ADFIAP has launched its manual on “Key Performance Indicators for DFIs” during the 13th Extraordinary Meeting of its General Assembly at the 33rd Annual Meetings of the Association on May 10, 2010 in Vancouver, Canada. ADFIAP has one key objective in mind in developing the manual, i.e., to use and adopt this performance management and measurement tool as a standard for development banks.
ADFIAP has since been working to develop a performance measurement system for DFIs, one that encompasses the main and critical aspects of their “balancing” mission and mandate – operational sustainability and development impact. Through in-depth research and the mathematical savvy of Dr. Cesar Saldaña, ADFIAP’s Adviser on Corporate Governance and Risk Management, ADFIAP believes it has developed the “holy grail” of performance management and measurement system for DFIs that can be adapted and contextualized based on the conditions where a DFI operates.
Part I of the Manual starts with the mission and the adoption of good governance practice of a DFI. Part II tackles the impact of the DFI on society in general by quantifying, on one hand, the benefits of the DFI to the country (development investment) and on the other, the cost (subsidies and failure/longevity rates) of the DFI to the country. Part III covers the DFI’s operational efficiency and effectiveness by measuring profitability, portfolio quality, capital and liquidity and efficiency and productivity. It also covers benchmarking over three target sectors, namely, microfinance, SMEs and social enterprise. Finally, Part IV deals with the performance of a DFI on economic, social and environmental aspects.
After a series of “tests”, using actual and factual data from member-banks, the next step of the development process of this tool is to produce a software that can be integrated into the bank’s existing management information system for a seamless and real time report generation of the DFI’s performance.
Members as well as interested non-members of ADFIAP that would like to use and adopt this manual are requested to formally write the Association being its proprietary developer as well as sign a simple non-disclosure agreement.