In my series of Bolivia posts so far, I have shared insights on several positive aspects of pricing transparency in the Bolivian microfinance industry. In today’s post, I’d like to highlight how MFTransparency’s pricing data will complement the Bolivian microfinance regulation and transparency efforts already underway.
Posts Tagged ‘Field Work’
Bolivia Transparency Part 4: How MFTransparency’s Pricing Data Complements Current Regulation
Friday, June 25th, 2010Bolivia Transparency Part 3: Transparency in Loan Contracts & Publicity
Thursday, June 24th, 2010Today, I’d like to continue my previous post on interest rate disclosure to clients and the general public, and share some insights on transparency in loan contracts and publicity.
While interest rates are freely negotiated between both parties, the loan contracts have to include several pricing details. As a minimum requirement, the contract has to specify the:
- loan amount
- details of all financial charges
- whether the interest rate is fixed or variable and its value at disbursement
- the periodic interest rate and the corresponding annual rate (TEAC)
- the method used to calculate the balances of the financial operation, as well as the calculation method of any financial charges
- the amount of credit service charge and cumulative total of payments, as well as the penal interest to be applied in case of default
- any insurance fees if applicable
- The contract also has to include the corresponding repayment schedule.
- In the case of variable interest rates, the loan contract must specify the variation and how the reference rate will be applied.
Bolivia Transparency Part 2: Interest Rate Disclosure to Clients & the Public
Wednesday, June 23rd, 2010There are several positive mechanisms in place to facilitate interest rate disclosure to microfinance clients and the general public. Our recent trip to Bolivia was a wonderful opportunity to see firsthand how a range of legal requirements play out in practice.
Bolivia Transparency Part 1: Pricing Strategies & Challenges
Monday, June 21st, 2010As promised in my last blog post on the Bolivia launch, I’d like to share some insights on the regulatory framework in Bolivia and outstanding transparency efforts we learned about during our initial trip to Bolivia where we recently launched the Transparent Pricing Initiative. Over the next few days I’ll be providing a series of posts to tell you a bit about what we’ve discovered. In this first part, I’ll focus on pricing strategies in Bolivia as well as challenges associated with current pricing practices and general challenges currently perceived in the local microfinance community.
Azerbaijan Data Launch and Webinar
Friday, June 4th, 2010by Jessica Haeussler and Michael Tucci
How do banks and MFIs in Azerbaijan respond when asked to report their interest and fees publicly in a common APR or EIR format?
How does the shape of the price curve for Azerbaijan differ from other countries?
What factors seem to be driving prices in Azerbaijan?
How much variation is there in price for loans of similar size, and how might transparency change prices over time?
These are some of the questions that were explored during MFTransparency’s Webinar to highlight the launch of pricing data for the Azerbaijani microfinance market. On June 1st, Azerbaijan’s microfinance community took a definitive step towards pricing transparency and market efficiency, as 10 of the largest MFIs had their pricing data displayed publicly on MFTransparency.org. We here at MFTransparency would like to congratulate Azerbaijan on this important step forward and for their commitment to providing straightforward pricing information for their clients and other stakeholders. Additionally, we would like to extend our gratitude to the Azerbaijan Microfinance Association (AMFA) for their cooperation and coordination of the Transparency Initiative as well as to KfW, who funded our work in the Azerbaijan market.
Pricing Transparency Launch in Bolivia
Thursday, May 20th, 2010
Chuck Waterfield, CEO & President of MFTransparency; Fernando Prado, Secretario Ejecutivo of ASOFIN; Nestor Castro, Gerente of FINRURAL; signing MFTransparency’s Endorsement Statement at the transparency workshop in La Paz, Bolivia.
Last week, we officially launched our Transparent Pricing Initiative in Bolivia, sponsored by the Ford Foundation and MicroNed. This project launch in our third Latin American country has been a great success and we’re excited about the widespread support from the diverse Bolivian microfinance community!
Stakeholders from the entire spectrum of the local microfinance industry joined us in the launch of the Transparent Pricing Initiative in Bolivia. The two local microfinance networks ASOFIN and FINRURAL are our strategic implementation partners in this effort and we are very pleased to announce that all their member institutions attended our events in La Paz and Santa Cruz. In La Paz, 71 participants attended our workshop on May 4th, including representatives from the vast majority of MFIs, among them Banco Los Andes ProCredit, Banco Sol, Banco FIE, CRECER, PRODEM and ProMujer, downscaling banks such as Banco Unión and Banca Minorista del Banco de Crédito BCP, as well as the Central Bank of Bolivia (BCB) and the Supervisory Authority of the Financial System (ASFI). Also in attendance were investors including Oikocredit, LOCFUND, Bolivian Investments Management and Alphamundi Group, and other industry stakeholders such as the Corporación Andina de Fomento (CAF), World Vision, Fundación PROFIN, Consultora IMPACTO, CONFIE, AFIN, and representatives of the local media.
Ecuadorian Innovations in Regulating Pricing Transparency
Monday, May 17th, 2010As I mentioned in my last blog post, I would like to share some insights on Ecuador’s regulatory framework for the microfinance sector and advances in the area of transparency.
Regulations that Support Transparency in Pricing
Ecuador’s regulatory framework already includes several mechanisms for facilitating transparency in pricing. For instance, financial institutions can only charge interest on the remaining balance of a loan, which effectively outlaws flat interest rates. Moreover, regulated institutions are no longer allowed to charge fees. Both these aspects make loan pricing more transparent, allowing borrowers to better understand what they are paying and to compare between the different products available to them. In all marketing materials, financial institutions are required to specify the nominal and effective annual interest rate, the frequency of interest payments and the loan term (Regulación No. 153 del Directorio del Banco Central del Ecuador). The regulation also establishes that all product documentation has to clearly specify the loan amount, term, payment frequency and the nominal and effective annual interest rate. The formulas to calculate these figures are defined in the regulation as well.
Warm Welcome in Ecuador for Pricing Transparency Initiative
Wednesday, May 12th, 2010
I have just returned from a two-week trip to launch the Transparent Pricing Initiative in Ecuador and Bolivia. I am happy to report that the launch was successful in both countries. The Initiatives in South America are funded by the Ford Foundation to promote fair and transparent pricing in the microfinance industry in Argentina, Bolivia, Colombia and Ecuador. As my job with MFTransparency primarily involves managing the South America work, the launch of our Initiative in the first two countries this year was an exciting experience for me. I also finally got the chance to meet our Board member María Sara Jijon who has been incredibly supportive and a great inspiration. In Ecuador, the local microfinance network Red Financiera Rural (RFR) is our strategic implementation partner and we greatly appreciate their support in this Initiative.
No Place Like Home
Sunday, April 25th, 2010I find myself at home this weekend – Lancaster, PA. This is the first time I’ve been home in three weeks, and I’ll be leaving Monday morning for another two weeks. My latest trip took me completely around the globe – US to London to Nairobi (for the Microcredit Summit). From Nairobi I flew to Dubai and Delhi, to launch the India Pricing Transparency Initiative. I was scheduled to fly back via Frankfurt, but the volcano changed those plans. So instead I flew from Delhi to Bangkok to Tokyo to NY to DC.
Bringing the Transparent Pricing Initiative to South America
Sunday, April 11th, 2010Hola 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.
Blog RSS Feed