What’s Working and What’s Not in Social Performance Management?

Has social performance management (SPM) taken root in Latin America, or does it just exist on a superficial level? This was the question that opened the debate at the SPTF Annual Meeting’s plenary session on the state of social performance management in Latin America. The panelists, from Brazil, Mexico and Nicaragua, discussed the advances in SPM in the region and set the stage for the rest of the conference, providing context for important issues in the sector such as the future of financial services in Latin America, regulation, technology and social outcomes. 

According to SPTF data, the average level of SPM implementation in Latin America, as measured by the SPI4 social audit tool, is around 70%, compared with the global average of 60%. Iván Gutiérrez, of the Central American microfinance network REDCAMIF, argued that the most developed cases of SPM come from those institutions which are convinced that a balance between social and financial objectives is key for their organization. He noted that oftentimes the challenge is not about getting institutions to understand why they should implement SPM, but how. The Universal Standards and the SPI4 evaluations offer a practical guide for responding to this challenge of “how,” he added. 

SPM and sustainability: Do they go hand in hand?

The biggest test of the advantages of doing business with a double bottom line comes during moments of regional crisis - such as those caused by over-indebtedness, or losses in the cattle and cafe sectors, said Gutiérrez. This is when it becomes clear that the institutions which are better able to manage the crisis are those who understand that the best business practices require greater client loyalty and a balance between social and financial goals. Social performance management can reinforce the sustainability of an institution.

What you can’t measure, you can’t control. What you can’t control, you can’t improve.

Guillermo Colín García, AMSOFIPO

National and regional networks, as well as regulators in the region, are increasingly promoting or requiring the use of SPM audits to evaluate the level of SPM implementation. As Guillermo Colín García of the Mexican network AMSOFIPO indicated, “What you can’t measure, you can’t control. What you can’t control, you can’t improve.”
 
Isabel Baggio, of the Brazilian microfinance network AMCRED-SC, shared that the Brazilian organizations which have been evaluated fall in line with the regional average of 70% implementation of SPM, and that the network will continue to monitor outcomes and work towards improving in the areas identified by the SPI4 tool. 

In Nicaragua, the country’s Microfinance Law includes SPM as an important piece of the law, not as a way to impose more restrictions on microfinance institutions but rather to help stimulate market competition with better conditions for its development. Gutiérrez pointed to the case of Nicaragua, where this law was created only two years after the No-Pay movement took hold, as a great example of how regulatory frameworks can be changed to incorporate SPM. 

Upcoming challenges

The panelists indicated that there are still several challenges that will need to be confronted in order to continue the implementation of social performance management in the region, including:

• Addressing the lack of financial infrastructure, especially in rural areas, and improving outreach to women;
• Ensuring that savings and credit services only be offered by regulated institutions;
• Providing financial education that promotes the responsible use of financial services;
• Producing research data and follow up on the results of policies and programs, as monitoring continues to be a challenge for the region.
• Further promoting exchanges between financial service providers, between the biggest and the smallest institutions, to take advantage of the region’s culture of sharing information.

To conclude, the panelists agreed that the Universal Standards (and the implementation guide) are a great help for the “how to” of improving and measuring SPM, an excellent starting point for any institution that is looking to achieve a balance between social and financial performance.

Throughout the SPTF Annual Meeting, several institutions presented on measurement and client outcomes. We invite you to explore the following presentations (in Spanish) to learn about some of the best practices in the region: Fondo Esperanza, Chile; IDEPRO, Bolivia; y ADRA, Perú.

The Microfinance Gateway and the Portal de Microfinanzas were media partners for the Annual Meeting of the Social Performance Task Force (SPTF) held in Mexico City from 6-8 June.