Mid-Term Evaluation of the Making Access to Finance More Inclusive for Poor People Program

Report Cover Image
Evaluation Plan:
2014-2015, UNCDF
Evaluation Type:
Mid Term Others
Planned End Date:
11/2015
Completion Date:
10/2016
Status:
Completed
Management Response:
Yes
Evaluation Budget(US $):
71,700

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Title Mid-Term Evaluation of the Making Access to Finance More Inclusive for Poor People Program
Atlas Project Number:
Evaluation Plan: 2014-2015, UNCDF
Evaluation Type: Mid Term Others
Status: Completed
Completion Date: 10/2016
Planned End Date: 11/2015
Management Response: Yes
Focus Area:
  • 1. Poverty and MDG
  • 2. Others
Corporate Outcome and Output (UNDP Strategic Plan 2014-2017)
Evaluation Budget(US $): 71,700
Source of Funding: non-core
Evaluation Expenditure(US $): 71,700
Joint Programme: No
Joint Evaluation: No
Evaluation Team members:
Name Title Email Nationality
GEF Evaluation: No
Key Stakeholders:
Countries: LAO PEOPLE'S DEMOCRATIC REPUBLIC
Lessons
Findings
Recommendations
1

.

2

Evaluation Recommendation or Issue 1: Clearer definition and strategic orientation on part of the program itself towards further refining what MAFIPP intends with financial inclusion with more emphasis on outreach in priority poor districts and/or rural areas. 

3

Evaluation Recommendation or Issue 2: Evaluation Recommendation 2: Stronger focus on the provision of financial education

4

Evaluation Recommendation or Issue 3: leverage MFA as a channel for knowledge management and dissemination of best practices and for promotion of voluntary industry standards

5

Evaluation Recommendation or Issue 4: Concerted attempt towards bringing microfinance funding efforts under the same umbrella and continue to crowd in and facilitate investments in FSPs

6

Evaluation Recommendation or Issue 5: Soliciting higher level political support for the financial inclusion agenda

1. Recommendation:

.

Management Response: [Added: 2017/07/10] [Last Updated: 2018/08/24]

Management thanks external evaluators Microfinanza for their comprehensive report and insightful findings, with which Management overall agrees. BoL and UNCDF will endeavor to embed the evaluators recommendations into the remaining year of activity of MAFIPP and into the foundation of the post-MAFIPP programming framework.

Key Actions:

2. Recommendation:

Evaluation Recommendation or Issue 1: Clearer definition and strategic orientation on part of the program itself towards further refining what MAFIPP intends with financial inclusion with more emphasis on outreach in priority poor districts and/or rural areas. 

Management Response: [Added: 2017/07/10]

