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 2009 consists of nine indicators that are based on the five elements of effectiveness described above. Taken collectively, they present a comprehensive picture of a funders internal management system. Different weights are assigned to the indicators, giving due prominence to those that make the most difference.
| 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 designated microfinance specialist(s) who are responsible for technical quality assurance throughout the project/investment cycle |
15 points |
| 3. Funder invests in microfinance/access to finance human resources |
10 points |
| Accountability |
4. Funder has a system in place that flags all microfinance programs and components |
10 points |
| 5. Funder tracks and reports on performance indicators for microfinance programs and components |
10 points |
| 6. Funder uses performance-based contracts in its microfinance programs and components |
10 points |
| 7. Funder regularly conducts portfolio reviews |
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 |
SmartAid is based on self-reported documentation from 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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