Bringing increased transparency to microfinance investments is one of the priorities
of the Riskebiz. Microfinance institutions (MFIs) maintain information related to
their services in financial statements, regulatory reports, ratings reports, poverty
assessment tools, and other documents. All of this data must be compiled and analyzed
as part of the investment due diligence process. This process can be time consuming
and prone to errors as data is rekeyed into different computer applications and
reports.
XBRL provides a common format for recording, exchanging, and assigning meaning to
the key valuation metrics (both social and financial) of a microfinance institution.
XBRL tagged financial, social, environmental, governance and political data can
be easily shared and analyzed, making key valuation metrics very portable and easily
accessible by investors.
Although transparency is important to investors, transparency is equally important
within MFI operations. MFI management should begin to think about ways to increase
the transparency of their organization operations. A quick and relatively inexpensive
way of gaining that operational visibility is to utilize XBRL. Use of XBRL within
MFI operations provides many advantages including:
- Ability to access operational information from different
applications;
- Improved accuracy in the financial information because
of built in validation tools;
- Fewer errors during information exchange;
- Less time exchanging data and manually reviewing data;
and
- Increased ability to automate reporting.
Increased transparency in microfinance is key to increased investment.