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New Pakistan Pricing Data Now Available

Published on January 31, 2014

We are pleased to announce the launch of new pricing data covering the microfinance market in Pakistan. The new pricing data shows the current state of pricing dynamics in the Pakistan microfinance market which has never been public before. The dataset shows complete and comparable data on interest rates, fees, insurance costs and taxes charged on microloans, standardized in an annual percentage rate formula.

It is our pleasure to invite you to view the new pricing data on the MFTransparency Pricing Data Platform. The data will also soon be available for direct download via the Truth In Lending (TILT) csv files.

Highlights of the Pakistan transparent pricing data include:

  • Transparency level – the transparency level in Pakistan is explained by pricing practices consisting of multiple price components: only 31% of borrowers in Pakistan receive loans which incur interest calculated using a flat interest method; 86% of borrowers pay 1 fee or no fees in addition to the interest rate; 44% of borrowers pay a compulsory insurance fee; and only 5% must provide compulsory deposits.  These figures are all relatively low when compared to pricing practices in countries where these practices are not specifically banned by legislation.
  • Full Price trend – unlike most other countries, the full prices in Pakistan do not follow the standard price curve where prices rise as loan size decreases.  This common practice is related to the increasing operating cost ratio of smaller loans. The preliminary indications are that products in Pakistan are priced to generate profit margins on the larger loan sizes to offset losses from the smallest loans.
  • Integration with other services –  Despite the relatively medium to low prices, the majority of MFIs in Pakistan still do bundle other training and technical services together with their credit product. In other markets, the higher cost of bundled services leads to higher prices, but the Pakistan prices still remain lower relative to other countries.
  • Market coverage – the new pricing dataset presents the current prices paid by 1.3 million active borrowers representing 54.4% of Pakistan’s microfinance market.

The Pakistan Pricing Data Launch and Understanding Pricing presentations delivered by Chuck Waterfield during the data launch event in Islamabad, Pakistan  are available for download from Here and Here.

The new pricing data for Pakistan was collected and analyzed in partnership with Pakistan Microfinance Network.

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