Launch of the Transparent Pricing Initiative in the Philippines

by Laila Q. Deles

In March, MFTransparency CEO & President Chuck Waterfield and Vice President of Global Programs Alexandra Fiorillo traveled to the Philippines to launch the Transparent Pricing Initiative in the Philippines.

MFTransparency partnered with the Microfinance Council of the Philippines (MCPI), Rural Bankers Association of the Philippines (RBAP), Mindanao Microfinance Council (MMC) and APPEND to host a series of half-day workshops on transparent pricing in key cities nationwide—Davao (March 22), Manila (March 24) and Iloilo (March 28). The workshops were attended by more than 150 participants representing a range of microfinance service providers including NGOs, banks and cooperatives as well as microfinance networks and other industry stakeholders.

Manila workshop audience

The workshops were each divided into two parts.  The first session focused on the need for transparent pricing and the new industry standards for calculating interest rates for microcredit products, Annual Percentage Rate (APR) and Effective Interest Rate (EIR).  This session included a demonstration of the Calculating Transparent Prices Tool. This tool, available free of charge on the MFTransparency website (www.mftransparency.org), calculates the actual cost for a client to borrow a loan with a given set of terms, taking into consideration fees, compulsory savings and insurance, and demonstrating the effects of different charges on APR and EIR, cash flow and total cost of credit.  The second session provided an overview of MFTransparency and how stakeholders can actively participate in the Transparent Pricing Initiative in the Philippines.

Ms. Fiorillo explained that microfinance service providers, including NGOs, rural banks and cooperatives, can participate by submitting pricing data on their various microcredit products.  Submitting data is a unique opportunity for institutions to demonstrate their commitment to client protection and to play a leadership role in promoting transparency in the Philippine microfinance industry. Moreover, it is an effective way to gain the attention of investors and donors, prepare for transformation, rating or expansion and to market products and services to current and potential clients.  Participating institutions will be issued a Certificate of Recognition as well as a Seal of Transparency.  The first institutions to submit will be given special recognition through a press release as well. Directions on how to submit data can be found on the MFTransparency website (www.mftransparency.org).  The process takes about 2-3 hours and MFTransparency staff are available to assist throughout.

In between the workshops, the MFTransparency team had the chance to meet with key Bangko Sentral ng Pilipinas (BSP) officials, including Deputy Governor Nestor Espenilla, to discuss the proposed regulation for adopting a standard pricing disclosure format.  While the BSP only supervises banking institutions, it is working closely with MCPI so that non-regulated entities adapt the regulation as well.  Given this direction of BSP, the Transparent Pricing Initiative is one way in which the industry can start preparing for the implementation of this regulation and to show its capacity to self-regulate.

MFTransparency also held meetings with People’s Credit and Finance Corporation (PCFC), Oikocredit and PlaNet Finance, all of which expressed their support for the Initiative. In addition to collecting data from financial institutions, MFTransparency is working on this Initiative with networks, regulators and policymakers, investors and donors, technical service providers and any other stakeholders of the Philippine microfinance market interested in becoming involved.

With the launch successfully completed, MFTransparency has proceeded to the data collection phase.  Discussions are now ongoing with individual institutions regarding this process.  In the next few months, as data collection progresses, we will begin to develop a better understanding of product pricing in the country. The objective for this pricing disclosure and education is to enable more informed decisions by microfinance clients, microfinance institutions and regulators.

All questions about the Transparent Pricing Initiative in the Philippines, including information about submitting pricing data, should be directed to [email protected]. Please check our Philippines page for updates as the project progresses.