Microfinance impact lessons learned
PAMF and the Luxembourg Microfinance Development Fund were encouraged by evidence that they are achieving positive impacts for underserved groups. PAMF constantly monitors its clients and was delighted to dive deeper into its profile with the study run by the European Investment Bank and the Global Development Network.
Thanks to the rigorous approach applied by the researchers and technical experts, PAMF was able to get quantitative insights into the benefits it delivers. This evidence will help PAMF substantiate its impact for existing and potential investors. The study also pointed PAMF and the fund manager towards things they can do better, to catalyse greater impact. They are looking at ways to further empower women and boost their capacity to benefit from borrowing, and ways to help customers make investments in bulkier productive assets, allowing them to boost their earning potential in the longer-term.
For example, increasing the loan sizes offered to successful repeat client groups could help to increase impact while keeping risk low. In addition, some of the clients may be ready to move on to PAMF’s recently launched loan product aimed at small and medium-sized enterprises. These loans are slightly larger and allow eligible clients to move away from the group lending modality.
EU bank impact studies of impact investments
Impact measurement is central to the European Investment Bank’s business in developing countries. Since its inception in 1958, the European Investment Bank has invested over €1 trillion, around 10% of it outside the EU. These investments are selected and designed to generate social, economic and environmental benefits, alongside financial sustainability. The European Investment Bank tracks the development results of every investment to understand what works and how we can further enhance our impact.
The EIB has been piloting a programme of impact studies of private sector impact investments with the Global Development Network. The studies further deepen our understanding of the impacts of these projects. The programme goes beyond the results measurement the European Investment Bank does for every project by collecting data directly from the people who benefit. This requires boots on the ground and an understanding of local context, so the programme has mobilised 30 talented researchers from developing countries to carry out impact studies of impact investment projects in Africa, the Caribbean and the Pacific. The results of the first wave of studies can be found here.
The research is tailored to a diverse set of impact investments. The investments made by the European Investment Bank range from direct investments in agri-business to support for innovative firms through venture capital funds and indirect lending to micro-enterprises through microfinance investment vehicles.
The researchers have been working with European Investment Bank clients to understand their business models and their development objectives. They then tailor their research to answer questions of mutual interest.
The programme is demonstrating how academically rigorous research can drive impact. Global Development Network has brought in globally renowned experts as impact advisors. The advisors ensure that the studies are carried out with maximum rigour and using the latest methods. Their stamp of approval ensures that the results are a reliable basis for decision-making to enhance development impacts by the European Investment Bank and our clients.
The European Investment Bank also aims to provide empirical evidence of the impact thesis of impact investment—that the private sector can be a key engine for sustainable development.