176(11-12) MIX Understanding MFIs Report(Eng) 11-08-11

7/29/2019 176(11-12) MIX Understanding MFIs Report(Eng) 11-08-11

1/13

Written by:Bryan Barnett, Ph.D., Consultant

Understanding MFIs Reporting Burden

A study of the reporting burden for micronance providers

in sub-Saharan Africa

Micronance Information Exchange

Understanding MFIsReporting Burden


2/13

MicroBanking Bulletin August 2011 Page 2

Table of Contents

Acknowledgements........................................................................................................................ 3

Executive Summary ....................................................................................................................... 4

Introduction ................................................................................................................................. 5

Methodology 5

The Reporting Process 5

I Collecting Data 6

II Aggregating the Data 7

III Extraction and Summarization 8

IV Consolidation and Formatting 8

V Delivery 10

VI Improving the Reporting Process 10

Conclusion ................................................................................................................................. 13


3/13


Acknowledgements

A special thank you to Audrey Linthorst (MIX) for support of the data collection efforts and review of the report

Thanks to Normand Arsenault, Tiphaine Crenn, Clara Fosu and Cyrus Ngoma for fostering the relationship and conducting

interviews with the participating MFIs

We would like to extend a special thank you to the MFIs in Sub-Saharan Africa that took part in our research study

We would also link to thank The MasterCard Foundation, who is committed to strengthening the micronance industry,particularly in Africa


4/13


Executive Summary

To better understand the burden that external reporting places on MFIs, MIX conducted a research study focused on Sub-

Saharan Africa The study included interviews with MFI executives, an online survey, and narratives collected from MF

staff involved in report preparation It focused especially on the collection and management of data related to loan/

savings portfolios as well as accounting and nancial data, and addressed reports to regulators, funders and investors,

and networks or associations. Key ndings of the study include:

Computer systems for portfolio management and accounting are widespread, with commercial off-the-shelf

systems now predominating over custom built applications

While many specialized applications combine portfolio management and accounting functions, many institutionsstill use different applications from which data must be merged and manually reconciled for reports

Most institutions use multiple methods to move data from branches to home ofces, with more than a thirdrelying on some combination of email and hand delivery Even institutions which have fully networked real-time

systems in place often do not have these systems in place at all branches

For slightly more than half of respondents, automated reports from IT systems were no more than a startingpoint in the preparation of reports, which required substantial additional effort to nalize.

Our data suggest that half of all respondents are preparing more than 28 separate reports annually, with many

preparing substantially more than that

All stakeholders tend to be interested in the same information in their reports, which must nevertheless besubmitted in varied formats, which accounts for a substantial part of the time spent on report preparation

Respondents reported that on average 3-5 people are involved in the preparation of stakeholder reportsresulting in a conservative estimate of 57 person-days of effort expended annually on report preparation for

the median MFI (or roughly one-quarter of a full-time employees workload)

Email is the dominant method of submitting reports, while paper forms delivered by post or hand delivery arestill a signicant percentage, particularly for reports to regulators.


5/13


Introduction

It is widely accepted that better reporting of operational

and nancial data by micronance institutions would

benet both the institutions themselves and other

stakeholders Ask almost any MFI, though, and they will

tell you that reporting is a real burden, especially when

many have to prepare twenty or thirty reports a year Of

course, no one is going to stop requesting reports merely

because its a burden for the MFIs If the burden could bereduced though, it would increase the both the quality and

timeliness of reports while allowing MFIs to devote more

resources to building their business

With this goal in mind, MIX set out to better understand

the reporting process from the MFIs perspective The

study focused on sub-Saharan Africa because reporting

among institutions there is less consistent than other

regions, suggesting that the challenges of reporting are

particularly signicant. As shown in Figure 1, our research

looked at four types of information commonly reported

and the three groups of external stakeholders that

most commonly receive reports1 We placed specialemphasis on the two important categories of information

that all MFIs must track and report (abbreviated as

follows):

Loan/savings portfolio data (abbreviated as L/Sin this report)

Financial/accounting data (abbreviated as F/A inthis report)

As Figure 1 shows, regulators, funders and investors,

and networks and associations, all requested similar

information, with regulators and investors somewhat

more interested in nancial and operational data and

networks or associations relatively more interested in

social performance data But overall, the differences

are not that great All external stakeholders tend tobe interested in the same types of information Inthis report, we pay relatively little attention to audited

nancial statements because they are prepared and

delivered by independent auditors and therefore are not

prospects for adjustment or improvement All other types

of reports (and the processes that generate the data

behind the reports) are considered here

Methodology

For our study we conducted a series of interviews with

senior staff at a representative group of institutions,

followed by an online survey The survey was sent to

over 1000 contacts at MFIs across the continent and

received 160 responses Finally, we asked a number of

staff engaged in preparing reports to provide us withnarratives describing the process within their institutions

The result is a composite picture compiled from these

sources

The institutions in the online survey were not a random

sample They were nonetheless selected to be generally

representative of different types and sizes of institutions

across SSA Results, therefore, are only illustrative But

taken as a whole, the results offer a good overall picture

of the challenges and opportunities for improving the

reporting process

Responses were roughly evenly distributed among small

medium and large-scale MFIs, with a similar number

of unknown either due to non-identication by the

respondent or lack of data on outreach

At least 75% of the responses were from MFIs that do not

maintain proles on MIX Market. The survey distribution

list covered some 600 institutions, including MIX Market

participants and non-participants

The survey was delivered in English and French for a two-

week period in each case The English-language survey

received 93 responses, while the French version received67 responses

The Reporting Process

Submitting a report to an external stakeholder is the nal

step in a complex process in which data on customers,

transactions, MFI personnel, and the like originates with

customers and staff and moves through the organization in

a series of ve stages.1 In charts throughout this report percentages often total to more than 100%

because respondents selected multiple responses to the question

0%

Audited Fin.

Unaudited Fin.

Operations

Social Performance

What types of information do you report to external

stakeholders?

Networks Investors Regulators

20% 40% 60% 80% 100%

Figure 1: Types of Information Reported


6/13


1 Collection: Data is generated as clients areenrolled, loans disbursed, repayments made,

savings deposited or withdrawn, etc Crucially,

some data must be manually collected (such as

client proles and nancial history), while other

data is generated more or less automatically in the

course of processing loan or savings transactions,enrolling employees, etc

2 Aggregation: From the point of collection(normally interaction with a loan ofcer or teller)

data is entered into some form of record-keeping

system, possibly paper or spreadsheets, but most

often computerized portfolio management and

accounting systems (which may be combined in a

single application) This step also involves moving

data from branches to the head ofce.

3 Extraction & Summarization: Once gatheredinto one or more centralized repositories, data

are selected and rolled up into summary totals

or calculated ratios In principle, this process

can draw data from a single comprehensive

repository, but, in practice, data are often pulled

from multiple systems or sources, producing

several interim tallies

4 Consolidation & Formatting: The specic setof information required by each particular

stakeholder is then taken from interim reports

and consolidated into the specic report format

required by each stakeholder This necessarilyinvolves reformatting data, but may also involve

recalculation

5 Delivery: Finally, the completed stakeholderreport is delivered, by hand, by post, by email, or

by direct submission to a stakeholders website

In the pages that follow we look in more detail at each of

the ve steps outlined above in light of the information

gathered in our interviews and surveys with MFIs in Africa

with special attention to feasible changes that can make

the process more efcient and less burdensome.

I. Collecting Data

Most of the key business data in a micronance institutionoriginates with customers It often starts with paper records

used by loan ofcers to collect customer information or

record cash transactions At this stage, the greater concern

is not for the efciency of collection, so much as for the

accuracy of the information collected Pre-printed forms

and ledgers are virtually universal, but the opportunity fo

error is great, so substantial manual re-checking is typically

required before anything is entered into a computer The

initial manual verication and reconciliation takes place

at the branch, before the information is passed on to

intermediate regional ofces or the head ofce, and it

can take several hours a day depending on the caseload

of loan ofcers and the procedures required. Speeding up

this process frees up more time for loan ofcers to spend

serving customers, which translates into greater loan

ofcer efciency. But greater efciency should not come

at the price of accuracy or completeness of the data

Technology offers an obvious strategy to improve this

process Laptop computers are generally not practical in

the eld, but mobile phones, especially so-called smart

phones with the ability to run fully functional applications

have the potential to automate some of the paper process

and produce greater accuracy These phones are still not

widely available in much of SSA, but recent announcementsby RIM (makers of Blackberry phones) and others on the

