Designing a cost-benefit analysis tool to assess microfinance delivery channels
This case study shares the experience of Opportunity International in designing a cost-benefit analysis tool to evaluate and compare microfinance delivery channels.Opportunity developed the tool to identify the most effective and cost-efficient ways of spending its resources to facilitate outreach to the poor. Opportunity's development team faced challenges in terms of data availability, allocation of costs, and drawing comparison between urban and rural delivery channels. Initial observations from the tool are helping Opportunity's strategic thinking on how best to achieve large outreach and scale. Opportunity recommends that other MFIs considering setting up their own cost-benefit analysis tools should:
Establish separate cost centers;
Integrate the tool with management information systems;
Address issues of transfer pricing;
Account for the cost of time management.
The tool has helped identify issues such as return on investment and client transaction patterns, and has aided new investment decisions based on that information. It has also revealed policy issues and needs. The information it provided showed that investing in the tool can help an MFI to achieve its mission.