A key objective for impact assessment of microfinance programmes is 'internal learning' by field staff and programme managers about what is working, what is not working and why, in order to improve programme operations. Success of microfinance and livelihoods programmes can be enhanced if they are based on sound understanding and analytical skills and greater commitment amongst both staff and clients. MFIs would do well to invest in training that reinforces programme values and empowers clients, for this. The Internal Learning System (ILS) offers one such way forward.
The ILS is a simple system that can be used by all clients in a group-based microfinance programme - members, village groups and field staff - in contrast to methods that are controlled by managers at the top or by external researchers. This system, rather than narrowly focusing on the way a programme functions, works as an empowering tool for poor illiterate clients and village groups to track and analyse changes in their lives and to use this understanding to shape their lives and strategies as they participate in the economy and interact with others in the wider community. At the same time field staff gain useful information about clients' lives and livelihoods and are able to adjust their programme organising methods to assist them better. Managers can use the ILS data to understand programme-wide impact on a broad range of indicators.
The ILS medium is multi-year pictorial diaries in which clients can keep a record of change over time by noting their responses to scenes representing their lives. Clients draw lines and insert simple tick marks to denote quantities, yes/no responses, multiple-choice answers and satisfaction levels. The diaries can be used by all clients in a programme for learning purposes and analysed statistically for impact assessment purposes. It is also a mutual learning process as clients crosscheck the accuracy of each other's entries. These diaries are enhanced with a variety of pictures that include teaching and motivational tools. Other items in the ILS can include village group diaries designed to improve the functioning of self-help groups or to track wider impact issues such as collective actions to improve local conditions or change negative social practices. Staff diaries help field officers identify good and bad performance among self-help groups, reflect on possible reasons for such performance and plan appropriate remedies.
Several MFIs such as ASA, HLWDS (Handloom Weavers Development Society) and PRADAN (Professional Assistance for Development Action), piloting different adaptations of ILS report a range of positive results for both programme and client learning.
ASA ILS data showed an increase in the use of loans for women's independent productive activities from 18.5% to 21.2% and a decrease in the use of loans in joint (men and women) income generation activities from 39.4% to 36.8%, while the level of investment in men's activities -14.4% remained the same over the first year of using ILS diaries.
ILS figures also showed increased school attendance and greater gender equity for the children of long term ASA members (80% for both sons and daughters) compared with new programme members (74% and 65%, respectively).
In HLWDS, there was a decline in domestic violence from 54% in the first year to 27% after three years to 3.7% after six years of using ILS diaries.
PRADAN's long-term members had fewer months of food inadequacy (2.7 months) compared with newly joined members (4 months).
The ILS is a unique system. Its strength lies in its ability to yield quantitative and qualitative information for 'improving' programme operations and enhancing client involvement.
Helzi Noponen E2, First floor, Greater Kailash Enclave 1 New Delhi 110048 India
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