Developing an Impact-Oriented Measurement System

This guidance paper, published by FSD Africa in January 2016, details the first stage of implementing an Impact-Oriented Measurement (IOM) system for Financial Sector Deepening (FSD) programmes. It focuses on establishing a clear purpose through the development of evaluable Theories of Change (ToC) and the formulation of strategic impact measurement questions to track systemic change and poverty reduction.

• The first stage of the IOM process, 'Clarity of purpose', consists of two primary steps: ensuring the FSD Theory of Change (ToC) is evaluable and developing specific impact measurement questions. This stage is most critical at the beginning of an FSD's strategy period to ensure a "shared understanding of the programme’s main objectives, and what the FSD is seeking to measure."
• For a Theory of Change to be considered evaluable, it must meet six specific criteria: it must be clear, relevant, plausible, testable, contextualised, and account for complexity. This includes identifying the final impact, financial sector outcomes, and outputs, as well as explicitly incorporating "systemic change" to capture both direct and indirect effects of interventions.
• FSDs are encouraged to use a 'nesting' approach to manage the complexity of their interventions. This hierarchy consists of an overall programme ToC for high-level logic, nested thematic ToCs for detailed impact pathways (e.g., digital financial services or SMEs), and further nested project results chains that provide the specific evidence base for individual interventions.
• The guidance identifies three main pathways through which FSDs promote systemic change: the direct effect on a partner and their immediate sphere of influence, the effect partners have on the wider market through expansion and replication, and the effect of changing system structures on the incentives for system actors.
• Impact measurement questions should be developed using both 'top-down' and 'bottom-up' approaches to create a comprehensive narrative. Bottom-up questions track the contribution from intervention to market change, while top-down questions examine broader changes in financial outcomes and livelihoods to determine if the FSD's interventions were a driver of those changes.
• The document emphasizes the importance of 'additionality' in results chains, which helps build a contribution narrative by identifying changes that would not have occurred, or would not have occurred as quickly, without the FSD intervention. This approach is aligned with criteria used by institutions like the International Finance Corporation (IFC) and the Dutch Development Bank (FMO).

APA

FSD Africa (2016). Developing an Impact-Oriented Measurement System. https://fsdafrica.org/wp-content/uploads/2025/05/11655-Impact-Oriented-Sys_Chp4_Sngl_LR.pdf

Chicago

FSD Africa. Developing an Impact-Oriented Measurement System. 2016. https://fsdafrica.org/wp-content/uploads/2025/05/11655-Impact-Oriented-Sys_Chp4_Sngl_LR.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Developing an Impact-Oriented Measurement System |date=January 2016 |url=https://fsdafrica.org/wp-content/uploads/2025/05/11655-Impact-Oriented-Sys_Chp4_Sngl_LR.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2016developing, author = {{FSD Africa}}, title = {{Developing an Impact-Oriented Measurement System}}, institution = {FSD Africa}, year = {2016}, month = jan, url = {https://fsdafrica.org/wp-content/uploads/2025/05/11655-Impact-Oriented-Sys_Chp4_Sngl_LR.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }