Exclusive Interview with MFTransparency executives Chuck Waterfield and Alexandra Fiorillo
MicroFinance Transparency Urges Indian MFIs to Share Pricing, Interest Rate Data. Microfinance Transparency is currently on a whistle-stop tour of India to speak with MFIs and industry stakeholders, as part of their worldwide Transparent Pricing Initiative, which urges MFIs to share their pricing and interest data to improve transparency and bring credibility to the sector. Microfinance Insights caught up with MFTransparency executives Chuck Waterfield and Alexandra Fiorillo, to speak with them about their experience in India so far.
Microfinance Transparency is currently on a whistle-stop tour of India to speak with MFIs and industry stakeholders, as part of their worldwide Transparent Pricing Initiative, which urges MFIs to share their pricing and interest data to improve transparency and bring credibility to the sector. Microfinance Insights caught up with MFTransparency executives Chuck Waterfield and Alexandra Fiorillo, to speak with them about their experience in India so far. Read on.
Chuck Waterfield (Waterfield): It is to get the information about the process out; dialog, explain how things go forward, answer concerns and questions – it’s a familiarization process.
Alexandra Fiorillo (Fiorillo): We are placing the Indian transparent pricing initiative in the global context of the work we are doing – explaining how the Indian case fits with our broader mission.
Insights: What has been the audience’s reaction so far?
Waterfield: There have been some very engaged discussions and good questions. Everyone is digging deeper into the topic. They know this is something that is important to do but relatively risky – so it’s all about discussing how to move forward but to do so carefully.
Insights: Have there been any criticisms of this effort?
Waterfield: Not publicly, at least. We have got a few reserved comments and judgments, but none in India yet. What we are doing in India is significantly different than our process in the rest of the world, so this discussion is all about that.
Fiorillo: We haven’t heard any criticisms but there have been a lot of questions on our methodology and the data gathering process.
Insights: How different is your process in India? Why?
Fiorillo: The main difference is the sheer size of the market. It’s the largest market we have looked at. Plus, prices in India are already relatively low and competitive and are fairly transparent. There don’t seem to be too many hidden fees and so we expect to be less shocked at the overall result when we are finished with our data gathering process. We’ll be focusing mainly on the APR (annual percentage rate) in India.
Waterfield: In other countries, we have a barebones process where we analyze data and post it online. In India, we have a lot of support to develop analytical reports; hold a major conference at the time of the release of the data on our website. We also want to work with the MFIs to develop financial literacy. And we’re pulling all of this together in a very short time frame for a market this size.
Insights: What have been the most common questions raised by the audience so far?
Fiorillo: In Chennai, there were a lot of questions about collecting information on compulsory savings and insurance fees. People also asked if we will analyze MFIs’ financial statements, which we don’t.
Waterfield: We don’t ask for information that people are already giving out. This is not an onerous reporting task. It is just about products and prices. The audience is also curious about the time and effort needed for the task and the extent of their involvement in the process.
Insights: Have you followed a similar process in other countries?
Fiorillo: Yes but we have had fewer workshops elsewhere. It’s all relative to the market size.
Waterfield: And we’ll be back for more workshops on a follow-up trip in three to six weeks from now. That’s also when we will begin the data collection process for India.
Insights: Has your experience in India been different in any way? Compare expectations and reality.
Fiorillo: We haven’t done the data collection yet so it’s hard to comment on the reality bit. But the reception has been pretty much the same around the world. A lot of people are interested and concerned and we get a lot of people at these workshops because they want to learn what we are doing.
Waterfield: The MFIs are specifically interested in the question of whether the product is tied to other products and services because this ties to the price. For instance, we ask if it’s an education loan or for a business; if it’s only for women, or if it’s specific to gender.
We completed a data collection process yesterday – in less than an hour – with Equitas. But we will be rolling out all the data together at the same time.
Insights: What is the next step?
Waterfield: We will be back in three to six weeks to conduct more workshops and start collecting data. We will unveil the data within six months from now in September.
Insights: How many MFIs have signed up so far?
Fiorillo: We haven’t asked anyone to sign up yet. We are still in the sensitization phase yet. We will be reaching out to them individually in the next four weeks and ask them to participate.
Waterfield: MFIN is very much on board and they have reached a consensus that every member will participate. NABARD and SIDBI are both endorsers and are encouraging people to participate. And we have five funders for India – Standard Chartered, Citibank, MFIN and a couple others in the pipeline.
Insights: Where to next?
Fiorillo: Ecuador and Bolivia. These are country-wide projects that are funded by the Ford Foundation and we will be working closely with regulators and networks in both countries. We have a lot of people signed up for workshops in these countries.