Impact Study for 3 Microfinance Institutions Supported By Stromme Microfinance East Africa

Project Description and Background to Evaluation

The microfinance industry has learnt that in order to achieve financial inclusion and contribute to positive changes in the lives of clients, financial service providers need to be client-centric. SMF EA Ltd (Strømme Foundation’s microfinance apex in East Africa) through its microfinance intervention is committed to creating positive changes in the lives of enterprising poor. For many years, the industry has emphasized financial sustainability, but SMF EA Ltd realises that strong financial performance alone does not necessarily translate into benefits for clients.

In order to measure the impact of SMF EA Ltd’s intervention on the livelihoods of its partner clients during the 2014-18 strategic planning period, three socially oriented partners were sampled from Uganda. These sampled Partner Institutions have taken deliberate actions to be sustainable and serve clients’ interests, including reaching excluded people, protecting their clients from harm, and designing and delivering appropriate products that help clients cope with emergencies, invest in economic opportunities and build assets, and manage their daily and life-cycle financial needs.

Purpose/objective

The objective of the study was to follow up the results of the baseline study that was carried out with 1,002 partner clients in the three Partner Institutions in 2014. In addition, the impact study also assessed the impact of SMF EA Ltd’s intervention on the livelihoods of these partner clients.

The study specifically sought to:

1. Assess progress of accessibility to financial and non-financial services of partner clients, and
2. Assess the progress of improvement in the partner client livelihood.

Methodology

The impact assessment employed a quantitative methodology combined with a participative approach that involved the partners and partner clients in gathering data. The target respondents were clients of the partner institutions that participated in the 2014 baseline survey. The study involved interviewing partner client households and interviewing key informants from partner organisations.  591 of the original 1,002 clients were surveyed.

Key findings and Recommendations

• All clients are accessing both financial and non-financial services from the partner clients.
• Microfinance has contributed to more families being able to meet their livelihood needs.
• Clients engaged in agriculture need information on post-harvest handling of their produce. It is recommended that this information be included in the non-financial services.  
• There was a decline in household incomes. This could be attributed to the sharp devaluation of the UGX against the USD, however the evaluation did not investigate. It is recommended that a qualitative study be commissioned to explore this.
• The proportion of clients that could pay for medical care with ease declined. At the same time, a high proportion of respondents were willing to contribute to ‘community health fund/health insurance’. The evaluators recommend that the microfinance institutions be encouraged and supported to adopt the ‘community health fund/health insurance’ approach in providing healthcare.

The unwillingness of some former clients to participate in the survey indicates that there may be room for improvement with client relations.