MCE Social Capital recently structured two technical assistance facilities through interest rate savings for two of our Microfinance Institution (MFI) partners in Ecuador: Fundación Espoir and Insotec. In both cases, we are working together with Grameen Foundation in Ecuador (formerly known as Freedom from Hunger) to develop and implement the programs, which will focus on specific areas of improvement identified by the MFIs.
Fundación Espoir (“Espoir”) is a socially focused MFI with a loan portfolio of over US$50mm and over 48,000 borrowers, 80% of whom are women and 74% of whom live in rural areas. In addition to its portfolio of individual and village banking loans, Espoir provides strong educational programs and health services to its borrowers, maintaining a firm commitment to its social mission — as part of Espoir’s village banking program, group members receive health insurance, life insurance, access to a network of medical centers, and bi-weekly education sessions from loan officers on topics ranging from financial literacy to healthy living. MCE has been funding Espoir since 2006, when the MFI had a portfolio of less than US$5mm and support from only a few international lenders.
The technical assistance program for Espoir aims to strengthen and develop the organization’s educational staff, who are responsible for training, monitoring, and accompanying Espoir’s loan officers in the field to implement Espoir’s education program and provide knowledge and guidance for borrowers. Nearly 50% of Espoir’s portfolio is allocated to village banking, which includes bi-weekly education meetings in which borrowers are trained on a variety of topics. In an effort to continue strengthening this component of Espoir’s operations, the technical assistance will enhance the knowledge and competency of the educational staff to facilitate these meetings and maximize their usefulness for borrowers.
This technical assistance program, which was launched in June 2018, will be carried out through in-person meetings as well as Grameen Foundation’s e-learning platform. This includes a three-day, in-person workshop focused on core competencies for the educational staff, as well as forty hours of online training. The program also includes a follow-up component in Q1 2019, during which Grameen Foundation will join Espoir’s educational staff to evaluate how their new techniques and learnings are being applied in practice, and to ensure the continuation of these new practices to maximize their benefit to Espoir’s borrowers.
Instituto de Investigaciónes Socioeconomicas y Tecnologías (“Insotec”), one of the newest additions to MCE’s Microfinance Institution (MFI) portfolio, was initially founded in 1980 as a technical assistance agency to support the political and economic role of small businesses in the Ecuadorian economy. Over the course of the following decade, Insotec recognized that its technical assistance clients could also benefit from financial assistance to develop and expand their businesses — thus, in the early 1990s, Insotec’s microfinance portfolio was created. More than 25 years later, Insotec operates as an NGO and maintains a strong social focus that goes above and beyond the provision of credit. As of June 2018, Insotec managed a portfolio of US$43mm, reaching nearly 15,000 borrowers via 14 branches in the central Andean and coastal regions of Ecuador, complementing its loan products with a variety of insurance products and health and education services. 41% of Insotec’s borrowers were women and 67% were rural.
The technical assistance program for Insotec will build and improve the organization’s Social Performance Measurement and Client Protection by implementing SPI4, a social performance assessment tool used by financial service providers around the world. This process will improve Insotec’s strategic decision-making processes by focusing on the social consideration of the client and developing a methodology to measure the social outcomes of the clients using appropriately designed indicators.
The SPI4 tool is divided into five distinct modules. In 2017, Insotec implemented modules 1-2, which focus on defining and monitoring an organization’s social goals and ensuring board, management, and employee commitment to those goals. This year, by means of the interest rate savings structured by MCE, Insotec will implement modules 3-5.
Module 3: Design products, services, and delivery channels that meet clients’ needs and preferences — this module will help Insotec gain a better understanding of its client base and ensure that its offerings are well-targeted and appropriate for their needs.
Module 4: Treat clients responsibly – this module will help Insotec ensure that its policies and practices meet the Smart Campaign principals of Client Protection, focusing on transparency, fair and respectful treatment of clients, mechanisms for complaint resolution, and the prevention of over-indebtedness.
Module 5: Treat employees responsibly – this module will help Insotec improve its human resources practices and maintain a supportive working environment with a focus on employee treatment, communication, training, and protection, as well as systems for monitoring employee satisfaction and turnover.
MCE is proud to support these two impactful organizations in Ecuador, and will continue to strengthen our relationship with Espoir and Insotec as these technical assistance programs are implemented.