6.7.4 Improve Transparency in Reporting Outreach and Impact
More than other segments of the development field, financial services industry is under scrutiny. Claims that microfinance is “banking for the poor” have had to be adjusted after painful exposure; in some places, revelations that borrowers have become over-indebted have led to reactionary policy shifts that have disrupted the industry and financial access for many people. A positive result is a microfinance industry that is increasingly measuring poverty outreach and even striving to measure actual impact. As financial services companies and initiatives claim to reach “rural” areas or to target “youth,” it is critical to measure and appropriately report outreach and – when possible - impact.
To raise donations or impact investment funds, development initiatives need to highlight their “impact.” For the most part, funders and investors are not overly concerned with how that impact is defined or measured. For some, having a positive mission is enough; others want to count the number of people reached, but an increasing number care about measuring and reporting jobs created, businesses started or grown, income generated – and for whom. Women? Youth? Rural population? People living under $2/day? Under $1/day? At the same time, in the financial services and social enterprise arena in particular, impact investors want a “reasonable” return on investment that usually cannot accommodate sophisticated, highly reliable impact measurement and reporting systems. And, development initiatives rarely pay for rigorous impact measurement. This leads to a “gap” in impact reporting, a gap between statements that claim impact and the data that reflect actual impact.
For example, WING Cambodia is a successful money transfer business. The Australian New Zealand Banking Corporation launched WING commercially in 2009 as the first mobile money transfer business in Cambodia. Within a year, WING documented reaching 100,000 customers, and as of January, 2013 WING’s 826 agents handled 750,000 transactions per month valued at $53 million. Profiles of the mostly urban and peri-urban customers indicate significant benefits to individuals, businesses and organizations, including cost-savings on money transfer compared to sending money with a driver, reduced time to process payroll, safe ways to transfer large sums of money, etc. As a commercial operation now owned by a telecom company that was not party to original impact investment agreements, WING does not report the number and location of customers, and does not track their income levels or the impact of mobile money services.
According to a WING case study sponsored by its impact investors, this situation poses challenges. Investors made ambitious statements about WINGs intentions such as, “WING’s aim is to help the Cambodian people improve their livelihood and alleviate their conditions of poverty.” However, it is unlikely that money transfer services would be accessed primarily very poor people or that these services alone would significantly alleviate poverty conditions. There is no data to indicate that WING contributes to this goal. Investors also made misleading claims of impact based on actual data, such as, “WING improved access to services for 318,000 rural customers.” However, more people purchase access cards than actually use the services, so the actual number of active customers at the time of reporting was closer to 100,000, as reported by WING. Also, the vast majority of WING customers are in cities and peri-urban areas. Impact investors, in the definition of “rural,” counted any location outside of the capital. The case study – designed to reveal positive and negative lessons learned – openly discussed this dilemma and advises the industry to report results cautiously and accurately while methods to improve impact assessment - particularly in profit-seeking institutions - improve.
 Hoffman and McVay, 2013.