Developing a Cost-Benefit Analysis Tool: Experiences and Lessons from Malawi and Mozambique

Which microfinance delivery models are most cost-effective? How can microfinance institutions identify the best use of limited resources to get the greatest outreach and highest impact? How can an organization be sure that it is applying consistent, appropriate metrics across its delivery channels to evaluate organizational productivity and make sound investment decisions?

The desire for reliable metrics to help answer such questions led Opportunity International to create a cost-benefit analysis tool to assess the best channels for delivering financial services, particularly to rural clients. The first phase of the work was conducted at Opportunity’s microfinance banks in Malawi and Mozambique. The initial assignment took place in November 2006, with a follow-up visit six months later to update figures and refine the tool.

The following case study shares Opportunity’s experience designing the tool, the challenges faced, and results and analysis from the tool. It also offers practical experience to other MFIs looking to design similar tools for analysis.