planned release of lower-cost smart phones in Africa

suggests that these devices will soon come within reach

of MFIs2 Software makers will be eager to take advantage

Table of Respondents to Online Survey

# of respondents MIX market status

Scale Visible No prole (Unknown) Grand Total

Large 46 46

Medium 30 30

Small 45 45

(unknown) 6 12 21 39

Grand Total 127 12 21 160

2 See: Mobile Marketing Trends: Smartphones Conquering Africa?, retrieved

from http://internationaldigitalmarketing.com/2010/10/29/mobile-marketing-

trends-smartphones-conquering-africa/On 5/4/2011. Also http://www.brightstarcorp.com/news-room/press-releases/

brightstar-rim-africa/


7/13


of this opportunity and applications for the phones that

integrate with portfolio management and banking systems

will doubtless follow But for many institutions this willnot change life very much if the next step in the process

remains unchanged

II. Aggregating the Data

After data is collected or captured at the point of customer

interaction it has very little value, until it is pooled with

data from other customers and interactions As loan

application forms, collection sheets, cash receipts and the

like are gathered at branch ofces, they are assembled,

consolidated and passed on to the home ofce, where they

are further consolidated into various storage repositories

How easily this happens depends on telecommunications

and technology, either of which can be a challenge for

many MFIs

We asked respondents in our survey how they transmitted

both loan/savings (L/S) data and nancial/accounting (F/A)

data from branches to their head ofce. The combined

results are shown in Figure 2

While internet connectivity is nearly universal at head

ofces, the situation in branch ofces is often much

different As the chart shows, about one third of institutions

are using networked applications to transmit data in realtime Yet, email and hand delivery are nearly as common

Most important, nearly one in three institutions is usingmore than one method, with email and hand deliverybeing the most popular combinationThe lack of consistentuse of networked software applications (which deliver data

in real time) is only partly the result of poor connectivity

Many software applications require a separate license for

each user Deploying the software other than at the head

ofce or regional ofces is often too expensive. MFIs have

long wished for a change in the vendors business model,

and this may come about through the spread of so-called

SaaS (Software-as-a-Service) as internet connectivity

continues to improve For the moment, MFIs are forced

to be inventive and move data to the head ofce as best

they can

The situation described by Sinapi Aba Trust illustrates

the problem They cannot afford the USD 5,000 license

for Temenos eMerge at all branches, so they use it onlyat a limited number of anchor branches Data from the

remaining branches is recorded in spreadsheets and sent

to the anchor branches via email, where it is validated

(sometimes requiring phone calls to the originator) before

being entered into Temenos

One signicant consequence of the varied ways that data

travels to the head ofce is the time required for this to

happen Undoubtedly, this partly explains the variation in

frequency of transmitting data In our survey, nearly 40%

of respondents indicated that either loan and savings or

nancial and accounting data were transmitted to the head

ofce monthly. This is a very surprising result that invitesfurther investigation monthly transfer of information

makes rapid response difcult, at best. Interviewees

described instances where data were hand carried by

bicycle, requiring many days travel to reach the head

ofce. Under those circumstances monthly transmission is

understandable (if not at all desirable)

Though perhaps not quickly or easily, essential data does

invariably arrive at the head ofce where it is gathered

into one or more centralized les or repositories. In our

survey the vast majority of respondents report using some

type of computer software for consolidation

At one time many of these applications were custom

built, but as Figure 3 shows, today the majority of MFIsuse some type of commercial off the shelf (OTSapplication. This is signicant because these applicationsare much more likely to have robust reporting capabilities

Figure 2: How Data is Transmitted to the Head Ofce

0% 5% 10% 15% 20% 25% 30% 35%

Real time (Networked Application)

