The Transparent Pricing Initiative in West Africa: The perfect fit at the right time
by Mélina Djre
“MFTransparency’s Transparent Pricing Initiative comes at the right time.” That’s the sentence we have heard most frequently during our meetings with MFIs, networks and especially regulators. This is both positive and stimulating for our work in West Africa.
Here in Senegal, and in the seven other member countries of the West African Economic and Monetary Union (WAEMU), the legal framework in the microfinance sector is provided by the BCEAO (Central Bank of West African States). With the diversity of MFIs’ legal type, target and mission, regulating microfinance in West Africa is no easy matter. The PARMEC Law of 1993, a unique law specific to microfinance and applied by each member country, has regulated the sector. In 2007, the analysis of its limits has resulted in a new law, better adapted to the specific needs of microfinance in West Africa. While getting familiar with this new microfinance law, my colleague, Bachir Amadou, stumbled upon Article 60 of Chapter 4 which states the obligation of transparency in financial services pricing. This key article is crucial for the Transparent Pricing Initiative in West Africa.
Microfinance is really dynamic in West Africa and fully contributes to financial inclusion. In Dakar, almost every street corner holds an MFI branch. Clients have a wide range of choices, which is not a surprise given the vitality of the informal sector and the significant proportion of people marginalized from the traditional banking system. This makes it all the more important for clients to have access to clear and standardized pricing, such as Effective Interest Rates (EIR). For clients, being able to compare the many different prices means being able to use free market play and encourage a competitive environment. This emphasizes the relevance of MFTransparency’s work with clients’ needs as well as the regulatory framework.
The synergy between the regulator’s requirements and our work in the promotion of transparency is promising. The collection and publication of pricing data initiated by MicroFinance Transparency offers West African MFIs a great opportunity to take a first step towards transparency. By submitting data MFIs can put their commitment to pricing transparency and consumer protection into practice!