Key Performance Indicators for DFIs

ADFIAP-IDF
International Seminar-Workshop on
Key Performance Indicators: Measuring Performance and Impact
of Development Finance Institutions

September 5-9, 2011 <> Manila, Philippines

Background

A significant requirement in good governance is timely and accurate assessment of the DFI’s performance. Because DFIs serve the country through development loans for economic development, the evaluation of the contribution is very crucial to the economic planning done by governments involving the DFIs. Indeed, DFIs constitute a link by government to the priority sectors. Most evaluations of DFI performance had been oriented to traditional commercial activities rather than their main mandate which is contribution to the economy of the country. In particular, DFIs perform a dual role of delivering development investing funds to priority sectors and at the same time have to remained financially strong. Unlike commercial banks that only have commercial focus, development banks have a social, environmental, and governance orientation to meet as government-owned entities. For this reason, it is expected that DFIs will show worse financial performance than commercial banks on the aspect of profitability.

Regulators and government institutions as stakeholders of DFIs often challenge the DFI to show evidence of success when they fall behind in profitability compared to commercial banks. In the absence of the performance indicators that integrate what they do in society, environment, and economy, DFIs are often considered ineffective and even failures as business entities. ADFIAP has researched and developed a new, integrated approach to viewing the performance of DFIs that measures its contributions to the country.

Objectives

The objectives of the seminar are:
1. To demonstrate the primary role of good governance in delivering the services benefits to society of DFIs.
2. To introduce the KPI for DFIs as an instrument that recognizes the capacity of DFIs to achieve multiple goals of profitability, impact in economic sectors, degree of subsidy and longevity of businesses supported by the DFI.
3. To integrate the results of performance of DFIs in one evaluation instrument.
4. To develop more comprehensive assessment of performance from the different dimensions of development financing and investing.