Email

Hand Delivery

Network & Email

Network & Hand Delivery

Email + Hand delivery

Network, Email & Hand Delivery

F/A Data L/S Data

Paper

Spreadsheets

Custom application

OTS application

0% 20% 40% 60% 80%

F/A Data L/S Data

Figure 3: How Data is Stored


8/13


3 In addition to the built-in reporting capabilities in many portfolio management

or accounting applications, there are separate specialized reporting applications

that provide enhanced capabilities and can be used with many common business

applications Crystal Reports or Pentaho (an open source reporting application)

are examples

4 As a consequence of this type of difculty, Adok Timo is moving to an

integrated system

which are a signicant advantage at this stage of

report preparation3 While there are now a number

of commercially available applications that combine

functions, a signicant number of institutions still useseparate applications for both portfolio managementand accounting information In our survey, 71% of thoseresponding said they used a single integrated package

for both accounting and portfolio management, while

another 29% use different applications (or perhaps a single

computer application combined with spreadsheets)

Where separate applications are used for portfolio

management and accounting, data are often moved

between them manually Thus, as described by Adok

Timo, their accounting system (Quickbooks) is not

integrated with the MIS system and the IT staff has to

print all accounting entries from the MIS and give it to

the accounting department for them to manually post4

Even where portfolio management and accounting are

managed in the same application, care must be taken

to insure that the two systems are synchronized As one

interviewee commented regarding their (integrated)

system, gures pulled from different reports sometimesdiffer. For example, the portfolio gure in the balance

sheet is different from that in the portfolio report

With the raw data gathered into one or more central

repositories, and discrepancies identied and addressed,

an MFI is in nally in position to begin creating reports to

stakeholders To turn raw customer and transaction data

into information that anyone can use, it must be sampled,

extracted and summarized As simple as it sounds, the

process occupies multiple people and substantial time

III. Extraction and Summarization

A report is nothing more than a summary of a selected subset

of all the data available. Reports are potentially innitely

variable depending upon different needs and preferences

MFIs compile a large number of reports annually, forboard members, regulators, investors, funders, networksand associations For each of these, the MFI must pull aselect subset of required data available from each of the

several systems mentioned above For those institutions

using specialized software packages, the process starts

with running one or more automated reports from these

systems As noted above, where separate software is used

for portfolio management and accounting respectively,these intermediate reports originate in different systems

and must subsequently be combined manually This, in turn,

requires verication that data is consistent between the

two systems, which must be determined through a manua

audit process, as noted earlier

Depending on the requirements of the stakeholder report

being prepared, data may have to be collected from other

sources as well, including audit reports, bank statements,

regulatory lings, human resource systems, or systems

used for tracking social performance What results is a

series of partial or intermediate summaries from differentsources that constitute the raw material from which a na

report will be constructed

IV. Consolidation and Formatting

With initial summaries and tabulations of data from any

required sources in hand, this information must then

be organized into the form and format required by the

specic recipient. In an ideal world, all the data required

for any stakeholder report would be housed in a single

repository and the process of preparing reports could be

almost completely automated

In reality, this is not the case today In our survey we asked

respondents to tell us how much they relied on automated

reports from portfolio management or accounting systems

The results are shown in Figure 4 Nearly half saidthat standard automated reports were mostly, if notcompletely, sufcient. But for slightly more than half ofrespondents, automated reports are at best a startingpoint, requiring additional work

The required forms and formats of external reports

vary widely and invariably require manual preparation

Data are consolidated from different sources andtabulated or summarized in the form required byeach stakeholder in what is perhaps the most labor-intensive phase in the preparation of external reports

10.1%

41.1%

40.3%

8.5%

Little or None - Manual

A Starting Point

Mostly sufficient

Sufficient

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Figure 4: How much Reliance on Automated Reports


