Conducting Social Audits with members: AMFA experience Sevda Huseynova June 5, 2012 SPTF Meeting, Jordan

Introduction of SPM & Social Audit in Azerbaijan Project introduced : in January, 2008 Project Goal: To advance SPM in Azerbaijan Microfinance market and facilitate achieving greater transparency in achieving ‘double bottom line’. Success Factors : Strategic partnership with MFC : Joint fund raising initiative High commitment of ICCO as social fund to support the networks

Developing own capacity on SP SPM WG meeting in Warsaw (2005-2007) SPM training by MFC (2008) Pilot Social Audit (SA) in VF AzerCredit ToT in Ethiopia (Dec.2008) ToT on SP in Bishkek (2009) Social Audits in 8 nescent member MFIs SPTF meeting in Madrid (2009), Bern (2010) & Den Bosch (2011)

Social Audit –AMFA service Use of MFC QAT tool 3-5 days duration Target Org-s: MFIs with social mission & committed to SP Recommended once in 2 years (track the changes). Price: depends on MFI size 8 Social Audits done

Social audits by AMFA Under the project “Promoting Social Performance in Azerbaijan 3 Social audits Under the Corporate Social Responsibility project funded by AMFA member - NBCO CredAgro 5 Social audits

Benefits of Social Audit for MFIs – improved social performance Segments the portfolio in performance by client characteristics, identify market niches, opportunities and problems Helps to monitor how clients use services, will help to understand if the services appropriate to the needs of target clients Helps to improve client satisfaction and loyalty through better products and services Tracks impact on client’s lives

Benefits of Social Audit for MFIs – improved financial performance Will increase the retention of clients Will help the program to grow, by offering attractive products and services Will lower operational costs, resources will be used more effectively Will serve as substantial information for PR/Marketing publications

Benefits of Social Audit for MFIs – improved reputation Will raise credibility among social investors, public and local government. Will help to demonstrate social performance to stakeholders, which will be useful to strengthen the position in funding market Will support obtaining international accreditation via participating at various industry performance awards programs

Motivation & Benefits for the Networks Excellent element of advocacy/lobbying strategy Enables AMFA to achieve its mission “advancing interests of microfinance community and clients” Area of expertise demanded by members & appreciated by funders Opportunity to build reputation of “Industry Expert in SPM” in country and globally Potential revenue generating stream: members willing to pay for this service if offered locally & professionally

Motivation & Benefits for Networks -continued Perfect multipurpose facility: preventing MF shifting away from original social mission-revealing unique features of MF business model “scanning” MFI’s performance and suggesting improvements without giving any grades enabling the network to engage members to validate own social mission Deepening relationships with member organizations

Lessons Learnt Promotion of SPM among MFIs practitioners could be achieved more efficiently if SOCIAL AUDIT is conducted FIRST and followed by the training on SPM and not vice versa. WHY? Easy to understand on practical example of own organization Opportunity for joint assessment with network and better understanding of the QAT exercise in practice Increased self-confidence of MFI’s team in using QAT independently

THANK YOU! Sevda Huseynova Azerbaijan Micro-finance Association program@amfa.az