Partially Accepted - Management deems that the evaluators may not have properly seized the extent of the challenges in developing a market approach to pro-poor and pro-rural financial services: therefore the request for a focus on priority districts and for very targeted groups is deemed premature as the mode of intervention is always indirectly under UNCDF sustainability mandate, i.e. through established Financial Services Providers (FSPs). It is recalled that, as part of the Lao Australian Rural Livelihoods Programme (LARLP), MAFIPP had be requested to perform interventions in the 3 priority districts of LARLP – Soukhouma of Champasak, Lao-Ngam of Salavan and Xepon of Savannakhet- and in spite of its efforts MAFIPP wasn’t able to identify any FSP willing to work there.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
1.1. Management to propose refined methodology for outreach calculation to be validated by MAFIPP PMC.
[Added: 2017/07/10] [Last Updated: 2019/05/20]
MAFIPP management 2017/08 Completed see attached Minutes of PMC History
1.2. Management to revaluate DFS outreach target for validation by MAFIPP PMC.
[Added: 2017/07/10] [Last Updated: 2017/07/11]
MM4P MAFIPP management 2017/04 Completed Management will reassess the target of users of Digital Financial Services that was set to 200,000 users by end 2017 – already lowering the estimates from UNCDF/MM4P that set a 250,000 target (see annex #5 of ProDoc revision #1). The two reasons for this unachievable target are first the time necessary to raise the awareness of the local financial & telecom industry and to nudge them to draft business cases and then to pilot, then more importantly is the severe shortfall of capital from the State-Owned Enterprises that dominate this market which does not provide the opportunity to heavily invest in marketing for penetration to soar up once customer acceptance and the business model are validated by the pilot. BCEL BCOME is a case in point where customer acceptance and the overall sustainability of the value proposition are demonstrated but the lack of capital resources prevent the bank from turning the business growth into a hockey curve as envisioned by MM4P: business growth is envisaged by BCEL to be linear. Now that the second DFS pilot is about to start (the objectives set out in the ProDoc revision #1 were that two pilots would be launched in 2015 – only one did actually) management forecast for DFS outreach based on the business plans of the three operators supported by UNCDF (2 by MAFIPP, 1 by SHIFT) are: • Q4 2017: 11,733 • Q4 2018: 109,116 • Q4 2019: 280,726 See Appendix 1 History
1.3. Recalculation of results under the new methodology
[Added: 2017/07/10] [Last Updated: 2017/12/01]
MAFIPP management 2017/09 Completed Management will update the DFS outreach targets of MAFIPP using the values above for 2017 and 2018 (since a no-cost extension of 6 to 9 months into 2018 is envisaged). Management will therefore reset the MAFIPP outreach targets using the above-delineated methodology and rationale. Management agrees that “more emphasis on outreach in priority poor districts and/or rural areas” is desirable. Management and BoL concur that rural areas will remain a priority for their action moving forward: support to DFS and MFIs has been geared in nearly all instances toward rural expansion – SmartKids is the only urban outreach project to have received support from FIF. However, management points out that, at such a nascent stage of a sustainable market of pro-poor financial services, nudging Financial Services Providers which struggle already with sustainability to operate in priority districts is too much of an ask in the short-term. MAFIPP has been already struggling to create a pipeline of investable projects for the FIF that cater to rural expansion – focusing on the priority districts would certainly yield no projects at all. That said, the idea will however be kept for the post-MAFIPP interventions to offer a reinforced set of incentives for operations extending to priority districts: UNCDF would then reach out to the WB Poverty Reduction Fund to see if it would agree to co-finance the extra incentive (an operational subsidy may be needed to nudge an FSP to encompass also the priority districts). See Appendix 1 History
3. Recommendation:

Evaluation Recommendation or Issue 2: Evaluation Recommendation 2: Stronger focus on the provision of financial education

Management Response: [Added: 2017/07/10]

Accepted - Management agrees with the importance of the financial education to bring about catalytic change in the adoption of formal financial services by all strata of the population and also in increasing the likelihood of impact on poverty reduction.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
2.1. Support to MFA on capacitation of 8 MFIs on business planning training and consumers’ general financial education
[Added: 2017/07/11] [Last Updated: 2019/05/08]
MAFIPP Management 2017/12 Completed 3rd and last tranche PBA disbursed September 2018 History
2.2. MAFIPP to evaluate the budget cost of financial education for 2-3 target groups: #1 – factory workers in an urban setting #2 – Urban consumers, focus on household budget management and goal planning #3 – Youth in secondary education
[Added: 2017/07/11] [Last Updated: 2019/05/08]
MAFIPP Management 2018/12 Completed Target #2 – Data points obtained from MFA Financial Education intervention supported by MAFIPP Target #3 – Data points obtained through former grantee EMI, ‘Smart Kids’ initiative Target #1 is dropped following the cancellation of the DFAT ADA funded project ‘Laos Female Garment workers payroll eco-system’ History
4. Recommendation:

Evaluation Recommendation or Issue 3: leverage MFA as a channel for knowledge management and dissemination of best practices and for promotion of voluntary industry standards

Management Response: [Added: 2017/07/10]

