Improving Microfinance Together

A Message from the President and CEO: Our Clients Come First! October, 2011Dear Friends and Supporters,

Recently, media criticism of the microfinance industry has resulted in our once highly-regarded reputation for helping the poor being turned on its head to where we are now characterized, by some, as profiteers whose goal is to make money on the backs of the poor in order to line the pockets of a few shareholders. These disturbing allegations motivated me and a group of my peers to come together to discuss a number of challenges facing the microfinance industry including:

• Over-indebtedness and harsh collections practices, particularly in saturated markets that are growing rapidly
• Questions about high interest rates and fees, and how answers to these question are communicated to clients.
• The entrance of new players who may not fully share the microfinance industry’s history of mission-driven motivation and commitments
• Research indicating that microfinance’s impacts on client welfare may be more modest than is sometimes claimed and
• The need for the industry to offer a wider range of products

It was out of these initial discussions that the Microfinance CEO Working Group (MCWG) has emerged. Our purpose is to enable the microfinance industry to evolve in a positive way so that it can achieve its full potential of bringing financial and related services to those who have traditionally been excluded, and thereby, address the global problem of poverty. The MCWG’s current membership is made up of the CEOs of largely U.S.-based microfinance organizations that promote microfinance around the globe including ACCION International, FINCA International, Freedom from Hunger, Grameen Foundation, Mercy Corps, Opportunity International, ProMujer, World Vision, and Women’s World Banking.

After much discussion, we all agree that the appropriate responses to these challenges include strong consumer protection, meaningful transparency and development of industry standards of social performance management and, where possible, measurement. In addition, we must communicate more effectively that we are firmly grounded in meeting the needs of our clients, and that our commitment to remaining a mission-driven industry guides all that we do. To these ends, MCWG’s initial commitment is to promote and support three initiatives already underway in the industry:

The Smart Campaign – Built on seven Client Protection Principles and endorsed by 2,000 global MFIs, support organizations, investors and individuals, the campaign is an unprecedented effort to make client protection part of the DNA of microfinance.

MicroFinance Transparency (MFT) – An organization that promotes transparent pricing in the microfinance industry.

The Social Performance Task Force – A participatory effort of hundreds of industry practitioners developing common tools for measuring social performance and mission fulfillment.

FINCA is committed to ensure that these initiatives are fully implemented across our network. If, at any time, you have questions about how FINCA and the microfinance industry conduct their business, please don’t hesitate to contact me at [email protected]

Sincerely,

Rupert W. Scofield