social investor meeting on responsible inclusive financesocial investor meeting on responsible...

Social Investor Meeting on Responsible Inclusive Finance

Customer Centricity Learning EventChennai, India

Monday February 19, 2018

Our areas for improvement: West Africa, social goals in Tier 1 and 2

0%20%40%60%80%

DIM 1: DEFINEAND MONITORSOCIAL GOALS

DIM 2:COMMITMENT TO

SOCIAL GOALS

DIM 3: PRODUCTSTHAT MEET

CLIENTS' NEEDSAND

PREFERENCES

DIM 4: TREATCLIENTS

RESPONSIBLY

DIM 5: TREATEMPLOYEES

RESPONSIBLY

DIM 6: BALANCEFINANCIAL AND

SOCIALPERFORMANCE

GCAMF (West Africa region) N=11

0%

50%

100%

DIM 1: DEFINEAND MONITORSOCIAL GOALS

DIM 2:COMMITMENT

TO SOCIALGOALS

DIM 3:PRODUCTSTHAT MEET

CLIENTS'NEEDS AND…

DIM 4: TREATCLIENTS

RESPONSIBLY

DIM 5: TREATEMPLOYEES

RESPONSIBLY

DIM 6:BALANCE

FINANCIALAND SOCIALPERFORMAN…

GCAMF (Tier1) N=6

0%20%40%60%80%

DIM 1:DEFINE

ANDMONITOR

SOCIAL…

DIM 2:COMMITMENT TO

SOCIALGOALS

DIM 3:PRODUCT

S THATMEET

CLIENTS'…

DIM 4:TREAT

CLIENTSRESPONSI

DIM 5:TREAT

EMPLOYEES

RESPON…

DIM 6:BALANCE

FINANCIALAND

SOCIAL…

GCAMF (Tier 2) N=12

CERISE Database (Tier 2)N=22

GCAMF vs benchmark by region: West Africa GCAMF vs benchmark by size: Tier 2- MFI – 10M<GLP<100M

GCAMF vs benchmark by size: Tier 1- MFI –GLP>100M

Areas for improvement

• Performance of Sub-Saharan Africa is due to East Africa.• West Africa below benchmark for dimension 2

(governance), 3 (product adaption) and 6 (balancing financial and social objectives).

• Tier 2 partners’ social performance globally just at benchmark

• Tier 1 partners globally at or below benchmark• Main area for improvement is defining and monitoring of

Social Goals

TIER 1

West Africa

2 Grameen Credit Agricole Foundation

Grameen Crédit Agricole Foundation 3

End clients focus

• Introduce specific funding products for agriculture• Focus on vulnerable clients, such as refugees (project in partnership with the UNHCR)

Social Performance Management

• Strengthen our partner selection based on social performance through the implementation of social covenants and performance targets

• Monitor the poverty level of our partners’ clients and their social outcomes• Offer Technical Assistance missions to reinforce social performance

Keep the momentum and strengthen our social performance requirements

Global Social Performance score (All six dimensions)

• TIER 1 > 50%• TIER 2 > 45%• TIER 3 > 40%

Client Protection score (dimension

4)

• TIER 1 > 70%• TIER 2 > 60%• TIER 3 > 50%

Prevention of over-indebtedness

• TIER 1 > 70%• TIER 2 > 50%• TIER 3 > 50%

Feedback from the group and Q&A

Thank you!

CERISE: [email protected]

Agenda• 11.00-11.10: Welcome and Updates

• 11.10-11.40: Understanding the risk for over-indebtedness in India

• 11.40-12.20: Implementing the Universal Standards in India

• 12.20-13.00: Responsible Exits

• 13.00-14.00: Lunch

• 14.00-14.30: SPI4 and ALINUS

• 14.30-15.00: Update on lender guidelines monitoring in Cambodia

• 15.00-15.45: Assessing S&E performance of SME finance

• 15.45-16.00: Coffee Break

• 16.00-16.45: Digitalization & Fintech

• 16.15-17.00: Data Platform

• 17.00-17.45: Aligning efforts with the impact investing field

• 17.45-18.00: Wrap up and conclusions

Cambodia Microfinance AssociationLender Guidelines Project

An initiative of the Cambodian Microfinance Association led by the CEO Task Force and CMA CEO Club

With the Technical Support of the Credit Bureau of Cambodia and Daniel Rozas (MIMOSA)

