Financial Action Learning System

‘Financial Action Learning System’ (FALS) integrating client financial empowerment, product market research and social performance management into a responsible finance partnership between clients and Financial Service Providers.’

FALS Concept Note for IFAD March 2017

FALS Powerpoint pdf for IFAD March 2017

Bridging the Gender Gap in Responsible Finance: Philippines FALS process with Oikocredit, NWTF and ASKI – the first piloting September 2017 – March 2018

FALS adapts simple proven tools from the generic Participatory Action Learning System (PALS) empowerment methodology to integrate:

  • Client financial empowerment methodology to enable women, youth and men clients to effectively plan how they will best use and benefit from financial products – and become financially responsible clients. FALS Tools also enable clients to share and upscale good financial management and planning practices with other clients and potential clients, ultimately becoming a sustainable network of community financial advisers and therefore an integral part of business expansion.
  • Participatory Social Performance Management integrating client-identified empowerment indicators not only to ‘prove impact’, but to identify which specific products and services and/or design elements are most effective in delivering benefits to clients. SPM therefore becomes an integral part of product development, rather than an add-on for donor recognition.
  • Responsible product design and market research based on information from SPM and use of FALS planning and analysis tools with groups of clients from different backgrounds to discuss potential improvements to products that could increase their usefulness to clients and also be profitable for FSPs.

This integration allows the development and sustainable implementation of:

  • Responsible Finance Memorandum of Understanding (RFMOU) between clients and FSPs integrated into application processes for loans and other services. This is the core tool in the form of a pictorial Financial Management Calendar based on mutually agreed Client Protection Principles and the understanding that sustainable client empowerment also requires profitability of the FSP (whether commercial or member-owned) to continue to develop and deliver quality products and services[1].

All these client-led inputs form the basis for a parallel process at all stages of:

  • Organisational Visioning, Planning and Capacity Building using the same tools within organisations and integrated into staff training enable clearer organisational understanding of responsible finance strategies based on the realities of clients, including women and youth. This leads to better decision-making and communication at all levels.

As discussed in more detail elsewhere, PALS is a proven community-led empowerment methodology used in various forms by at least 100,000 women and men from poor and very poor backgrounds. It has been developed by Linda Mayoux since 2000 with many different organisations in Africa, Asia and Latin America involved in financial services and value chain development. This includes use of the tools since 2001 for organisational gender training with MFIs involved in the Microcredit Summit Campaign and donor members of CGAP like USAID, DFID, ILO and UNIFEM as well as work with IFAD. It also includes work since 2007 with IFAD and Oxfam Novib on the community-led Gender Action Learning System (GALS) for mainstreaming Household Methodologies in livelihoods and value chain development. This Concept Note in based particularly on work on sustainable upscaling community-led empowerment methodologies in private sector and cooperative strategic planning with Bukonzo Joint Microfinance Union in Uganda, Vuasu Cooperative Union Tanzania, and SNV Ethiopia.

The full Financial Action Learning System as a Responsible Finance partnership between clients and FSPs as proposed here however remains to be piloted. This will need to be done in a range of different types of FSP with different structures, developing a spectrum of implementation options for different organisational and client contexts, and identifying the most empowering and profitable strategies for each case.

For discussions and materials on gender and microfinance see: see http://www.gamechangenetwork.info/GenderMainstreaming/Financial%20services/FinancialServices.html.

Mayoux, L. C. and M. Hartl (2009). Gender and rural microfinance: Reaching and empowering women: Guide for Practitioners. Rome, IFAD.

For details, toolkits and videos on GALS methodology see: http://www.galsatscale.net.

For details of different PALS and GALS processes see http://www.gamechangenetwork.org.

For experience and Toolkits produced for SNV/GYEM in Ethiopia see: http://gamechangenetwork.org/africa/ethiopia.