MicroRate’s institutional evaluation provides small and developing microfinance institutions (MFIs) with a comprehensive internal analysis to support leadership teams in improving the organization’s performance. The evaluation highlights areas of strength, weakness and opportunity, offering specific guidelines for improvement, and comparing the institution’s procedures with industry best practices. This evaluation has proven to be a valuable tool for management and Board members, helping them to focus resources on the areas where changes will produce the highest impact on organizational development.
The institutional evaluation is designed to strengthen microfinance institutions by outlining recommendations to promote institutional maturity and improved performance. The report provides insight on the six main areas of an MFI’s performance, within its regional context:
- Financial Situation
- Microfinance Operations
- Portfolio Quality
- Organization & Management
- Governance & Strategic Position
- Social Profile
In order to accurately capture this information, MicroRate starts with a pre-visit desk analysis of data and information collected from the client. This is followed by a thorough on-site evaluation of the institution by two analysts. The analytical team interviews all levels of management and personnel and visits several of the MFI’s branches. While on-site, the analyst team collects any additional information needed and reviews client files and reports from the MFI’s information system. The on-site evaluation is followed by an analysis of all the data collected which is then consolidated into a final report. Prior to publication, the MFI is provided with a draft version of the report to review in order to ensure that there are no factual errors or misinterpretations. While the review of the draft does not influence MicroRate’s overall opinion, it provides the MFI with the opportunity to verify the data collected.
The institutional evaluation covers the same areas as the performance rating, but the perspective of the final report differs significantly. The institutional evaluation highlights key areas of opportunity and improvement and is directed toward internal management teams. Performance and credit ratings are focused on highlighting areas of risk and are written primarily for external audiences, including investors. There is no rating grade given for the institutional evaluation as it is a tool for internal management.
While no final rating grade is given, MicroRate’s International Rating Committee, composed of senior management and seasoned analysts from MicroRate’s different field offices does review the report to ensure consistent, robust analysis.
Benefits of an Institutional Evaluation
MicroRate’s experience and international credibility allow MFI clients to benefit from our knowledge of industry best practices, improve performance and ultimately attract funding.
MicroRate’s institutional evaluation:
- Provides an independent evaluation of the MFI without a rating grade
- Benchmarks the institution with comparable MFIs and industry best practices
- Identifies areas for improvement based on priority level, so that the MFI can prioritize and focus its efforts or technical assistance to maximize resources and improve performance
- Guides the MFI in attaining institutional maturity and self-sustainability, facilitating easier access to funding
MicroRate’s institutional evaluation includes a pre-visit desk analysis, on-site evaluation, and final report. The entire process from the desk analysis to final report delivery is about 6-8 weeks.
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