrows in the diagram Once at
the home ofce the data are collected into one or more
of several repositories, which might be part of a single
integrated application or might be separate applications
Throughout this part of the process there is a need for
constant validation and scrubbing of the data to make
sure it is complete and accurate How much time and
effort this validation requires is heavily dependent not
on the software applications in use, but on the underlyingbusiness processes adopted by the institution Finally
once all data are aggregated and scrubbed, the process
of extracting specic parts of the data can begin.
As suggested by the network of curved arrows in the
diagram, each nal report requires an individual subset
of data from each of the host repositories formatted into
a unique template to complete the nal report required
by an individual stakeholder Then, when each report is
nalized, it is delivered to the intended recipient.
Figure 6: How Reports are Submitted
Email
Hand or postal delivery
Complete web form
Upload to web site
How do you submit reports?
Networks/Associations Funders/Investors Regulators
0% 20% 40% 60% 80% 100%
0.5 day 0.75 day 1.0 day
Average 65.7 98.5 131.3
Median 37.8 56.6 75.5
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In considering ways that reporting might be improved,
its helpful to consider each stage of the process in turn
As noted above, eliminating the use of paper forms to
collect data from customers through the use of mobilephones or some other type of electronic device at the
point of customer interaction can save time and increase
loan ofcer efciency. The required applications would
not be difcult to create, but the cost of the devices
must come down signicantly for this to be practical for
most MFIs
Moving data from branches to the home ofce is inuenced
by connectivity and the type and cost of software in use
at the branches While conventional broadband internet
will doubtless be slow to reach many smaller towns or
rural communities, improvements in the data capacity
of mobile phone networks are already having an impact
Applications that do not require excessive bandwidth can
function over these networks, allowing faster transmission
of data to home ofces. One key factor, however, is the
business model of software providers, most of whom
currently charge a separate license fee for each computer
on which their software is installed This often limits access
to software at branches because of cost Moreover, when
software is installed locally by individual institutions, the
costs associated with maintenance, upgrades, and so forth
are often quite high
The emergence of so-called Software as a Service (SaaS)has the potential to change this With SaaS, customers pay
for the use of an application hosted remotely and accessed
via the internet through a web browser Normally, charges
are based on the number of clients an MFI has rather than
the number of computers, so smaller MFIs can avoid having
to pay signicant license fees for branches that have few
customers Moreover, because applications are running
centrally under the control of the service provider, costs
associated with maintenance and upgrades are signicantly
less SaaS offerings are already beginning to appear in the
micronance market and though the business model is not
yet proven, there is reason to believe that some providers
will ultimately be successful delivering software servicesin this way
As the micronance industry matures, we can expect
to see consolidation among software vendors providing
specialized applications for managing loan and savings
portfolios A broader base of customers will allow vendors
to lower costs, as will the adoption of SaaS delivery models
Together, these changes will bring better information
systems to MFIs, enabling them to collect, manage and use
information much more effectively and efciently. It wil
also hopefully impact reporting by increasing reliance on
automated reporting from information systems, thereby
reducing the need for manual transfers or scrubbing
of data
However, all of this leaves the single largest component
of report preparation untouched As long as MFIs are
required to prepare large numbers of reports according to
varying requirements, it will still be necessary to allocate
signicant resources to extract data from multiple
sources, summarize it in different ways and format it
into the various templates In as much as most of these
reports contain the same basic raw data on nances and
operations, it seems needlessly inefcient not to have
greater standardization
There are two complementary approaches to this problem
First, recipients could agree to accept standardized
reports, thus reducing the number of different report
formats which MFIs would have to provide This might
appear as in Figure 8
Alternatively, as suggested by Figure 9, report data
could pass through an intermediate stage before being
Regulator
Investor
Network
Funder
Investor
Report
Report
Report
Report
Report
Portfolio
Management
Finance/Accounting
HR
Branch
Branch
Branch
Branch
Figure 7: Reporting Process
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redistributed In this scenario, data would be selectively
repackaged and reformatted to meet the specic needs
of individual stakeholders before being passed on to
them
To standardize reports, at least some stakeholders
must be willing to agree that the information they
need is not altogether different from the information
that other stakeholders need If a stakeholder believes
that the information they request gives them a
unique competitive advantage in evaluating theperformance of MFIs, this can prove difcult. For regulators
or networks this may not be as great a concern Among
investors seeking the best opportunities, who account for
a very substantial share of all reports prepared, it may
be more difcult to achieve consensus on a standard
report format
The second approach, illustrated in Figure 9, requires
several components to be successful
1. A comprehensive data set sufcient to meet
a large number of stakeholder needs must be
specied.
2 MFIs must be persuaded to collect and provide
this data
3 The technical capability to extract and format
the data received from MFIs to the exact
specications of the intended recipients must
exist
4 Recipients must trust the redistribution process
to be transparent, forwarding on data that has
not been altered
Specifying the comprehensive data set required to meet
multiple stakeholder requirements could be accomplished
by reviewing multiple report formats MFIs would have a
strong incentive to provide comprehensive data if they were
Figure 8: Effect of Standardized Reports
Regulator
Network
Network
Investor
Investor
Report
Report
Report
Portfolio
Management
Finance/Accounting
HR
Branch
Branch
Branch
Branch
Regulator
Investor
Network
Funder
Investor
Report Redi strib uti on
PortfolioManagement
Finance/
Accounting
HR
Branch
Branch
Branch
Branch
Figure 9: Effect of Data Redistribution
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then relieved of the burden of preparing and submitting
multiple reports The technical challenge of automating
the formatting of reports to meet stakeholder requirements
is not complicated, but in as much as it would need to
be done repeatedly for many different stakeholders,
it could require signicant effort. Finally, gaining the
trust of stakeholders would be heavily dependent on the
demonstration of consistent transparency and reliability,
something that can, unfortunately, only be achieved
over time
Conclusion
The need to collect data and report results is and will
remain a critical part of any micronance operation.
As both the industry and individual institutions mature,
business opportunities will emerge to improve information
management and the market will attract entrepreneurs
and new solutions will appear Evidence of this can
already be seen in the emergence of mobile phone based
applications, specialized software packages for managing
micronance portfolios and the recent appearance of SaaS
business models for delivering enterprise software
These developments, combined with improvements in
internal business processes, can and will improve information
collection and management over time Market forces alone
will not, however, necessarily have much direct effect on the
reporting burden Those who impose report requirements -regulators, networks, and investors - have little incentive
to act individually to alter their requirements in the
interest of the reporting institutions Yet, standardized
report formats or a redistribution model would change the
dynamics and cost structure of reporting for MFIs, which
could benet both the clients of micronance institutions
and external stakeholders Industry coordination among
those committed to promoting access to nancial services
for the poor could build such a program to streamline
reporting in this fashion