9/13


In the words of the CEOof one MFI (that employs a very

advanced information system based on Microsoft Dynamics

software), their system does not meet the requirements

in that, although all data is available in it, it requires to

be pulled from the system and then prepared manually

to t into the template and forms required to report to

different stakeholders If this problem affects those with

very advanced systems, it can only be worse among those

with less sophisticated technology

Whatever effort is required to produce a single report, the

real impact of reporting is caused by the large number of

5 For this calculation we included only those MFIs that reported data for all

categories of stakeholders

reports that most MFIs are required to prepare annually In

our survey we asked MFIs to provide the total number of

investors and funders as well as the number of networks

or associations to which they submitted reports in the past

year We then applied these totals to the MFIs estimate

of the average frequency of ling to each category of

stakeholders For example, sending reports to 6 investors

and funders, on a quarterly basis, means an estimated tota

of 18 lings per year to this group of stakeholders. Applying

this methodology across all categories of stakeholderswe estimate that the MFIs in our survey are submitting

an average of 39 reports annually5 The median for this

was 28 reports annually, meaning that fully half of MFIs

reporting are estimated to be ling more than 28 reports

each year

Beyond just the total number of reports led, our survey

sought to gauge the amount of time actually spent

preparing reports after all data were initially aggregated

at the head ofce. Estimating the time required is difcult

though Asking respondents to estimate time spent on a

task for which they typically do not keep records is too

subjective, while precise time-and-motion studies are tooexpensive We have therefore followed a middle path to

arrive at an estimate, combining data from our survey

with some conservative assumptions based on interviews

and sector knowledge The survey asked respondents

about the number of reports they submit to each of three

external stakeholder groups: 1) regulators; 2) funders and

investors; 3) networks or associations. We also asked how

frequently (on average) each type of report is submitted

From these two gures, we can estimate the total number

of submissions made annually For example, reporting to

Estimating the Total Reporting Burden

A signicant majority of respondents suggested that at least three people were involved in report preparation generally,

with three to ve people being the most common. In our analysis of the survey results, we calculated separately

for each respondent the number of reports, frequency and number of people involved In all instances, where the

respondent indicated a range for the number of staff involved (for example 3-5 people), we use the lowest (ie, most

conservative) gure. Combining these different gures together resulted in an initial formula as follows:

[Number of stakeholders receiving reports] X [frequency per year] X [Number of personnel contributing to the report]

What was missing then was an estimate of the actual amount of time spent by each individual on preparing a single

report Here we are required to make an assumption, but one informed by conversations with MFI personnel ininterviews On this basis, we estimate that the average person involved spends perhaps one half to one day on average

preparing each report. So our nal estimate looks like this:

[Number of stakeholders receiving reports] X [frequency per year] X [Number of personnel contributing to the report]X [Days per person] = [Total person-days of labor spent on reporting]

1-2 people

3-5 people

6-8 people

>8 people

On average how many people participate in creating reports?

0% 10% 20% 30% 40% 50% 60%

Regulators Investors/Funders Networks/Associations

Figure 5: The Number of People Working to PrepareEach Type of Report


10/13


6 See: http://www.mixmarket.org/data-center/reports/xUzfouRF

7 See: http://www.mixmarket.org/data-center/reports/SnX775Ai

three funders on a quarterly basis would mean submitting

12 reports a year At the same time, we asked respondents

to estimate the number of people engaged in preparing

each type of report

Using the formula from the sidebar, applied to all

respondents who provided data, we obtain the results

shown in the table below In line with our assumption about

the range of time spent on average by each participant, we

provide three estimates assuming 05, 075, and 10 daysof effort per person, respectively In addition we provide

both average and median estimates because the average

is inuenced by several outliers.

Fully half of those reporting spend the equivalentof one full-time staff working for several months In

practice, many MFIs devote considerably more person-days This calculation also only looks at time spent on

report preparation It excludes any time spent collecting,

aggregating or scrubbing data before the process of report

preparation begins

While allocating something more than 57 person days

to report preparation might not seem signicant,

especially when considering the relatively low cost of

labor in developing countries, there are several reasons

not to dismiss this impact Reporting requirements are

independent of an institutions size, so for smaller MFIswith limited central staff this will be a disproportionatelylarge impact Moreover, MIX data show that averagesalaries for micronance staff in Africa are almost fourtimes what they are in other regions,6 reecting the factthat skilled labor is scarce and more expensive in AfricaBecause the nance staff involved in report preparation

are among the more highly-paid employees of an MFI, the

resources allocated to reporting have a disproportionate

impact on the bottom line Finally, yields in Africa havenot declined much in recent years,7 suggesting that evena small reduction in costs could translate into lowerinterest rates and greater access to affordable credit