Funded by ADA, BIO, FMO, Incofin Investment Management and PROPARCO

Progress

• CMA Board approves the MoU in December 2016• Endorsed and supported by CBC• Endorsed by investors/lenders• Endorsed in principle by NBC• Signed by 39 CMA members• Started monitoring data from Jan 17 to develop and improve

monitoring ‘compliance’ dashboard, which CBC is handling and reporting to CMA• Collected data for monitoring dashboard since July 2017, individual

report has been sent to each signatory (dashboards exist for April –Dec 2017)

Lending Guidelines summary

Broader data reporting to CBC

• Income sources supporting loan• Parties to the loan (co-borrowers, guarantors)• More timely reporting (within 5 biz days)

Prevent unhealthy competition

• Caps on multiple lending• Metrics on loan refinancing

Client protection

• Implement rescheduling/restructuring policies• Limit asset sales of poor clients to exceptional

cases only• End use of local authorities for collections

CBC Lender Guidelines Dashboard

Growth, unabated

Portfolio …

Num …

0.0

0.5

1.0

1.5

2.0

2.5

01234567

2… 2… 2… 2… 2… 2… 2… 2… 2… S…

Num brwrs(mln)

Portf size (bln USD)

CMA member growth 2008-17

Loan sizes

Avg …

Ln Size Growth (%)

20%

34%

0%

10%

20%

30%

40%

0

500

1,000

1,500

2,000

2,500

3,000

20082009

20102011

20122013

20142015

2016Se

p-17

CMA Members: Avg loan size

Source: CMA; excludes “large loans” from ACLEDA and Sathapana

… but multiple lending is low.

what’s going on?

Hypotheses:

1. Loan size growth is key risk in Cambodia2. Refinancing is riskiest part of loan size growth

Competition via refinancing

Lender 1

Lender 2

And in Cambodia, usually:

Lender 2 = Lender 1

Loan 2

Loan 1

1st trimester 2nd trimester 3rd trimester

Refinancing: measuring time risk

Refinancing: measuring size risk

Loan 1 Loan 2

Proposed Limits for RefinancingCurrent lending distribution

Max level with proposed limits

Ø 18% reduction in current disbursements, all at the highest refinancing risk level

Time Size <=110 >110 >120 >140 >160 >180 >200

1st trimester19%

2nd trimester21%

10%

3rd trimester

Time Size <=110 >110 >120 >140 >160 >180 >200

1st trimester1%

2nd trimester30%

10%

3rd trimester

CBC Lender Guidelines Dashboard

Next Steps

• Revise dashboards to include matrix and industry averages so that MFIs can see where they stand• Encourage social investors to collect dashboards during monitoring

visits and to have a dialogue with investees• Discuss with SMART Campaign on how to include such risks in

upcoming certification renewal • Keep regulators updated on the trends• Lenders to slow growth

A new way forward for self-regulation?

Continuously update on

project outputs

CBC providing dashboard to

regulator

Encourage regulator

engagement

Social investors

MF association

Oversight by interested

stakeholders

Credit bureau

Independent monitoring

Loan-to-income ratioRefinancing

matrixMultiple

borrowing

Clear indicators to monitor

Loan size growth

RefinancingMultiple

borrowing

Identify key risks

Thank You!





• 13.00-14.00: Lunch









Assessing social & environmental performance of SME finance institutions

ObjectiveMap the relevance and applicability for SME finance of the UniversalStandards (SPTF), investors’ due diligence tools and other frameworks.Identify possible opportunities for SME tailored analysis. Consolidatethe information available on how to evaluate social &environmentalperformance of SME finance institutions.

Source5 MIVs, 3 DFIs, MFR data, Universal Standards, Cerise SBS and IRISmetrics.

Timeline2017-2018. In person meetings at: SPTF 2017, SAM 2017, EMW 2017,SPTF 2018, SPTF SIWG 2018.

