loans of specific segments of financial intermediary clients are used as a proxy for the business performance of the sub-borrowers, the consideration of collaterals and other risk mitigations can hide the poor business performance of the financial institution clients. Often, IFC sets targets of extending loans to groups of previously unbanked microentrepreneurs, yet the extent to which borrowers had been previously unbanked cannot be confirmed because of a lack of data. Given that the client does not collect and report on whether new subborrowers had previously borrowed from the formal financial sector, it is not possible to assess reliably whether borrowers had been previously “unbanked.” Assumption of new clients as fresh entrants to formal financial institutions needs to be questioned. Third, IFC’s funding relative to the intermediary’s total assets is usually small. Money is fungible, so attributing subprojects to IFC’s intervention is arbitrary. Moreover, these indicators do not indicate long-term access to financing after IFC’s credit line ends—the bank may terminate the line of business when IFC exits, so an increased access to financing may be transitory. Fourth, assessing E&S effects of financial intermediary projects is also challenging because of the often weak capacity of local financial intermediaries to ensure that subprojects meet IFC’s requirements (usually Host Country Laws and Exclusion List, and for high-risk projects IFC’s Performance Standards). Also the subproject clients do not have legal responsibility to IFC for their E&S effects. Quality Control
Data supplied to IFC must to be validated for credibility and relevance before being incorporated into IFC’s results measurement system. Quality control is partly structural: standard indicators are defined so they can be taken from standard documentation for any type of client. This would include audited financial reports, company annual reports, and other sources with built-in validation. Data are timely when they are up to date and the information is available when it is needed. DOTS data are entered as they become available, or entries are updated at least annually and information is provided per the client’s reporting cycle. DOTS is a central element to the supervision cycle, which begins after the first disbursement, when a project is passed to portfolio officers for supervision, and ends with project closure. During supervision, each project indicator is updated annually and IFC diligently follows clients’ audited financial statements. There are similar reporting requirements for annual E&S monitoring. The information is tied to respective risk rating systems (CRR and Environmental and Social Risk Ratings), so follow-up actions are triggered if there are discrepancies. In the data manual for DOTS, CDI cites the four data quality considerations— accountability, consistency with previous years’ data, consistency in definitions, and focus on the target of IFC investment. For new business, the department emphasizes consistency between DOTS and Board report data. This department oversees the annual DOTS quality control cycle. The schedules start in January by naming clients to be included in the six-year rolling cycle for the annual report. Data collection and entry are coordinated during February to April in operational
Monitoring and Evaluation in IFC and MIGA
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