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Preparing to launch the enabling APR & EIR Program: Bringing transparency to 8 countries in Africa

Published on August 24, 2010

by Christabel Dadzie

MicroFinance Transparency has begun a global movement to promote transparent pricing in the microfinance industry by collecting data and training microfinance institutions, regulators, and other stakeholders about the true cost of loans. Next week we will launch a project that will expand this movement throughout Sub-Saharan Africa.

This project is called the Transparent Pricing Initiative in Malawi and is part of the “enabling Africa to Price Responsibly & Educate on Interest Rates Program,” or the enabling APR & EIR Program for short. The acronyms in the program’s name are also those used to refer to Annual Percentage Rates (APRs) and Effective Interest Rates (EIRs), internationally accepted standard ways of calculating the true cost of a loan. Educating industry stakeholders to understand interest rates and to communicate them clearly is a core component of our mission, and an important factor in maintaining the integrity of the microfinance industry.

This program will reach out to eight African countries — Malawi, Rwanda, Ghana, Uganda, Zambia, South Africa, Tanzania and Mozambique. Our largest yet, this program provides a unique opportunity to understand the specific characteristics of the microfinance markets in each of these countries, as well as any traits they have in common. By gathering the various actors in a given microfinance market under one roof for training and dialogue, our hope is that together, all stakeholders will work towards pro-poor policies at the regulator, funder and MFI levels. While the microfinance markets in the eight countries of the enabling APR & EIR Program are at various stages in their development, gaining the perspective of what works and does not work in each country will be useful as we promote pricing transparency throughout the African continent.

The enabling APR & EIR Program is headquartered in Accra, Ghana. Our team here has been hard at work preparing for our first in-country pricing transparency workshop. The event will take place in Lilongwe, Malawi on August 31 and mark the launch of the Transparent Pricing Initiative in Malawi. The timing of our project in Malawi is excellent as the country is currently examining and redefining the microfinance industry and its leading policies. Recently, as part of financial sector reform in Malawi, a new Microfinance Bill was passed in parliament with the aim of providing regulation and supervision of microfinance service providers. We have already received support from the Malawi Microfinance Network and a warm reception from the leading microfinance institutions. We are thrilled about the opportunity to be in the country during a time in which positive changes in the industry are in motion.

In Malawi and beyond, the education, training, and data collection that we undertake will help establish a firm foundation for instilling transparent pricing in the microfinance industry. The weeks ahead will be busy and demanding, but the charge is right and timely. We look forward to meeting industry actors who support our mission and working with them to promote pricing transparency.

Check back frequently for updates on the enabling APR & EIR Program, starting with a writeup of the August 31st launch workshop.

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