26

Assessing social & environmental performance of SME finance institutions

27

# Activity Where1.1 Kick-off meeting with investors to collect feedback on their priorities, preferences, concerns SPTF1.2 SME literature review, collection and review of ESG SME finance tools publicly available -1.3 MFR SME assessments review: analysis of social ratings of SME finance FSPs, FGD with MFR analysts -1.4 Analysis of 200 SME clients survey conducted by MFR in 20 Countries (profile typical SMEs financed) -1.5 Investors due diligence review: NDAs signed with investors, one-on-one calls, documents and tools -1.6 Interim meeting to share the initial findings SAM, EMW1.7 Processing the information and data collected -1.8 Draft paper (Apr 2018) -1.9 Feedback period: share draft paper, collect feedback of participants, e-MFP and SPTF -1.10 Feedback meeting with investors on the draft paper SPTF1.11 Integrate feedback -1.12 Final paper, edit and publish -1.13 Disseminate the paper results EMW, SPTF2.1 Identify the most appropriate solutions to overcome the gaps highlighted in phase 1: adapt the

existing indicators, introduce new ones to complete the SME assessment add-on for investors-

2.2 Draft the list of indicators for the SME module and share it with investors for feedback -2.3 Incorporate investors’ feedback to the draft the list of SME indicators -2.4 Incorporate the lessons learned from the test to the list of SME indicators (Dec 2018) -

Preliminary findings

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• Gaps in E&S assessment tools forinstitutions serving very small and smallenterprises (ofterupscaling MFIs)

• In this segment, high level guidance (e.g.E&S risk management systemproportional to risks and affordable byticket size) may be useful cause majorityof FSPs are yet to build and E&S systems.The general guidance should then betranslated into a customized ESG riskmanagement system (sector, geo, SMEsize)

• It may be beneficial and sustainable forFSPs serving very small and smallenterprises to manage E&S risk atportfolio level, with individual analysisreserved to high risks only.

Segment Employees AssetsSmallandvery small 5-45 <3MUSDMediumenterprises 50-250 3-25MUSD

Thanks

29

Lucia Spaggiari, Business Development Director, MicroFinanza Rating

mailto:[email protected]





• 13.00-14.00: Lunch









31

• Initiative funded by CDC Group to discuss current practice of investors in evaluating fintech investments – what practical tips can experts share with investors since standards don’t yet exist?

• SPTF as coordinator – based on Social Investor Working Group demand and research for evolution of the Universal Standards

• 7 webinars – 2 held in 2017, rest to take place in 2018

• For investors, driven by investor input

• Featured speakers - drawn from key investors and initiatives working on these issues (e.g., Smart Campaign, Helix/MicroSave, CGAP, CFI, GSMA, UNCDF)

• Complementary to IFC/Goodwell initiative to develop “Investor Guidelines for Responsible Digital Finance”

• For more info https://sptf.info/working-groups/investors/spm-and-fintech

SPTF and CDC fintech webinar series for investors: Overview

https://sptf.info/working-groups/investors/spm-and-fintech

32

• Key thoughts emerging from webinars conducted:

▫ Fintech investments: Evaluating Risks and Value to Clients

▫ Fintech investments: Evaluating Repayment Capacity Analysis

• What topics would you want to make sure are included in the webinar series?

SPTF and CDC fintech webinar series for investors: Discussion

Customer experience and Protection with Digitalization and Fintech

February 19th 2018

Fintechs will adequately protect clients when:

Practical Know-How

Measurement and

Information Systems

Rules and Incentives

Will and Commitment

Fintech Community of PracticeMembers• Buhle Goslar, Jumo• Yoni Blumberg, Tala • Paul Randall, CreditInfo• Luca Giacopelli, PlugintheWorld• Wayne Hennessy-Barrett, 4G • Joffre Torien, FINCA • Get Bucks • Schan Duff, JUVO• Carol Caruso, Bloom Impact • Rohit Garg, SmartCoins• Stanley Munyao, Musoni• Ross Task, Nobuntu

Topics for Discussion• Transparency • Complaint Resolution • Sales and Marketing • Client Data Privacy and Security • Underwriting and Capacity to Repay • Influencing third party partners • Responsible Agent Management • Collections Practices

Smart Campaign Standards For

Fintechs

Donor Requirements

for Fintech Grantees (i.e.

USAID)

Investor Requirements

for Due Diligence (i.e.

