Principles for Smarter Microfinance

Frustrated by MFIs with loose credit policies? Fed up with regulators bent on imposing interest rate caps?  Finally, MFI managers and stakeholders can take some constructive action.

On June 14th, Beth Porter, founder of Women Advancing Microfinance spoke to the Silicon Valley Microfinance Network (SVMN) about the Smart Campaign.

The Smart Campaign is a global effort within the microfinance industry to bring transparency to the pricing of microloans.  The general idea is that one MFI can’t go it alone – if all its competitors use flat interest rates and front or back-end fees, it’s difficult if not impossible to remain competitive without joining the flat interest rate crowd.  The lack of transparency also increases suspicion and misunderstanding from well-meaning regulators and politicians about pricing microcredit.

The Smart Campaign puts forward a set of fair-lending principles for MFIs to adhere to, such as avoidance of over-indebtedness, transparent pricing, and client privacy.  The website presents a series of steps MFIs, associations and networks, and investors and donors can take.

So.  Let’s stop complaining about the badly behaving MFI next door or that government ministry which just doesn’t understand.  Check out the Smart Campaign and see how you can take action.

And if you’re in the San Francisco Bay Area, I highly recommend SVMN educational events, which occur roughly on a monthly basis.

About Kirsten Weiss

Integrating marketing and strategy to develop profitable, demand-driven institutions.