>>Authored by Jesse Marsden, Manager, Research and Operations
If you haven’t read what Mary Ellen Iskenderian (Women’s World Banking) and Michael Schlein (Accion) have to say about the tremendous work of MicroFinance Transparency (MFT) we think you should. “A New Chapter for Pricing Transparency” it is a powerful testament to the importance of the task Chuck Waterfield and his team undertook, enabling a clear and simple means to understand the true cost of the credit products the microfinance industry is providing.
As a direct result of MFT’s methodology, microfinance institutions in many countries now report their pricing data. Multiple institutions also reduced their prices after publishing data and determining that they were out of line with other institutions in their market. Since MFT has been operating, many governments have also started to require pricing transparency in their regulation of the microfinance industry.
Womens World Banking and Accion are two of the founding organizations of the Microfinance CEO Working Group (MCWG) who collectively launched Campaign Commitments in 2013. (Read all about it!) This is a consortium of organizations that globally reach over 61 million low income individuals — many among the extreme poor — working together to find synergies and partnerships that make possible their dedication to seeking the highest levels of client protection, social performance, and pricing transparency.
As they say, this is “work that none of us can do alone.” We agree. We are all implicated.
Pricing transparency is one aspect of work that, as they highlight in their article, is an essential part of fulfilling an organization’s mission to serve low-income clients well. This makes pricing transparency important to all actors serving the needs of the poor and extreme poor, whether service provider, market facilitator, policy maker, or investor.
The Campaign would hazard to say as well that pricing transparency is a core element to achieving the kinds of pricing models that will help make financial inclusion pathways more affordable to even extremely low-income individuals — an important constituent group to achieving full financial inclusion. (For more on that, check out the Center for Financial Inclusion — another Commitment Making leader!)
We are very glad to be partnered with the MCWG and point to their very thorough Campaign Commitment as an example of the kind of multi-faceted and collaborative approach needed to make headway in using financial and social services to help end poverty. We second the call from the MCWG to combine “successful data collection…advocacy, education, training, and funding” to ensure that pricing transparency remains a central pillar to sustainable and full financial inclusion.
Institutions that do not comply are not “getting away with it”; they do not belong in this industry. Pricing transparency should never be a threat to competitive advantage, but a requirement to operate as a responsible microfinance institution.
We look forward to a continued partnership with the MCWG in finding ways to strengthen the financial inclusion pathways for all those living below the poverty line.
We also would like to acknowledge the interesting conversation that has been happening on the Microfinance Practice Yahoo! Group listserv. Chuck made the announcement about MFT closing its doors there and the outpouring of support and the testimonials of personal experience either with MFT specifically or with price transparency in general has been enlightening. We encourage you to join the listserv as it is a valuable resource for a frank conversation about relevant issues with your peers.