Annex 7 | Impact evaluations and effectiveness studies

This section provides an overview of the evaluation activities we undertook in 2024 for MASSIF.

In 2024, FMO focused on completing three ongoing evaluations from 2023 and launched four new ones (see table items below). The evaluations for the Nepal Sector Initiative and FMO’s Progression Model were finalized in the first half of 2024 and the evaluation on Gender lens was finalized in the second half. We anticipate completing the ongoing evaluations on Client Protection Principles and Responsible exits by Q1 2025. The evaluations of MSMEs contributions and employment creation and Agri-rural finance will continue further into 2025 and 2026.

 Progression Model Evaluation

The Progression Model evaluation, conducted by Dalberg Advisors, assessed the progression of FMO’s customers from public funding to FMO’s own balance sheet (FMO-A), and from FMO-A to commercial mobilization, as well as the factors contributing to progression. The study found that 62 (27%) of the 230 customers financed by public funds before 2015 progressed to FMO-A, and 18 (29%) of these also received commercial funding. The evaluation also revealed that approximately 30% of customers financed by MASSIF at or before 2015 progressed to FMO-A and to commercial funding. Higher rates of progression were observed in Asian countries, particularly among banks and microfinance institutions.

Market-based factors, company-specific factors and FMO-driven factors influence progression. Market-based factors enabling progression are market stability (economic and socio-political) and sector maturity. Company-specific factors enabling progression are solid track record and governance quality. FMO-driven factors enabling progression are FMO’s investment strategy, along with various forms of financial support and non-financial support.

The evaluation recommended four priorities, including articulating the contribution of progression to FMO's business priorities and specifying how the progression model framework can guide fund-level actions and priorities.

A knowledge sharing session will be organized by FMO and the external publication will be shared with the Ministry of Foreign Affairs.

Invest for Impact Nepal (IIN) evaluation

The Invest for Impact Nepal (IIN) evaluation, conducted by URSUS Consulting, determined the program's development results and provided recommendations for the local implementation partner, FMO and other DFIs. IIN is a market creation program established in 2022 by British International Investment (BII), Swiss Development Cooperation (SDC), and FMO (MASSIF). IIN aims to unlock foreign direct investment, create jobs, and foster an equitable and sustainable economy in Nepal. It supports Financial Institutions (FIs) and Private Equity and Venture Capital (PEVC) funds by providing resources and expertise from DFIs and impact investors. IIN collaborates with various stakeholders, including FIs, PEVCs, the Nepal Bankers Association (NBA), the Government of Nepal, regulators, and academic partners.

The evaluation found that IIN is well-established and on track with its activities, leading to positive changes in attitudes towards sustainable financing. However, more progress is needed in applying ESG standards in the financial sector. The evaluation recommended priorities for both FMO’s Impact Department and IIN’s local implementation team.

Upon the completion of the evaluation, FMO, partners, Invest for Impact Nepal’s local implementation partner and the Dutch Ministry of Foreign Affairs discussed the recommendations.

Gender lens evaluation

The Gender lens evaluation, conducted by Dalberg Advisors, assessed FMO’s gender strategy implementation and its support to MASSIF, AEF, and BP in embedding a gender lens between 2018-2023. The 2017 gender strategy outlined FMO’s contributions to gender equality across domains such as women as employees, end-users of products and services, entrepreneurs, project-affected people, and leaders. The evaluation examined the investment volumes and technical assistance of the three public programs towards this theme (identified via FMO’s Reducing Inequalities label and customers identified under the 2X challenge). It also assessed the progress in implementing operational aspects of the strategy.

The evaluation found that MASSIF, AEF, and BP allocated approximately €160 million to gender lens investments between 2017-2023, with MASSIF contributing to around 70% of the total amount. These results were driven by a combination of FMO’s gender strategy, the fund’s own mandates to embed gender, and sector specific dynamics. The evaluation suggests there is an additional € 243 million of potential by improving how FMO tracks investments in this theme and by being more intentional. The evaluation recommended areas where FMO can improve in terms of governance and accountability, support to investment staff, monitoring and evaluation, among others.

A knowledge sharing session will be organized by FMO and the external publication will be shared with the Ministry of Foreign Affairs.

Evaluations in progress

The evaluation of the Client Protection Principles (CPPs) being conducted by M-CRIL is in its final stages with a synthesis report underway. The evaluation seeks to highlight the effectiveness of adopting client protection principles as perceived by customers of microfinance institutions. Two in-depth case studies were conducted as part of the field research with MASSIF customers, one in Bangladesh, and the other in the Philippines. Additionally, we continued to collaborate with CGAP on this evaluation to benefit from their expertise in microfinance and CPPs. We anticipate that this partnership will enhance the sharing of insights beyond FMO. As this is our first extensive collaboration with CGAP, it required a considerable amount of time to establish.

The evaluation on Responsible Exits being conducted by ADE is at its final stages. The evaluation aims to summarize relevant responsible exits policies and approaches from selected peers. It also aims to assess FMO’s approach to responsible exits and provide recommendations that can strengthen existing policies and guidelines. The evaluation relies on an external document review and interviews with peers, and on FMO’s own insights and experience with responsible exits. It also includes case studies from the MASSIF’s and Building Prospects’ portfolios to illustrate examples of past exits.

The Agriculture and Rural Livelihoods evaluation, being conducted by Ecorys, aims to conduct an in-depth analysis of this theme within the MASSIF portfolio to provide relevant information for designing the MASSIF Strategy 2026. This evaluation also seeks to enhance FMO’s understanding of the impact it achieves under this theme. It references both the impact data FMO currently captures in its systems and the impact that is not captured.