The Transparent Pricing Initiative in Ecuador has published standardized pricing data from 26 microfinance providers, representing over three quarters of Ecuador’s active microfinance borrowers. Launched in 2010 the Initiative is delivered in partnership with the Red Financial Rural (RFR) and is funded by the Ford Foundation.Microfinance in Ecuador
Ecuador has one of the fastest growing microfinance sectors in the Latin American region. Following the government’s recent determined effort to reform the existing supervisory framework and provide access to funding for microfinance institutions, the future outlook of the sector looks positive. The leading providers of microfinance are downscaling commercial banks, regulated loans and saving cooperatives, registered cooperatives and non-government organizations. The gap in market penetration between urban and rural areas are relatively high, represents a significant untapped demand for financial services.
Since 2002, microfinance institutions have been incorporated under the regulatory and supervisory framework of the Superintendia de Bancos (SBS) of Ecuador. Laws on consumer protection and transparency in the financial system were introduced in 2004. This law is also applicable on registered NGO-MFIs. The law requires all public financial institutions to disclose their procedures adequately and maintain transparency about the interest rate and fees charged. Interest rates are one of the areas that are highly regulated in the microfinance sector. The Superintendcia de Bancos has instituted a national price formula- TEA (Tasa Efectiva Anual) which mirrors the international Effective Interest Rate formula with the exception that it does not include insurance charges.
The Price Graph showing Ecuador’s microfinance pricing was constructed using two formulas – the standardized national formula (Tasa Efectiva Anual) and the Effective Interest Rate (EIR) including security deposit. Microloan prices in Ecuador range from 10% to 40% TEA.
Minimal variations in microloan pricing are seen across institution type, geographic location and product purpose. Nearly 100% of the institutions analysed use the declining balance interest rate calculation method. The use of fees and other charges were reported among many of the participating institutions.
|Institution||# Borrowers||Portfolio (US$)||Products||Transp. Index||Participating Since||Age of Data|
|Banco Solidario||79,700||221,716,000||1||66||2010-Nov||128 mos.|
|COAC 4 Octubre||2,200||5,771,000||2||N/A||2010-Nov||128 mos.|
|COAC Ambato||1,300||16,415,000||2||82||2010-Nov||128 mos.|
|COAC FondVida||2,500||4,200,000||4||69||2010-Nov||128 mos.|
|COAC LaBenefica||2,500||8,482,000||6||91||2010-Nov||128 mos.|
|COAC MCCH||5,300||10,020,000||2||95||2010-Nov||128 mos.|
|COAC Nacional||30,700||27,129,000||2||85||2010-Nov||128 mos.|
|COAC San José||10,400||29,133,000||5||91||2010-Nov||128 mos.|
|COAC SanAntonio||1,000||2,384,000||3||67||2010-Nov||128 mos.|
|COAC SantaAnita||2,000||2,532,000||6||69||2010-Nov||128 mos.|
|Coop San Miguel||1,800||4,754,000||5||84||2011-Feb||125 mos.|
|CooP VPR||700||1,052,000||4||75||2010-Nov||128 mos.|
|Credi Fe||100,900||380,039,000||4||92||2010-Nov||128 mos.|
|Fundacion Alternativa||4,300||5,545,000||2||61||2010-Nov||128 mos.|
|Luz del Valle||6,400||11,300,000||3||84||2010-Nov||128 mos.|
|PS Ambato||5,600||2,771,000||1||82||2010-Nov||128 mos.|