by Jessica Massie and Dasha Kuts
MFTransparency‘s financial education team in Rwanda has been learning a lot about the client perspective as we complete the first phase of our financial education pilot program. Through interviews and focus groups, we are learning directly from clients about the experience of making borrowing decisions based on price, and learning about what approaches to education are effective and which may be less effective.
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I just returned from a two-week field trip to Argentina to meet up with local financial institutions and provide technical assistance in the data collection process. During this trip I gained some new insights on the importance of contextualizing microloan prices.
After the launch of the Transparent Pricing Initiative in Burkina Faso in July 2010, I returned to work directly with the MFIs on the data collection process.
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In one of my previous blog posts, I shared our plans to host a conference to present the results of our Transparent Pricing Initiative in Bolivia in early September. As it is critical for us to include all key stakeholders of the local microfinance industry in this conference, such as the local microfinance networks, regulatory institutions, investors and participating MFIs, we agreed to move the conference date to October 21st, so as to allow for full participation. I have just returned from a field trip to Bolivia to assist the remaining MFIs with the completion of their data submissions, meet with the local networks ASOFIN and FINRURAL to finalize the conference agenda and view the conference facilities for the event. I also had the opportunity to continue discussing the development of educational materials for the Bolivian microfinance sector with a number of local institutions.
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Signing the endorsement statement during the inauguration of the workshop. Pictured, from left to right: Claudio Higuera of EMPRENDER, Jaime Villarraga of Microfinanzas para el Desarrollo, Carlos Moya of Banca de las Oportunidades and Chuck Waterfield of MFTransparency.
Greetings from Colombia! This week MFTransparency is launching the Transparent Pricing Initiative in Colombia, hosting two transparency workshops in Bogotá and Medellín.
Over seventy representatives of the local microfinance community attended today’s workshop in Bogotá, discussing costing and pricing in the context of the local microfinance sector. Jaime Villarraga and Claudio Higuera of Microfinanzas para el Desarrollo and EMPRENDER-AsoMicrofinanzas respectively, MFTransparency’s strategic implementation partners in this Initiative, as well as Carlos Moya of Banca de las Oportunidades, inaugurated the workshop highlighting the timeliness and importance of launching the Initiative in Colombia.
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Depuis le lancement en juillet 2010 de l’Initiative sur la Transparence des Coûts au Burkina Faso, l’équipe Afrique de l’Ouest a fait beaucoup de progrès. Nous avons rencontré de nombreux intervenants et acteurs de la microfinance et nous prévoyons une deuxième série de réunions dans les semaines à venir. Nous avons effectivement démarré le processus de collecte de données depuis le début de ce mois d’Août. Dans ce post, je vais décrire les formidables progrès que nous faisons au Burkina Faso.
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Our Latin America team is currently organizing an industry conference that we will host in La Paz on September 7.th At this conference we will launch the pricing data we have been collecting since May when MFTransparency and the local microfinance networks ASOFIN and FINRURAL kicked off the Transparent Pricing Initiative in Bolivia.
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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.
Today, 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:
There 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.
As 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.
by 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.
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.
As 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.
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.
I 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.
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.
All around the world, our thoughts are with the Haitian people, as they work together to overcome yet another tragic situation. The Haitian proverb – beyond mountains, more mountains – has been so poignantly true for them.
I know Haiti. I lived in Haiti for three years, and though that was a long time ago, I still find myself slipping into Haitian Creole on occasion. The language — like the country and people – stays with you.
Twenty-five years ago, in 1985, I took a job to start up a microfinance program in Haiti. Actually, the word microfinance didn’t yet exist. This was the pioneering days, when we were exploring ways to help the self-employed poor to increase their incomes and create jobs. We found that business loans were an excellent vehicle to do just that. We were inspired at the resourcefulness and appreciation shown by our clients. We were humbled by the conscientiousness with which they paid back their loans.
by Jordan Filko
Jambo! I would like to share a bit in this post about recent work in Kenya, where I spent three weeks in January with Alexandra Fiorillo (Vice President, MFTransparency) continuing the data collection process for MFTransparency’s Transparent Pricing Initiative in Kenya. Kenya is the first African country where we have implemented the Initiative and we’ve been continuing the work we began in October, when we hosted a training session in Nairobi during the Social Performance Task Force workshop. This trip has been hugely successful! I’m excited to report back and share some of the highlights of our time in Kenya.
We focused our first week in Kenya having meetings with organizations that support the local microfinance industry. The Association of Microfinance Institutions of Kenya (AMFI) has supported our work from the beginning of the Kenya project and we were happy to visit their offices to update them on our progress. As hosts of the 2010 Africa/Middle East Regional Microcredit Summit, AMFI invited us to host a session at the Summit where we will officially announce the results of the MFTransparency Kenya Initiative. Our partnership with AMFI has helped us to access the leading MFIs, communicate our message throughout the industry and ensure that there is support for our work from within the Kenyan microfinance market. We are very excited about the Microcredit Summit and sharing the results of our project there!
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