The SmartAid Index measures and rates the way funders with an interest in financial inclusion work. Heads of 29 major development institutions endorsed CGAP’s development of the Index. The premise of SmartAid is simple: funders with strong management systems are better equipped to support financial inclusion effectively. Its indicators assess five areas agreed by all funders as critical for effective financial inclusion: strategic clarity, staff capacity, accountability for results, knowledge management, and appropriate instruments.
SmartAid enables funders to understand how their systems, policies, procedures, and incentives affect their work in financial inclusion projects. An independent, external assessment, the Index highlights strengths and areas for improvement. It can also provide an impetus for funders to take action, prioritize changes, and hold themselves to account for their own performance. Funders support financial inclusion with the goal of reducing poor people’s vulnerabilities and increasing their incomes. Having the right systems is a necessary, not sufficient, condition for achieving this goal. SmartAid does not, however, evaluate the quality of programs on-the-ground.
Five funders— AFD Group (AFD/PROPARCO), EIF, IFAD, MIF and UNCDF —participated in SmartAid 2013, increasing the total number of funders participating in the SmartAid Index to 19. Prior rounds have included the participation of AECID, AFD, AfDB, AsDB, CIDA, EC, EIB, FMO, GIZ, IFC, ILO, KfW, SDC, and Sida. Three agencies from the 2013 round participated in prior SmartAid rounds (IFAD, MIF and UNCDF). AFD (AFD/PROPARCO) and EIF are both considered new participants given that different units in the agencies participated in prior rounds.2 This diverse group of funders includes development finance institutions focusing mainly on mature retail institutions, large multilateral development institutions that make sovereign loans to governments and bilateral and multilateral agencies that primarily provide grants.
IFAD received 61 out of 100 points, meaning that overall it has “good” systems in place to support microfinance. IFAD increased its score by eight points since its participation in SmartAid 2009. This can be attributed to significant improvements in its internal systems over the last four years. As the graph below shows, IFAD received a score of 3.9 (on a scale from 0 to 5) on indicator 1 (strategic clarity). Scores were only slightly lower than this benchmark on knowledge management (indicator 8) which received a score of 3.6, and still 3 or above on quality assurance, project identification system, performance indicators, and portfolio reviews (indicators 2, 4, 5, and 7). IFAD’s lowest score is on performance based agreements, (indicator 6), but reflects a 0.3 increase to 1.8 on this indicator since the 2009 round. Staff capacity and appropriate instruments (indicators 3 and 9) also show significant improvements since 2009.