SmartAid Methodology
SmartAid distills learning from over seven years of aid effectiveness work undertaken by CGAP. It draws on the consensus Good Practice Guidelines for Funders of Microfinance and a body of knowledge developed through the Donor Peer Reviews, country reviews (CLEARs) and portfolio reviews. Together with many funders participating in these exercises, CGAP identified five elements of effectiveness that funders need to support microfinance effectively.
- Strategic clarity measures whether the funder has an agency-wide vision for microfinance aligned with good practice and documented in a policy.
- Staff capacity measures whether the funder has staff with relevant expertise to ensure the quality of design, implementation, and monitoring of programs/investments.
- Accountability for results measures whether the funder has systems in place that ensure the adequate monitoring and performance-based management of microfinance programs/investments.
- Knowledge management measures whether the funder has systems and resources to create, disseminate, and incorporate learning from its own and others’ experience.
- Appropriate instruments measures whether the funder has instruments that are used in a flexible manner and adapted to market needs.
SmartAid consists of nine indicators that are based on the five elements of effectiveness described above. Taken collectively, they present a comprehensive picture of a funder's internal management systems. Different weights are assigned to the indicators, giving due prominence to those that make the most difference.
SmartAid for Microfinance Index Indicators
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| Strategic Clarity |
1. Funder has a policy and strategy that addresses microfinance, is in line with good practice, and is based on its capabilities and constraints |
15 points |
| Staff Capacity |
2. Funder has quality assurance systems in place to support microfinance projects and investments |
15 points |
| 3. Funder has the staff capacity required to deliver on its microfinance strategy |
10 points |
| Accountability |
4. Funder has a system in place that identifies all microfinance programs and components |
10 points |
| 5. Funder monitors and analyzes performance indicators for microfinance projects and investments |
10 points |
| 6. Funder incorporates performance-based elements in standard agreements with partners |
10 points |
| 7. Funder regularly reviews the performance of its microfinance portfolio |
10 points |
| Knowledge Management |
8. Funder has systems and resources for active knowledge management for microfinance |
10 points |
| Appropriate Instruments |
9. Funder has appropriate instrument(s) to support the development of local financial markets |
10 points |
| MAXIMUM SCORE |
100 points |
SmartAid is based on documentation reported by funders. Based on guidance in the SmartAid Submission Guide and support from CGAP, funders provide evidence for each of the nine indicators. Scores are determined by a Review Board of four persons with extensive microfinance expertise and broad experience working with a range of funding agencies. Each Review Board member independently scores agencies against all indicators; final scores are determined at a Review Board meeting.
For each indicator, funders receive a score on a 0-5 scale (5 being the highest score). These scores are then multiplied by their weight for a maximum of 100 points. Naturally, a margin of error is unavoidable given the nature of the exercise, so no undue attention should be paid to minor differences in scores. The most meaningful messages lie in where a funder performs along the range of scores for each indicator as well as whether its overall performance lies in the "very good", "good", "partially adequate", "weak" or "inadequate" range, represented with a star system.
It may be difficult for funders to make improvements in all indicators simultaneously, but experience suggests that even the largest institutions can make positive changes. Over time, CGAP will perform trend analysis of SmartAid results to track evolutions within and across microfinance funders.
For further information contact the SmartAid Team.
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