IFC and Goodwell)

Example: Mobile Credit Ø All digitized credit decisions, fund transfers, marketing

Ø Big data informs credit decisions, product tailoring

Ø Rapid processing, short tenure

Ø Escalation from nano-loans, no collateral

Ø Used for consumption, emergencies

Sources: BIG DATA, SMALL CREDIT The Digital Revolution and Its Impact on Emerging Market Consumers. OmiidyarThe Proliferation of Digital Credit Deployments. CGAP

Fintech COP: guidelines on adequate transparency and complaints management

Guidelines for Investing in Responsible Digital Finance

Transforming Global Industry Principles into Action

SPTF Investor Meeting - India

February 19, 2018

“

”

As investors in inclusive digital financial services, we commit to adhering to, and promoting the Guidelines for Investing in

Responsible Digital Finance -- aligned with the G20 High Level Principles of Digital Financial Inclusion --

Objective: as Signatories, we will operationalize relevant global practices, by self-subscribing and implementing

investor action through our investments in DFS

Overview of Investor Guidelines (Part I)Guideline 1: Promote Responsible Investment in Digital Finance

Guideline 2: Manage Risks Comprehensively with Growth of Digital Inclusion

Guideline 3: Foster a Proportionate Legal and Regulatory Framework

Guideline 4: Facilitate Interoperability and Infrastructures for DFS Ecosystems

Guideline 5: Establish Customer Identity, Data Privacy and Security Standards

Guideline 6: Promote Fair and Transparent Pricing

Guideline 7: Improve Disclosure of Terms and Conditions for Customers

Guideline 8: Enhance Customer Services for Problem Resolution and Product Innovation

Guideline 9: Prevent Over-indebtedness, Strengthen Digital Literacy and Financial Awareness

Guideline 10: Track Progress to Mitigate Risks and Expand DFS Opportunities

Potential Actions and References (Part II) – Global industry standards adapted to investor operations, promote or support as relevant with investees

Engagement to Broaden Investor Awareness and Collective Outreachu Nov 2016: Formation of concept with Goodwell and IFC

u Feb 2017: Core Working Group formalized with early drafting

u Mar 2017: Meeting in WDC for initial first draft of Investor Guidelines

u Apr 2017: Meeting in Berlin for revised draft preceding Responsible Finance Forum (RFF) and proposed concept shared at RFF and G20/GPFI meetings

u May to Aug 2017: Expanded investor group, consultations, webinar/confcalls

u Aug to Oct 2017: Investor Guidelines revised and distributed for comments

u Nov-Dec 2017: Revised – 10 Investor Guidelines + Potential Actions

u Jan-Mar 2018: Signatory outreach, comments, internal investor approvals

u Jun 2018: Inaugural launch of Investor Guidelines

u Throughout 2018: Ongoing signatory outreach / rollout, DD tools, cases, lessons

For more info

GOODWELL INVESTMENTS

u Wim van der Beek ([email protected])

u Els Boerhof ([email protected])

INTERNATIONAL FINANCE CORPORATION

u Margarete Biallas ([email protected])

u Lory Camba Opem ([email protected])









• 13.00-14.00: Lunch









Data PlatformValidated data on Financial Service Providers’ (FSP) pricing, SPI4 and

ESG

FinFuture

FinCredit

All Network

Client over-indebtedness score

USSPM 6

USSPM 4

USSPM 2

Universal Standards score

Fund

Model

Free: visibility, guide, consistency check, overview report.Service: training, validation, award.

Subscription

Service: peer group data, tailored reports, APR model

DFIs, Foundations

Regulators

Standard setting bodies

MIVs

Research institutes

Users

Steering committee: SPTF, SMART, Cerise, MFT, ADA,

MIMOSA

Advisory board: AFD, Sida, BRS,

PPI

Data

Rating agencies

MIVs and DFIs

FSP networks

Cerise

Individual FSPs

Manager: MicroFinanza Rating,

CERISE (SPI4)

Data providers

SMART certif. & assessment

III Ongoing 2020

II Start-up 20182019

0 Concept 2016√

I Pilot 2017

Develop database

Develop architecture

Develop analysis functions

Timeline

√

Thanks

Lucia Spaggiari, Business Development Director, MicroFinanza RatingCécile Lapenu, Executive Director, CERISEData Platform info



http://www.microfinanzarating.com/index.php?option=com_content&view=article&id=509&Itemid=237&lang=en





• 13.00-14.00: Lunch









As impact investing continues to grow, several initiatives are working to help investors navigate the different investment opportunities

SPTF is coordinating efforts with these initiatives to help shape the tools and resources being developed on financial inclusion

51

Why is SPTF involved and how is this relevant to you?

