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

This guide from USAID, demonstrates how a cost benefit analysis tool was designed by Opportunity International in order to compare and evaluate microfinance delivery channels.

"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?

Cost-benefit analysis helps managers and other decision makers understand the cost and expected returns (in monetary terms) of a given decision. It can help them decide whether or not to undertake a proposed activity, or choose between different alternatives.1 Cost-benefit analysis tools make this analysis easier and more straightforward, for example, by graphing different alternatives or presenting data for comparison. `

Opportunity’s goal is to provide the rural and peri-urban poor with access to financial services. The organization uses different delivery channels—such as satellite and mobile branches—to achieve this goal. The cost-benefit analysis tool was therefore created to help decision-makers at Opportunity identify the most effective and cost-efficient ways of spending its resources to facilitate outreach to the poor." (Walden & Berger, 2009)

Contents

  • Tool Development
  • Guiding Principles for the Tool
  • Challenges in Developing the Cost-benefit Tool
  • Displaying the Data: Analysis Charts
  • Observations on Analysis Results
  • Potential Tool Upgrades
  • Recommendations for Other MFIs

Source

Walden, N., & Berger, E. The SEEP Network and Opportunity International, (2009). Developing a cost-benefit analysis tool: Experiences and lessons from Malawi and Mozambique. Retrieved from website: http://www.ruralfinance.org/fileadmin/templates/rflc/documents/126222118...

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