Issues in Designing Effective Microfinance Impact Assessment Systems

This paper is based on work conducted by Imp-Act a three-year action-research programme aiming to improve the quality of microfinance services and their impact on poverty. Learning from the experiences of 30 microfinance organisations (MFOs) in four continents, Imp-Act is developing and encouraging the use of internal practitioner-focused impact assessment that can serve as a means to improve practice and service delivery, not merely satisfy the needs of external stakeholders. The paper looks specifically at the benefits of designing and implementing effective practitioner-focused client and impact assessment. It considers the types of questions MFOs should be asking in terms of use of impact assessment tools, such as indicators. It makes the point that impact assessment must be context-specific, taking into consideration the type of information to be gathered and the purpose of this information. Above all, it stresses that impact assessment is an ongoing process, rather than a one-off event which benefits neither the clients nor the organisation.