Bosnia-Herzegovina

Sean Kline
Board Member
sean@prizma.ba

Scoring Change at Prizma

A Social Performance Initiative

7th ANNUAL CONFERENCE OF MICROFINANCE INSTITUTIONS

"Thinking About The Future - Strategic Choices For Microfinance”
May 2004 • Warsaw, Poland
 Objectives

Increase depth
 Environment in which poor un- and under-served

Improve service quality

 Environment of growing competition

Measure and strengthen impact

 Environment of poverty and growing inequality
 Mission is ‘Anchor’
Guides All Work

Strengthen Impact

Vision
To be widely
recognized Improve the well-being
for giving
people Increase depth
choices to
of large numbers of
improve
their lives poor women and their families
and building
committed
respectful
by providing long-term access to
relationships
quality financial services

Improve service
quality
 Assessing Poverty
Demonstrate Who We Seek (and Claim) to Reach

Measure poverty status of clients

 New and active
 Those leaving the Institution

Measure change in status over time

 By score
 By indicator
 Relative to other performance indicators
(e.g., dropout, portfolio quality, etc.)
Poverty Scorecard As Tool
Indicator—Question—Range

Prizma Poverty Scorecard

Poor and Very Poor 0-2 • Vulnerable Non-Poor 3-4 • Non-Poor 5+

Indicator 0 1 2

What is the education

Education level of female household ≤ Primary > Primary
head/spouse/partner?

Rural/Peri Urban
Residence Where is residence?
≤ 10,000 > 10,000

Household Size What is household size? ≥5 <5 —

Does household possess

Household Assets a stereo CD player?
No Yes

Transport Does household possess

No Yes
Assets a transport vehicle?

On average, how often Rarely Sometimes Often

Meat
does household consume 0-2 3-5 6+
Consumption meat each week? times/week times/week times/week

On average, how often Rarely Sometimes Often

Sweets does household consume
0-2 3-5 6+
Consumption sweets with main meal
each week? times/week times/week times/week

Poverty Status Score (0-9)

 Scorecard Development
Identify Indirect Ways to Identify the Poor

Collect data to identify indicators

 Qualitative
 Focus group discussions with poor women

 Quantitative
 UNDP early warning data
 CGAP Poverty Assessment
 National omnibus poverty survey
 Living Standards Measurement Survey (LSMS)

Identify most robust indicators

 Scorecard Development
Use Criteria to Narrow Indicators to Select Few

Essential Critically Important Desirable

• Strong proxy for risk of • Simple and clear • Already collected
being poor in a given
• Easy to collect • Can serve as means of
context
• Easy to verify targeting
• Non-income (indirect) • Can be leveraged for
• Universal applicability (all other institutional needs
regions, rural and urban, (e.g., credit scoring,
business and non- marketing, etc.)
business, etc.)
• Sensitive to change
• Durable—robust long-term
• Can be asked of clients
without intimidation or
offense
 Scorecard Development
Define Scorecard and Data Collection

 Define range for each indicator

 Develop simple scorecard
 Determine means and frequency of data
collection
 Use existing loan application form
 Collect data at entry and each cycle for every client
 Scorecard Development
Make Scoring Routine…‘
Routine… Hidden’

 Integrate into MIS

 Routine data entry
 Entered like all other portfolio data
 Composite score automatically calculated by MIS
 Score can be reported and filtered by other variables
 Dropout, crossover, branch, municipality, loan officer, product,
credit score, loan cycle, repayment, PAR, loan use, etc.
 Scorecard Development
Report (and Verify) Data for Use by All

 Ensure clear, regular reporting

 For all Board and staff…and key external stake holders

 Ensure quality control

 Internal auditor—LOT Quality Assurance (LQAS)
 External auditor—sample and reporting by internal auditor
 Reported in Auditor’s Management Letter
 Scorecard Development
Demonstrating Replicability

 Itemize development costs

Estimation of human resources to develop scorecard (working days)
Prizma
Prizma MFC MFC
Primary Steps front-line
senior staff TA analyst
staff
1. Agree Rationale 5 4
2. Identify data sources 5
3. Develop indicator pool 7 4
4. Narrow pool to select few 2 2 3
5. Define measures and ranges 2 6 22
6. Develop simple scorecard 2 8 12
7. Develop cut-off points for
2 6 12
categories
8. Determine frequency of
1 2 1
collection
9. Develop reporting formats 2
10. Determine means of quality
3 4
 Document cost-effectiveness
control
Total 31
(Small Enterprise Development Journal)
16 24 46
 Document Process (see MFC Focus Note #4)
 Scorecard Use!
Mine Data to Improve Social and Financial Performance

 Monitor depth of outreach

 Branch, product, loan officer, etc.
 Adjust service to reduce drop-out
 Affirm continued move down market
 Shape marketing to core clientele
 Staff incentives
 Etc.

 Monitor progress towards mission

 Change in clients’ poverty status over time
 Compelling Features

 Built by and for practitioners

 But…can serve external stakeholders’ needs
 Embedded in existing operations
 Application, MIS, reporting, internal audit
 Complements other institutional needs
 Strategic positioning, marketing, product development…
 Approach adaptable to other specific contexts
 Accurate and credible
 Verifiable
 Cost-effective
 Thank You!

Sean Kline
Prizma Board Member
sean@prizma.ba
www.prizma.ba

Senior Technical Advisor - Microfinance

Freedom from Hunger
skline@freefromhunger.org
www.ffhtechnical.org