This Technical Guide presents the portfolio review as an evaluation method that can help funders learn from what they fund. Microfinance portfolio reviews first appeared in the 1990s as an evaluation method that compares the performance of microfinance projects across a funder’s portfolio. At that time, funders focused on building strong, sustainable institutions that would provide access to financial services to low-income populations. Portfolio reviews helped assess whether this goal was achieved, by using standard financial performance indicators to evaluate the sustainability of microfinance institutions (MFIs).
Today, the focus has shifted to a broader vision of financial inclusion, which requires funders to consider project performance beyond the sustainability of a supported MFI. As microfinance sectors evolve and the number and diversity of funders increase, development agencies have to constantly reconsider the added value they bring to their target markets and whether their operations are relevant contributions to responsible market development. In this context, portfolio reviews evolved to assess not only the financial and social performance of MFIs, but also the relevance of the project design in a given market context and the quality of delivery.
There is no standard methodology for portfolio reviews, and this Technical Guide will not deliver a ready-to-use blueprint for evaluators. Rather, it takes stock of the lessons learned so far and aims to capture emerging practices among funders of financial inclusion. Ideally, this Technical Guide will reduce the efforts for funders conducting portfolio reviews in the future and increase the validity and comparability of results.