Monitoring and evaluating financial inclusion efforts: Lessons from Mexico and Peru

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National Financial Inclusion Strategy Monitoring and Evaluation system
National Financial Inclusion Strategy Monitoring and Evaluation system

Financial inclusion, or access and usage of quality financial services, such as payments, savings, and credit, is essential for enabling poor people and MSMEs to absorb shocks, smooth consumption, accumulate assets and plan for the future. It is a pillar of efforts to reduce poverty and more and more governments are adopting a formal National Financial Inclusion Strategy to support these objectives.

A recent peer learning workshop for five Latin American countries underscored the importance of effective Monitoring and Evaluation (M&E) frameworks for ensuring the successful implementation of these strategies. Despite entailing an immense amount of work and coordination, M&E frameworks are often less visible compared to the publicly available NFIS documents. Representatives from Mexico and Peru shared their experiences in implementing their respective M&E frameworks. Both countries are currently executing their second national financial inclusion strategies, launched in 2020 and 2019, respectively, and have accumulated over six years of experience in developing and refining these frameworks. 

M&E frameworks translate policy commitments into measurable objectives by establishing short- and medium-term targets to drive action. These frameworks hold people accountable for their commitments and provide valuable information to policymakers. The data produced through M&E frameworks allows policymakers to share the achievements made during the strategy's implementation with the public and other stakeholders in the public sector. This information is essential in guiding policy adjustments and evidence-based planning for promoting financial inclusion. There are four key components to a good M&E framework: (i) the financial inclusion data infrastructure, (ii) the action plan tracker, (iii) the national results framework, and (iv) ad hoc evaluations to measure the impact of specific financial inclusion interventions and learn valuable lessons from them. 

Mexico’s M&E framework has a very powerful data infrastructure and annual reports showcasing the progress of the strategy.  Mexico has a national demand-side financial inclusion survey, conducted every three years, and produces very reach supply-side data, which supports the analysis of the 63 follow-up indicators selected, through an annual report. They develop a working plan yearly, to set the activities to accomplish the goals set in the NFIS. The number of activities to be implemented varies by year, but each activity is linked to one of the 6 policy goals, 15 indicators and targets, and follow-up indicators. Annual working plans are presented together with an evaluation of the implementation of the previous year's activities. The secretariat (part of the NFIS governance mechanism) plays a key role in producing these different reports, by collecting the necessary information and producing these reports, which are then approved by the highest level of the governance mechanism. All these documents, other in-deep financial inclusion assessments, and minutes of the periodic sessions the governance mechanism held, are publicized through a dedicated website.

Peru’s M&E framework includes a data sheet reporting the essential information to follow up on the implementation of each policy measure, and a dashboard to showcase progress achieved through the NFIS implementation. Peru’s NFIS has 5 strategic goals, 16 guidelines (smaller objectives under each strategic goal), 30 policy measures, 57 indicators, and 187 milestones. Indicators linked to policy objectives in the NFIS have targets to be reached by 2030 while there are annual targets linked to activities (called services) in the Multi-sectoral Strategic Plan. For each policy measure, the authorities build a data sheet with information on the strategic goal that inspired the policy measure, its indicator, why this policy measure is important, the implementing entity, the formulae for the indicator, source, baseline, and targets. Implementing institutions must incorporate their commitments with the implementation of the NFIS in their institutional working plans/strategies. The lead entity of the governance mechanism is responsible for following up on the implementation and evaluation of the NFIS, and for issuing the annual reports to monitor the NFIS implementation, in compliance with the requirements of other government authorities. The secretariat strongly supports monitoring the NFIS’s implementation and issues a report on the NFIS progress every six months. In addition, Peru has developed an internal dashboard to showcase the level of progress in the implementation of each policy measure, and its respective milestones. It also shows the level of implementation per strategic goal. The authorities are planning to automate the monitoring process, by leveraging new technologies to support producing reports and exchanging information between participants. The financial authority has a dedicated space on its website to publicize annual reports and other studies relevant to policy design in financial inclusion. Also, the NFIS governance mechanism has a dedicated space on its website to publicize monitoring reports.

These two robust experiences have provided us with various lessons and key messages, which we have summarized below:

  • The implementation of the M&E framework must be spearheaded by a highly committed technical entity, such as the technical secretariat of the governance mechanism.
  • Assign responsibilities for reporting information, including specific activities and indicators, with clear timeframes.
  • Prioritize transparency and accountability as fundamental features of the M&E frameworks. This can be achieved by sharing minutes of the governance mechanism's sessions, producing annual reports, evaluating progress, and openly acknowledging instances of lack of progress when they occur.
  • Annual evaluation reports offer an opportunity to assess successful aspects and serve as a feedback mechanism to identify bottlenecks and areas for improvement. Both authorities are proactive in acknowledging publicly when activities are not implemented, providing justifications, and analyzing the feasibility of postponing or reforming proposed activities.
  • The M&E system plays a crucial role in informing the design of the second phase of the ENIF (Financial Inclusion Strategy). It should be evidence-based, incorporating lessons learned from evaluating the first ENIF.

We extend our gratitude to all the participants in these sessions for engaging in enriching discussions. A special thanks to the authorities from Mexico and Peru for providing practical and insightful guidance on designing and implementing M&E frameworks for NFIS (National Financial Inclusion Strategies).

Authors

Verónica Trujillo

Financial Sector Specialist

Fiorella Risso Brandon

Senior Financial Sector Consultant

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