Anita Campion, President, AZMJ recently wrote an article on the complexities of Social Performance Management (SPM) for Microfinance Focus and this was also published on the Microfinance Focus Blog for Microfinance Conference 2009. The article was based on a situation in the Philippines where many farmers were unable to repay their loans because of falling crop prices and were at risk of losing the land they had pledged as an asset upon which the loans had been made.

Campion raised many SPM-related questions surrounding agricultural lending.

• To what extent should we empower clients to decide what level of risk and indebtedness they are willing to take on? And to what extent do MFIs or the government need to protect individuals from borrowing too much?
• Should MFIs even use land as collateral for agribusiness loans, when it means potentially stripping someone of their livelihood in the case of non-payment?
• Should MFIs only lend to business owners to the extent that they can be ensured of repayment, perhaps by covering risk through crop insurance or weather-related index-based insurance?
• When whole sectors are negatively impacted, what is the appropriate response of the MFIs and of the government? What will these responses mean for future lending to that sector?

Providing a guiding principle for answering these tough questions, Campion suggested that improving the lives of microfinance clients is at the heart of SPM and when our actions cause the opposite effect, regardless of our intention, we should do whatever we can (within our means and without creating unrealistic future expectations or market distortions) to correct any negative consequences.