The Alliance for Fair Microfinance (the Alliance) will launch with its first discussion period, which is set to start at the latest in the first week of January of 2008. The Alliance is an initiative to promote customer / client interests in the microfinance industry by providing direction and platform for discussion among the actors of the microfinance industry.
The opening bid of the Alliance is ‘as a rule of thumb the costs of a micro-loan should not exceed a third of the loan amount in real monetary terms’, which puts focus on the cost prices and pricing levels of the micro-loans. The discussion on the inappropriate repossession through undue or illegal pressure on the clients, and untrue information that gives the clients false impression of loans, both of which are important problematic symptoms of current microfinance industry, will follow. Through the accumulation of debates, the Alliance hopes to induce a preliminary ethical certification package for the members of the microfinance industry.
The discussion will take place at the fairmicrofinance Yahoo group. The Alliance does not have a formal membership, but registration at the web site of the Alliance is necessary for participation in the discussion at the Yahoo group. The discussion will be open for a set period of time, after which the summary and concluding remarks will be posted on the web site of the Alliance. The subject will be open to additional comments after the discussion period is over.
The Alliance recognizes various reasons for the deficiency of ethical standards in the microfinance industry. First is the history of the industry; in the past, microfinance has been predominantly carried out by non-profit organizations and supported by non-profit investors and donors who usually treated customers / clients relatively fairly, some times even too leniently. Formulation of proper ethical standard is easy to be neglected in such setting. However, as the industry grows rapidly, the want and need to attract private capital at scale calls for profitability in addition to sustainability, and unfair practices that seek profits arise. Efforts to regulate microfinance practices often meet criticisms that argue for laissez-faire principle and natural growth of the industry.
The initiators of the Alliance are experts from all continents; they are Herman Abels of the Netherlands, the Managing Consultant of the Blue Rhino Consult BV, Maria Sara Jijon Calderon of Ecuador, a legal counsel with specialty in banking and financial matters, Malcolm Harper of the United Kingdom, a long-time microfinance practitioner who now serves as the Chairman of Micro-Credit Ratings Internatonal Limited, Jonathan Lewis of the United States, Chief Executive Officer of Micro Credit Enterprises, Henry Oketch of Kenya, and N. Srinavan of India.
Similar Posts:
- MICROCAPITAL BRIEF: Visa Everywhere Initiative 2023 Offering $500k for Fintech Innovation
- MICROCAPITAL BRIEF: Cerise+SPTF Updates Social Performance Indicators (SPI) Online Platform
- SPECIAL REPORT: Looking Back to Plan Ahead – The Year of AFISAR
- SPECIAL REPORT: e-MFP Launches the Green Map, a Pioneering Resource to Address an Information Gap in Green Inclusive Finance
- MICROCAPITAL BRIEF: EBRD Loaning $5m to ING Finansal Kiralama for Leasing for Energy Efficiency, Renewables in Turkiye
