African Policymakers Outline the Way Forward in Transparent Pricing

by Jordan Filko

Earlier this month MFTransparency hosted the African Microfinance Pricing Transparency Leadership Forum in Nairobi Kenya. This was the first event of its kind, bringing together policymakers, regulators, networks and a host of industry experts to discuss issues related to pricing transparency in African microfinance markets. More than 120 people comprised this carefully selected participant group, representing 24 different African countries. MFTransparency compiled country teams that would be able to achieve the two main objectives:

• Represent the experience of their country in developing a regulatory framework for pricing disclosure in the microfinance market, so that other countries could learn from it
• Synthesize the learnings of the forum into an actionable strategy for facilitating pricing disclosure in their home country microfinance market

Toward this end, it was important for us to include not only the regulator perspective but also that of the industry (through network representatives) and clients (through consumer protection agencies) as well, with industry experts on hand to provide technical backing to discussions and planning sessions.

These teams underwent a full three-day agenda with vigor. On the first day MFTransparency CEO Chuck Waterfield and COO Alexandra Fiorillo guided the group through a day-long training series designed to reinforce the principles underlying pricing transparency, discuss approaches to calculating transparent prices and share examples of effective policy that MFTransparency has observed in our work around the world. Day 2 started off with a riveting inaugural speech by Professor Njuguna Ndung’u, Governor of the Central Bank of Kenya. The day proceeded with themed workshops and round table discussions centered around the topics of pricing calculation, standards for reporting and spilling over into a third day with financial education. On the final day of the event participants also had the opportunity to hold strategic planning meetings, within their own country teams, directly with other country teams and in consultation with industry policy experts and technical assistance providers.

Not only was this the first event to bring together this unique combination of individuals, it also took a decidedly different approach from many industry conferences. While the trainings of Day 1 of the event served to ground participant discussions in a common level of technical understanding, the sessions that followed all heavily emphasized attendee participation and discussion. While MFTransparency is privileged enough to speak to policymakers and regulators in countries across Africa, we observed that these individuals do not often have an opportunity to speak with each other. In fact, some country teams commented that they do not even have so much time to see colleagues from their own country working in other institutions as they did at the Forum in Nairobi. The majority of time at this event was therefore spent in roundtable discussions, which proved to be quite lively and even heated on certain issues! Some topics, such as ideas for pricing disclosure formulas, stirred up questions and debates, while others, such as requirements for financial institutions to report on pricing, allowed some participants to present their particular approach and others to share their challenges and concerns and seek advice from their counterparts in other countries.

Perhaps the most important sessions of the event were those that lead participants to consider the concrete next steps in their own process for building transparent markets. By Day 3 of the event participants were fueled with examples and ideas to discuss, knew which countries they were most keen to learn from and aware of which industry experts may be able to offer them the technical support they need. The agenda therefore allotted valuable time for developing action plans, which were afterwards shared among the group as a whole. This Forum was a beginning, getting a process started that each country team will fulfill in their own market in their own unique way.

For some, the idea of three days of discussion of pricing disclosure among regulators may not exactly sound enthralling, but this Forum was genuinely one of the liveliest industry events I have witnessed. Observing the discussions, with active participation from all attendees, new ideas circulating in a constant flow and knowledgeable industry leaders having it out about some of the most contested topics in microfinance, was truly exciting. To me, a few core ideas defined this event:

• Exchange of experience is essential to effective practice. As important as it is to become an expert in whatever specific geographic or topical area of the industry that you inhabit, it is equally vital to learn from your peers in other areas. I believe the process of many participants was injected with new life as a result of conversations they had at this event.
• Creativity and innovation are inherent to building transparent markets. Microfinance is a unique industry with a unique set of stakeholders, and policymakers in Africa understand that to effectively regulate for transparency they have to get creative. The discussions at the Leadership Forum flowed freely outside of the norms of financial regulation, asked the hard questions, suggested active steps and showed willingness to experiment with new approaches.
• All members of the ecosystem are engaged. At the Forum I learned about many partnerships taking place between different regulatory bodies as well as networks, consumer protection agencies and other industry support organizations. The most intelligent policy is only as effective as its implementation, and African microfinance industry stakeholders are working closely to put in place policy that is practical and benefits the industry as a whole.
• Africa is setting an example for the rest of the industry. The regulators of African microfinance markets are committed to building strong, transparent microfinance markets. More mature markets are taking a bold look at how to restructure policies to incentivize pricing disclosure, and more nascent markets are incorporating pricing transparency into the core of their policy frameworks as they are developed.

In the coming weeks, we at MFTransparency are looking forward to continuing many of the interesting conversations started at the African Microfinance Pricing Transparency Leadership Forum. To fuel this process, we have uploaded all the presentations and resources distributed at the event here. We are also working on a body of articles and tools designed to condense the main learnings of the event for sharing throughout the industry and also to support regulators and policymakers as they begin to take the next steps toward transparent pricing that they identified at the event. We have heard from many participants who are already beginning to implement their action plans, and we’re excited to follow their progress as pioneers in responsible microfinance.

Thank you to our Steering Committee (comprised of representatives of Agence Franҫaise de Développement (AFD),UNCDF, CGAP and the African Microfinance Network (AFMIN)), the funders of the event (AFD, Luxembourg Cooperation and UNCDF), our speakers, moderators and discussion facilitators and all the participants for their contributions to making the Forum a truly valuable platform for discussion and planning.

Read about the African Microfinance Pricing Transparency Leadership Forum on the

 for Financial Inclusion Blog