V. Delivery

The last stage in reporting is to deliver the results to the

intended recipient The survey asked respondents how

they delivered reports to different stakeholders The

results are shown in Figure 6 It is perhaps not surprising

that email dominates, as most reports are deliveredin the form of a spreadsheet or a scanned documentMoreover, email is most commonly used with funders and

investors because they are least likely to be located in the

same locale, or even the same country, as the MFI More

surprising is the high percentage of respondents who saythat they le regulatory reports in person or by mailingpaper documents Most interesting of all perhaps is therecent appearance of web-based methods of submitting

reports, either by completing an online form or uploading

a le (usually a spreadsheet) to a web site.

VI. Improving the Reporting Process

Taking a step back to view the reporting process as a

whole, the picture that we now have looks something like

the diagram in Figure 7

Data originates with customer interactions in the eld

at a group meeting or a clients home for example, and

then moves to the branches From there it moves to the

head ofce by any of several different methods, shown

by the different types of arrows in the diagram Once at

the home ofce the data are collected into one or more

of several repositories, which might be part of a single

integrated application or might be separate applications

Throughout this part of the process there is a need for

constant validation and scrubbing of the data to make

sure it is complete and accurate How much time and

effort this validation requires is heavily dependent not

on the software applications in use, but on the underlyingbusiness processes adopted by the institution Finally

once all data are aggregated and scrubbed, the process

of extracting specic parts of the data can begin.

As suggested by the network of curved arrows in the

diagram, each nal report requires an individual subset

of data from each of the host repositories formatted into

a unique template to complete the nal report required

by an individual stakeholder Then, when each report is

nalized, it is delivered to the intended recipient.

Figure 6: How Reports are Submitted

Email

Hand or postal delivery

Complete web form

Upload to web site

How do you submit reports?

Networks/Associations Funders/Investors Regulators

0% 20% 40% 60% 80% 100%

0.5 day 0.75 day 1.0 day

Average 65.7 98.5 131.3

Median 37.8 56.6 75.5


11/13


In considering ways that reporting might be improved,

its helpful to consider each stage of the process in turn

As noted above, eliminating the use of paper forms to

collect data from customers through the use of mobilephones or some other type of electronic device at the

point of customer interaction can save time and increase

loan ofcer efciency. The required applications would

not be difcult to create, but the cost of the devices

must come down signicantly for this to be practical for

most MFIs

Moving data from branches to the home ofce is inuenced

by connectivity and the type and cost of software in use

at the branches While conventional broadband internet

will doubtless be slow to reach many smaller towns or

rural communities, improvements in the data capacity

of mobile phone networks are already having an impact

Applications that do not require excessive bandwidth can

function over these networks, allowing faster transmission

of data to home ofces. One key factor, however, is the

business model of software providers, most of whom

currently charge a separate license fee for each computer

on which their software is installed This often limits access

to software at branches because of cost Moreover, when

software is installed locally by individual institutions, the

costs associated with maintenance, upgrades, and so forth

are often quite high

The emergence of so-called Software as a Service (SaaS)has the potential to change this With SaaS, customers pay

for the use of an application hosted remotely and accessed

via the internet through a web browser Normally, charges

are based on the number of clients an MFI has rather than

the number of computers, so smaller MFIs can avoid having

to pay signicant license fees for branches that have few

customers Moreover, because applications are running

centrally under the control of the service provider, costs

associated with maintenance and upgrades are signicantly

less SaaS offerings are already beginning to appear in the

micronance market and though the business model is not

yet proven, there is reason to believe that some providers

will ultimately be successful delivering software servicesin this way

As the micronance industry matures, we can expect

to see consolidation among software vendors providing

specialized applications for managing loan and savings

portfolios A broader base of customers will allow vendors

to lower costs, as will the adoption of SaaS delivery models

Together, these changes will bring better information

systems to MFIs, enabling them to collect, manage and use

information much more effectively and efciently. It wil

also hopefully impact reporting by increasing reliance on

automated reporting from information systems, thereby

reducing the need for manual transfers or scrubbing

of data

However, all of this leaves the single largest component

of report preparation untouched As long as MFIs are

required to prepare large numbers of reports according to

varying requirements, it will still be necessary to allocate

signicant resources to extract data from multiple

sources, summarize it in different ways and format it

into the various templates In as much as most of these

reports contain the same basic raw data on nances and

operations, it seems needlessly inefcient not to have

greater standardization

There are two complementary approaches to this problem

First, recipients could agree to accept standardized

reports, thus reducing the number of different report

formats which MFIs would have to provide This might

appear as in Figure 8

Alternatively, as suggested by Figure 9, report data

could pass through an intermediate stage before being

Regulator

Investor

Network

Funder

Investor

Report

Report

Report

Report

Report

Portfolio

Management

Finance/Accounting

HR

Branch

Branch

Branch

Branch

Figure 7: Reporting Process


12/13


redistributed In this scenario, data would be selectively

repackaged and reformatted to meet the specic needs

of individual stakeholders before being passed on to

them

To standardize reports, at least some stakeholders

must be willing to agree that the information they

need is not altogether different from the information

that other stakeholders need If a stakeholder believes

that the information they request gives them a

unique competitive advantage in evaluating theperformance of MFIs, this can prove difcult. For regulators

or networks this may not be as great a concern Among

investors seeking the best opportunities, who account for

a very substantial share of all reports prepared, it may

be more difcult to achieve consensus on a standard

report format

The second approach, illustrated in Figure 9, requires

several components to be successful

1. A comprehensive data set sufcient to meet

a large number of stakeholder needs must be

specied.

2 MFIs must be persuaded to collect and provide

this data

3 The technical capability to extract and format

the data received from MFIs to the exact

specications of the intended recipients must

exist

4 Recipients must trust the redistribution process

to be transparent, forwarding on data that has

not been altered

Specifying the comprehensive data set required to meet

multiple stakeholder requirements could be accomplished

by reviewing multiple report formats MFIs would have a

strong incentive to provide comprehensive data if they were

Figure 8: Effect of Standardized Reports

Regulator

Network

Network

Investor

Investor

Report

Report

Report

Portfolio

Management

Finance/Accounting

HR

Branch

Branch

Branch

Branch

Regulator

Investor

Network

Funder

Investor

Report Redi strib uti on

PortfolioManagement

Finance/

Accounting

HR

Branch

Branch

Branch

Branch

Figure 9: Effect of Data Redistribution


13/13

then relieved of the burden of preparing and submitting

multiple reports The technical challenge of automating

the formatting of reports to meet stakeholder requirements

is not complicated, but in as much as it would need to

be done repeatedly for many different stakeholders,

it could require signicant effort. Finally, gaining the

trust of stakeholders would be heavily dependent on the

demonstration of consistent transparency and reliability,

something that can, unfortunately, only be achieved

over time

Conclusion

The need to collect data and report results is and will

remain a critical part of any micronance operation.

As both the industry and individual institutions mature,

business opportunities will emerge to improve information

management and the market will attract entrepreneurs

and new solutions will appear Evidence of this can

already be seen in the emergence of mobile phone based

applications, specialized software packages for managing

micronance portfolios and the recent appearance of SaaS

business models for delivering enterprise software

These developments, combined with improvements in

internal business processes, can and will improve information

collection and management over time Market forces alone

will not, however, necessarily have much direct effect on the

reporting burden Those who impose report requirements -regulators, networks, and investors - have little incentive

to act individually to alter their requirements in the

interest of the reporting institutions Yet, standardized

report formats or a redistribution model would change the

dynamics and cost structure of reporting for MFIs, which

could benet both the clients of micronance institutions

and external stakeholders Industry coordination among

those committed to promoting access to nancial services

for the poor could build such a program to streamline

reporting in this fashion

Date post:	04-Apr-2018
Category:	Documents
Upload:	mario-raul-morales
View:	216 times
Download:	0 times

176(11-12) MIX Understanding MFIs Report(Eng) 11-08-11

Documents