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60 decibels unveils a definitive assessment of the social impact of microfinance

The report confirms that MFIs promote women’s economic empowerment. Microfinance institutions often focus on the most vulnerable populations, including women, people living in rural areas, and people living in poverty. Among the customers surveyed by 60 decibels67% are women and 30% live below the $3.20/day World Bank Poverty line. More than half of the clients represented in this research (58%) are accessing a loan for the first time through the microfinance institution. Women and low-income clients are also more likely to borrow for the first time in microfinance.

This research provides new evidence that supports the basic tenet of microfinance: that clients can use loans for productive purposes in their businesses and that business improvements will result in improved household welfare. Furthermore, while the majority of clients report an improvement in their quality of life as a result of the MFI loan, a good third of clients place themselves in the top category of “very improved” quality of life, a strong endorsement that these marginalized clients feel their lives are changing for the better through their access to microfinance.

Microfinance has come under scrutiny time and time again because there is a risk that vulnerable populations will be hurt, not helped, by the provision of loans. However, 60 Decibels found that 3 out of 4 clients say their loan repayment is “not a problem” and that they are “totally ok” with understanding the terms and conditions of their loan. In fact, across all regions, more women than men agreed that repaying their loans was “not a problem” (73% of women versus 67% of men). This result is consistent with the fact that women borrowers traditionally show higher repayment rates than men. That said, the report also finds that 6% of borrowers say their payments are a “heavy burden,” and it’s important that microfinance takes steps to ensure these borrowers don’t take on heavy debt.

Access to microfinance loans helps borrowers withstand economic shocks – such as emergency spending – although women remain more vulnerable. According to Findex, 1 in 3 clients in the 60dB index of MFIs would struggle to cover an emergency expense of 1/20th of gross national income per capita, compared to 1 in 2 globally. 70% of clients credit the MFI with helping them with major expenses. 37% of female customers would find it “very” or “somewhat” difficult to finance an emergency expense, compared to 26% of male customers.

Sasha DichterCEO of 60 Decibels, said: “MFIs play a vital role in improving the well-being of clients in developing countries. However, until now, their managers and investors have not been able to see what “good” social performance looks like, or which MFIs create the best results. By listening directly to microfinance clients around the world, with a standard approach that allows for comparison, we empower these investors and managers to better deliver social impact and target improvements where they are needed most.

“The 60 Decibel Microfinance Index provides unequivocal evidence that MFIs can change lives for the better. More importantly, it shows what performance benchmarking covering all microfinance institutions, everywhere could look like – offering everyone with clear, actionable information to go from good to great.”

The 60 Decibel Microfinance Index is backed by:

Sponsors: Tipping Point Fund on Impact Investing & Ceniarth, LLC.

Founding partners: Accion, Advans Group, BRAC, ECLOF, FMO, Fundación Netri, Global Partnerships, Grameen Crédit Agricole Foundation, Kiva, LeapFrog Investments, MCE Social Capital, Nordic Microfinance Initiative, Opportunity International, Pro Mujer, ResponsAbility, Symbiotics, SPTF, WaterEquity, Women’s World Bank (WWB).

About 60 decibels

60 decibels is a global, technology-based impact measurement company that brings speed and repeatability to social impact measurement and customer insights. We provide true impact performance benchmarks, enabling organizations to understand impact against their peers and set performance targets. We have a network of over 850 researchers in over 70 countries and have worked with over 800 of the world’s leading impact investors, companies, foundations, corporations, NGOs and public sector organizations. 60 decibels makes it easy to hear the people who matter most.

Contact

Robin Grainger / Victoria Medina
Fourteen Forty Communications
[email protected]
[email protected]

Madeleine Copp / Lindsay Smalling
60 decibels
[email protected]
[email protected]


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SOURCE 60 Decibels