The social performance of the microfinance industry

The microfinance industry is developing and expanding at a fast pace; the formal banking industry has discovered the potential of offering microfinance related products and services and private investors are getting more and more interested in this industry. In hand with this development goes the development of the industry being criticized for not being that socially responsible as it pretends to be and being led by mission drift due to its increased emphasis on profitability. Worldwide alleviation of poverty, empowerment of women, job creation, education; this all sounds very rose-coloured, but what is the exact impact of these microfinance activities? How do investors know which investments yield strong social returns? To elaborate on this emerging concept, the importance of adopting a tool to measure the social performance of the microfinance industry will be highlighted. The results will not only help microfinance providers to better understand its products/services, clients and operations, but also aims at decreasing the knowledge gap regarding the relevance and impact of social performance measurements.