Accepted -  MAFIPP has done much for the institutionalization of the MFA and the recognition by government of MFA as a necessary partner in public-private dialogue on financial sector issues.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
3.1 Encourage MFA to take offer of services beyond the MF sector
[Added: 2017/07/11] [Last Updated: 2018/12/11]
MAFIPP Management, BoL 2018/12 Completed Organizations interested in MFA training include NTPC II, Project on Capacity Development for Agricultural Innovation Systems (CDAIS), Poverty Reduction Fund (PRF), Women Entrepreneurship (WEC) and Faculty of Environmental Sciences of the National University of Laos Advocated to MFA to extend business planning to banks under an income-generating franchise throughout activity 2.1 but MFA didn’t want to consider. History
5. Recommendation:

Evaluation Recommendation or Issue 4: Concerted attempt towards bringing microfinance funding efforts under the same umbrella and continue to crowd in and facilitate investments in FSPs

Management Response: [Added: 2017/07/10]

Accepted - Management and BoL have put this topic high on their agenda. A concept note on the extension of FIF beyond MAFIPP has been presented to the PMC #19 on 26 August 2016 to raise the attention on the need of such a facility for the implementation of the Roadmap for Financial Inclusion 2016-2020 and the possible synergies that BoL could create.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
4.1. Create synergies between the different refinancing facilities under the purview of BoL: MAFIPP FIF, KfW LAFF, IFAD upcoming ARF
[Added: 2017/07/11] [Last Updated: 2019/05/08]
MAFIPP Management, BoL 2019/04 Completed Bilateral discussions initiated with IFAD and KfW. Principle confirmed that KfW’s LAFF will also target Deposit-Taking MFIs – operational criteria to be worked-out. FIF Manager has shared job experience with staff of BoL/Banking Operations Dpt groomed to manage in-house the KfW LAFF. The institutions setup of the IFAD NSLCP-RFSP envisioning the ARF is still in discussion: implementation likely to be postponed to 2021. History
4.2 Operational synergies of donors to BoL on refinancing facilities
[Added: 2017/07/11] [Last Updated: 2019/05/08]
BoL 2019/04 No Longer Applicable [Justification: At this stage only LAFF is set to operate, with transfer of institutional experience already happening: this issue becomes irrelevant if IFAD project is delayed to 2021.]
History
6. Recommendation:

Evaluation Recommendation or Issue 5: Soliciting higher level political support for the financial inclusion agenda

Management Response: [Added: 2017/07/10]

Management Response: Accepted - Management and BoL concur with this recommendation: it is precisely the goal of the Roadmap for FI to provide a platform for taking key financial sector issues to the inter-ministerial level as in the case of subsidized lending which distorts the economy and weighs on the state budget, of village banks for which BoL needs the active support of an administration with presence down to district level to undertake supervision under a framework drafted by BoL.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
5.1. BoL to reach out to MAF for operational collaboration in agricultural & rural finance
[Added: 2017/07/11] [Last Updated: 2018/12/11]
BoL, UNCDF 2018/12 Completed Deputy Director General of Financial Institutions Supervision Dpt (BoL/FISD) focal person for dialogue with MAF. Areas of cooperation identified: village banks and refinancing facility for rural FSPs. Political decision taken to start cooperation on the village banks theme, yet to be operationalized at a technical level. BoL associated to the MAF Sub-Sector Working group on Rural Development. Social transfers could emerge as additional theme with WB $27mn CCT for pregnant mothers in rural North, implemented by MAF. History
5.2 Raising awareness at ministerial level on the Roadmap for Financial Inclusion following sign-off by Governor of BoL
[Added: 2017/07/11] [Last Updated: 2019/10/18]
BoL, UNCDF 2019/12 Initiated • Laos Financial Inclusion Roadmap (FIR) finally signed-off by Governor of BoL end August 2019. Doesn’t need further GoL senior sign-off (i.e. by Prime Minister Office) as it was downgraded from national sectoral strategy level to secure sign-off in 2019 • Appointment of new Deputy-Governor of BoL, Mr. Phouthaxay SIVILAY, mid-August 2019, taking-over FIR follow-up from other Deputy Mdm Vatthana. Has not yet received a thorough briefing. • FIR dissemination event concept note approved by BoL at technical level and scheduled for Q4 2019 but awaiting feedback from Mr. Phouthaxay to proceed. History

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