Certified MFIs Can Report Results on the Microfinance Information Exchange . ESAF Microfinance is the first MFI in India to become certified in the pilot project.
Grameen Foundation yesterday launched a certification program that will officially recognize organizations complying with new Standards of Use for its poverty-assessment tool, the Progress out of Poverty Index™ (PPI™). Through this certification, microfinance institutions (MFIs) and other PPI users will receive a seal of approval signaling that they are using the tool correctly. In addition, certified MFIs will be recognized on the Microfinance Information Exchange (MIX), the primary source for published financial and social performance data on MFIs across the globe.
“Grameen Foundation firmly believes that microfinance institutions whose mission is focused on reducing poverty must rigorously measure their social performance, along with their financial performance. We are pleased to collaborate with the MIX in working toward this goal,” said Alex Counts, president of Grameen Foundation. “We are encouraging MFIs that are seeking to measure and improve their anti-poverty outcomes to get certified, as this will ensure they are using the PPI correctly. Use of the PPI by leading MFIs worldwide has shown how it can lead to better management decisions, while giving investors and donors reliable data for evaluating their commitments.”
“This certification process will verify that the PPI data MFIs are reporting to the MIX have been collected by following a proper methodology, which has been audited by Grameen Foundation,” said Micol Pistelli, manager of the MIX Social Performance Program. “MIX is coordinating with Grameen Foundation to ensure that the MFIs that have received a certification for the validation of the PPI will be visible on MIX Market starting from January 2011.”
The new process, the first of its kind for poverty-assessment tools, is designed to strengthen the use of the PPI by ensuring the accuracy of its results for multiple stakeholders, including PPI users, technical assistance providers, and such decision-makers as investors, donors and rating agencies. Additional information about the certification, including the application process, is available at http://www.progressoutofpoverty.org/certification.
The official roll-out of the certification program follows the earlier launch of the PPI Standards of Use, which were endorsed by key microfinance networks and investors, including Oikocredit, Catholic Relief Services and Plan International Asia. FINCA Peru and ESAF of India were the first two MFIs to be certified through the pilot process. Both were certified in two of the three levels of use: Basic and Advanced. The third level, Tracking Over Time, is applicable to MFIs that have made more than one PPI collection over time. Grameen Foundation expects to certify more than a dozen MFIs during the next six months.
“We were pleased that our use of the PPI met all the standards for Basic and Advanced certification,” said Benita Mathew, manager, Research and Development, ESAF Microfinance. “The process was systematic, direct and inclusive, which touched all the components of operations, thus giving an overall perspective of the process. In addition, the process showed us specifically not only where our program was strong, but also where we could improve.”
To conduct certifications globally, Grameen Foundation is using a cadre of volunteer professionals selected through its Bankers without Borders™ initiative. Each volunteer will meet with an organization’s operational and management staff during a four-day period to assess its compliance with the Standards of Use.
The Progress out of Poverty Index™ (PPI™) is a country-specific assessment tool that helps institutions measure outreach to the poor, monitor changes in economic well-being of clients and provide data that helps managers improve the effectiveness of programs and services.. Building on the concept of Grameen Bank’s 10-Point System, the PPI was commissioned by Grameen Foundation, in collaboration with Consultative Group to Assist the Poor (CGAP) , Ford Foundation and Microfinance Risk Management L.L.C. Launched in 2005, the PPI is now being used by 89 institutions worldwide. For more information, please visit progressoutofpoverty.org.