Social Performance: Driving the Oikocredit Approach by HC12060611618


									Social Performance: Driving the Oikocredit Approach

Ging Ledesma, Manager Social Performance
Casa Xitla, Capilla, 28 October 2011
Who are we?
• International Cooperative Society established in 1975 and registered
  in 2003 in the Netherlands

• Loans (3-8 years), Credit Lines

• Local currency of € or U$

• Equity Investment, Quasi-Equity

• Guarantees

• Capacity Building Support
Regional/ country offices in 36 countries
Africa                               Asia                                 Latin America                       Eastern Europe and
                                                                                                              Central Asia

East Africa                          Southeast Asia                       Mexico, Central                     Eastern Europe and
Kenya1, Tanzania,                    Cambodia, Philippines1               America and the                     Central Asia1
Uganda                                                                    Caribbean                           Bulgaria, Kyrgyzstan,
                                                                          Costa Rica1, Dominican              Moldova, Romania,
                                                                          Republic, El Salvador,              Russia, Slovak
                                                                          Guatemala, Honduras,                Republic, Ukraine
                                                                          Mexico, Nicaragua,
                                                                          Panama and Haiti.
West Africa                          India                                South America –
Benin, Côte d’Ivoire1,               India1                               northern region
Ghana, Mali, Senegal                                                      Colombia, Ecuador,
Oikocredit                                                                South America –
International                                                             southern region
Nigeria2, Mozambique2                                                     Argentina, Bolivia,
                                                                          Brazil, Paraguay,
1   Country with regional office/RDC. Oikocredit International and the RDC for Eastern Europe and Central Asia are located
    in the Netherlands.
2   The country offices in Nigeria and Mozambique report to Oikocredit International.
Worldwide presence

 80 countries: Funding projects in 70 countries 70 countries; inflow in 16
Facts & figures
                                                          At 30 June 2011

• 879 project partners in over 70 countries (169 projects in LAC)
• 597 microfinance institutions (MFIs)
• € 456 million outstanding
• € 83.3 million approved
• € 80.1 million disbursed
• 29.3 million clients reached by Oikocredit’s microfinance partners
• Regional and country offices in 36 countries
Project funding outstanding by region
                                    At 30 June 2011
                            € 456 million outstanding
Project funding outstanding by sector
                                                  At 30 June 2011
                                    € 456 million outstanding

                       * including microcredit,
                        SME finance and
                        wholesale funding
Social Performance

Social Performance: translation of mission into practice in
                     line with accepted social values

SP Management : process of making sure mission is
Oikocredit Mission

            Promote global justice
  by challenging people, churches and others
          to share their resources
  through socially responsible investments
      and empower people with credit
Selecting Partners

• Core Criteria
   • Benefit poor and disadvantaged (employment, increased
     incomes, new markets, etc)

   • Benefits widely distributed

   • Contribution to community development

   • Respect for the environment, animal species

   • Women benefit and participate actively

   • Cooperative structure is favored
One step further: ESG scorecard

• 5 Dimensions
     • Outreach and Targeting (20%)
     • Client Benefit & Welfare (40%)
     • Governance (25%)
     • Environment (5%)
     • Responsibility to community & staff (5%)

•   21 Questions
 Outreach & targeting

Poverty screening 0,1 or 2 The organisation selects/targets incoming clients according to their poverty

                           Organisation does not use a poverty profiling tool as a standard practice or any
                           system to determine poverty level of potential clients. (0)
                           Organisation has a policy for targeting poor clients and either uses a poverty
                           profiling tool to screen potential clients or assesses incoming clients' income level
                           during the loan process. (1)