52

• Share the experience of financial inclusion ▫ Collaboration, working towards common objectives▫ Development and implementation of standards, common audit and monitoring

tools, advancement of outcomes management work, etc

• Financial inclusion is a large sector of impact investment and can help pave the way of less-mature sectors – seen as “example”

• Ensure coordination with broader impact investment initiatives – as prioritized by many of you

• Opportunity to shape frameworks and tools that can be used by asset owners and investors throughout the broader investments sector

WEF Effort: Accelerating Impact Measurement and Management

53

AG1 and 2: Evidence &

CasesTranslate

and synthesize

the existing evidence for

making more informed

investment decisions

AG3: Stakeholder

VoiceCapture the voice of all

those who are affected by the

impact investment/

activities of an organization

AG4: Conventions and NormsBuild on and amplify reach

of a shared convention for IMM based on the consensus

emerging under IMP

AG5: Resource

HubConnect users

to appropriate

tools, techniques,

and resources in a structure

related to norms

AG6: Training &

Capacity BuildingCreate a training

program to build

capacity within

organizations

AG7: Training &

Safeguarding Integrity

Explore inclusive ways to safeguard and maintain

integrity of measurement

and management

practices

20182017

Led

byO

verv

iew

The WEF effort brought together the work of many initiatives to ensure coordination

GIIN: Navigating Impact (WEF AG1-2)

• Objective: Provide a resource for investors to help select evidence-based impact strategies and aligned metrics

• Aligned to the 5 dimensions of the IMP

• Investment themes being developed

• SPTF has partnered with the GIIN to develop the evidence-based impact strategies for financial inclusion

• +38 collaborators (investors, experts in IMM and other specific areas, academics, etc.)

• For more info https://navigatingimpact.thegiin.org/54

https://navigatingimpact.thegiin.org/

GIIN: Navigating Impact • Impact strategies prioritized by the group for development

• Each strategy includes: overview (5 dimensions), link to SDGs, illustrative case, evidence maps, common metrics, tools

• Those interested in participating contact Leticia Emme• Additionally, in 2016, SPTF worked with IRIS (GIIN) and GIIRS to align

metrics among the different tools

Potential strategy/impact objective

1. Improve access to responsible financial services for historically underserved populations 2. Increase responsible and productive use of financial products and services3. Help low income populations build assets and mitigate risks4. Support creation of quality jobs and foster economic development5. Enhance women’s economic empowerment 6. Improve rural prosperity 7. Incerase access to renewable and clean energy

Prioritized

If time allows

55

56

• Objective: provide guidance on stakeholders’ engagement so that practice can become part of normal business operations• Why: good SE practice not

common or consistent• Key to understand extent to which

impact and value are being created – effect on people & planet• Expert group composition: ~20

organizations, +20 experts in different areas (including SIWG members)

SPTF: Guidance on engaging all affected stakeholders (WEF AG3)

57

• Guidance and practical examples• Refers to all those significantly affected (not just end-client)• Work has been integrated into other ongoing initiatives (IMP) and in

process of providing input to many others (BIA, Toniic, Feedback Labs)

5 Step Stakeholder Engagement Cycle

SPTF: Guidance on engaging all affected stakeholders (WEF AG3)

IMP: Setting Shared Fundamentals (WEF AG4)

58

• Objective: Establish practice of IMM as a norm• Gathered input from +700 organizations• Defined 5 dimensions of impact• SPTF participated of huddles, and integrated work on SE engagement

into IMP• Currently several initiatives and investors are working to align their

approaches to the IMP

GIIN: Impact Toolkit (WEF AG5)

59

• Objective: Provide an open resource to help investor find appropriate IMM tools

• Under development• SPTF and CERISE have submitted resources, guidance, tools for

Financial Inclusion (Universal Standards, Implementation Guide, SPI4, etc)

UNPRI: Impact Investing Market Map

• Objective: Provide a resource for investors to help identify investment opportunities (companies that generate impact) in one of 10 thematic areas

• SPTF chairing consultation process on Inclusive Finance• Market Maps provide an overview of how to identify companies

in each thematic area, what conditions, criteria, standards they must meet, and point to common metrics to assess the performance of investments/companies for the thematic area





• 13.00-14.00: Lunch









Thank you and Next Steps

62

• Stay tuned for news on upcoming webinars (fintech, Navigating Impact, etc)

• Next in person meeting most likely to be held in June in Luxembourg –more details coming soon

• Contact us with at any time:• Christophe Bochatay: [email protected]• Anna Kanze: [email protected]• Leticia Emme: [email protected]




social investor meeting on responsible inclusive financesocial investor meeting on responsible...

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