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Bringing the Transparent Pricing Initiative to South America

Published on April 11, 2010

by Jessica Haeussler

Hola from Quito! I have recently moved to Ecuador, where I’m currently organizing the preparations for our South America projects. Peru was the first country where we kicked off our Transparent Pricing Initiative in early 2009. This year, we’ll bring the Initiative to Ecuador, Bolivia, Colombia and Argentina. Our 2010 South America projects are sponsored by the Ford Foundation, and in the case of Bolivia also by MicroNed.

As part of the MFTransparency Transparent Pricing Initiative we will host a series of workshops in Ecuador and Bolivia in late April and early May. The first workshop will take place in Quito on April 27th, followed by the same event in Ambato and Guayaquil on April 28th and 29th, respectively. Our team will then travel to Bolivia and host workshops in La Paz on May 4th and 6th and in Santa Cruz de la Sierra on May 5th. At these events Chuck Waterfield, Founder and CEO of MFTransparency and Alexandra Fiorillo, Vice President of the organization, will share with key stakeholders of the local microfinance sectors the new industry standard for calculating interest rates for microcredit products. We’ll also explain how each MFI can actively participate in our Transparency Initiative and benefit directly from our Bolivian and Ecuadorian Market Data.

These workshops offer a wonderful opportunity for MFIs to share experiences with peer institutions and learn from experiences of other organizations from around the world. Our transparency events will also be a great opportunity to share and network with other stakeholders, such as donor agencies, raters, investors, technical assistance providers and government officials. Some of the most prominent MFIs in both countries have already signed up for our workshops and we receive RSVPs from a wide range of stakeholders almost daily. We encourage all remaining MFIs and stakeholders to sign up for our workshop in the city that best suits them as soon as possible, as spaces are filling up quickly.

Our Initiative aims at enabling transparent communications between suppliers and consumers of microcredit products and we will work with MFIs, Central Banks, and investors to achieve this goal. In both countries we have been collaborating closely with the local microfinance networks. In Ecuador, the Red Financiera Rural (RFR) has supported our work from the beginning, and in Bolivia we are closely working together with both the Asociación de Entidades Financieras Especializadas en Micro Finanzas (ASOFIN) and the Asociación de Instituciones Financieras para el Desarrollo Rural (FINRURAL).

In Ecuador, the issue of transparency in information has been a hot topic for the past 4 years and is currently a regular topic of conversation. Nevertheless, there is still the need to promote the principle of pricing transparency – and especially to approach the topic from a cost perspective. Caps on interest rates continue to pose a threat to the sustainability of Ecuadorian MFIs focusing on relatively small loan sizes. The relationship between costs and price will be a key topic in our workshops and aims at enabling a better understanding of price-setting from a cost perspective.

The Bolivian microfinance industry is among the foremost in the world in terms of outreach and development. It boasts both longstanding and large-scale institutions as well as years of accumulated knowledge and experience in applying and developing best practices. Yet, the status of consumer protection in Bolivia is weak, with little or no state action and scarce initiatives on behalf of banks to self-regulate. The General Law on Banking and Financial Institutions doesn’t contain any specific clauses covering transparency, client rights, over-indebtedness and reckless lending, while the principal banking networks have not established standards of client protection, either. Our workshops in La Paz and Santa Cruz will highlight the importance of pricing transparency and responsible finance, and set out to promote dialogue on why transparent pricing is vital for the Bolivian microfinance industry.

We are excited to work with the local microfinance industries to continue promoting transparency for microfinance in Latin America!

We will soon report from the field and share the highlights of our projects in Ecuador and Bolivia.

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