                           The organisation meets criteria (1) above and in addition, its MIS captures and
                           reports regularly on poverty profile of incoming clients. (2)
  Client benefit & welfare
Prevention of   0,1 or 2 The credit application process includes a standardised evaluation of client's
client over-             ability to repay the loan including a check on client credit history and existing
indebtedness             debt.
                         The capacity of the client to repay the loan is not assessed as a standard practice.
                         The capacity of the client to repay is assessed as a standard practice, the MFI has a
                         formal policy on it. (1)
                         The capacity of the client to repay is assessed as a standard practice, the MFI has a
                         formal policy on it and has a formal system for regularly coordinating with other
                         MFIs (e.g. in a credit bureau). (2)
 Client benefit & welfare
Code of ethics   0,1 or 2 The organisation has an established code of ethics and defined policies to
and staff                 prevent unethical treatment of clients, safeguard privacy of client data, and
compliance                disseminates policies to staff and verifies compliance through an internal audit
                          Organisation has no established code of ethics/conduct nor policies dealing with
                          treatment of clients. (0)
                         Organisation has established code of ethics and policies on treatment of clients,
                         client privacy and these are integrated in staff training and appraisal. (1)

                         In addition to meeting the criteria for (1) above, there is a systematic and formal
                         verification that staff comply with the code of ethics. (2)
  Client benefit & welfare

Transparency     0 or 2 The organisation actively discloses and promotes client understanding of loan
about costs to          terms and all costs in a language that takes into consideration literacy levels of
clients                 clients.
                        The organisation does not disclose information on effective interest rates nor of all
                        costs as a standard practice, but clients can be given information if they ask for it.
                          The organisation actively discloses information about effective interest rates and of
                          all costs relating to the loan before anyone can get a loan. (2)
Monitoring   0,1 or 2 The organisation systematically monitors changes in lives of clients and reports
Results               on this.
                      The organiSation has not identified indicators to be used in measuring change in
                      clients lives. (0)
                      The organisation has identified indicators to be used in measuring change and
                      reports on this occasionally. (1)
                      The indicators for measuring change in clients' lives are integrated into the
                      organisation's MIS and the information is processed and reported regularly. (2)
Organisational 0 or 2 Organisational exclusion of harmful enterprises from financing.
exclusion policy
                      Organisation has no explicit policy excluding enterprises harmful to the environment
                      from financing. (0)
                      Organisation prohibits activities or the financing of activities with adverse
                      environmental effects and monitors compliance with these policies. (2)
   Responsibility to staff

Staff appraisal 0 or 2 The organisation appraises and rewards social performance.
and incentives
                       Performance appraisal and incentives focuses only on financial performance. (0)
                       Performance appraisal looks at both financial and social performance and incentives
                       if any, are related to both. (2)
Scores and their consequence

• Identify an organization’s strengths – best practices for
  sharing with others, reward partners’ exceptional social

• Identify weaknesses, areas for improvement/monitoring
  or CB support/ identify red flags

• Taken in combination with PVR = negative decision on
  an application
Why is social performance important?

• Oikocredit is a social investor
• Social performance is good for the financial bottom line
    • Higher client retention
    • Higher staff retention
    • Funding
What we look for, what we offer

• A solid partnership with both social and financial goals
  - shared social objectives
  - transparency, accountability

• Long term relationship, critical support
  - capacity building support
This document was produced by Oikocredit, Ecumenical Development Cooperative Society U.A. (Oikocredit International) with the greatest of
care and to the best of its knowledge and belief at the time of writing. The opinions expressed in this document are those of Oikocredit
International at the time of writing and are subject to change at any time without notice. Oikocredit International provides no guarantee with
regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information.

This document is provided for information purposes only and is for the exclusive use of the recipient. It does not constitute an offer or a
recommendation to buy or sell financial instruments or banking services and does not release the recipient from exercising his/her own
judgment. The recipient is in particular recommended to check that the information provided is in line with his /her own circumstances with
regard to any legal, regulator, tax or other consequences, if necessary with the help of a professional advisor.

This document may not be reproduced either in part or in full without the written permission of Oikocredit International. It is expressly not
intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law.

Every investment involves risk, especially with regard to fluctuations in value and return. It should be noted that historical returns and financial
market scenarios are no guarantee of future performance. Investments in foreign currencies involve the additional risk that the foreign currency
might lose value against the investor‘s reference currency.

Oikocredit International is a cooperative society with limited liability (coöperatieve vereniging met uitgesloten aansprakelijkheid) under the laws
of the Kingdom of the Netherlands.

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