> Posted by Jon Pattee

The Microfinance Information Exchange (MIX) has big news about their future direction – news that means strengthened information services for all industry actors.  You can check out what’s happening in the video above.

MIX, which supplies microfinance data and analysis, has the mission of promoting microfinance transparency through integrated performance information on MFIs, investors, networks and service providers associated with the industry. MIX provides objective data and analysis with the goal of strengthening the microfinance sector. Incorporated in 2002, MIX is a nonprofit organization headquartered in Washington, DC with regional offices in Azerbaijan, Peru, Morocco, and India.

Five months after the Central Bank of Nigeria (CBN) revoked the licenses of 224 microfinance banks (MFBs), how are institutions of that kind faring?

Many MFB operators have hope that they are headed for better days, reports Microfinance Africa.

The managing director of Gobarau MFB, Alhaji Mustapha Yar’Adua, told the online news source that he “strongly believe[s] this year will be better because … the revocation of the licenses of some MFBs has made us sit up and carry out our duties appropriately”.

One top CBN official, who asked that his name be withheld, told Microfinance Africa that in the wake of the crisis, tighter regulatory processes will be enforced, and that non-compliant MFBs will face penalties.

Other changes are in the works. According to local press reports cited by MicroCapital, in early March, the CBN mandated that MFBs adopt information technology infrastructure and shared service providers.

These changes, which are expected to be in place by June 2011, are aimed at helping MFBs reduce operating expenses through efficient harnessing of services such as cash processing and currency sorting.

Image credit: Benji Robertson

Measuring the financial performance of MFIs is like taking an MFI’s pulse—and for that we need the right instruments.

As the microfinance industry grows and moves beyond credit, it is time to upgrade our methods of measuring financial performance in a way that captures the modern realities of microfinance.  The Financial Services Working Group at SEEP recently updated the financial performance standards in its 2005 SEEP Framework to reflect those realities, and is now seeking feedback from the industry.

The Microfinance Reporting Standards Initiative is calling on all industry stakeholders to join the ongoing conversation and help shape a set of high-quality financial performance standards that can be used by the industry to share information and improve decision-making. The deadline for feedback is July 18^th.

The Financial Services Working Group has added many new ratios in response to the changes and challenges faced by the industry in the past few years.  For example, new ratios for better assessment of non-performing loans and loan loss rates help to improve assessment of asset quality at a time when many hope that asset quality can serve as an effective indicator of over-lending. A newly added set of deposit ratios reflects the savings movement that the industry is currently pushing.

The new performance standards are more commercial as well.  The language, the formulas, and the elimination of the financial sustainability ratios (in favor of ROA and ROE), all reflect the commercialization of microfinance.  To what extent are these new standards more appropriate? A third important change in the proposed standards is the overall inclination for more conservative and prudent approach to financial reporting. The working group hopes to hear your thoughts on exactly these matters.

There are two ways you can join this initiative:

1. Join the industry-wide conversation at KDID.org to read what others are saying and share your opinion (a quick registration is required).
2. You can find downloadable versions of the draft and appendices on www.reportingstandards.org:

• Please save your comments using Microsoft Word’s track changes feature and email your thoughts to reportingstandards@seepnetwork.org.

• Drafts are also available in Spanish, French and Russian.

The new financial performance reporting standards can strengthen the microfinance industry, and the more we work together to construct them, the better they will be.