The Smart Campaign, a global initiative to improve accountability regarding client protection in the microfinance industry, recently announced a plan to launch a certification process that will enable microfinance institutions (MFIs) worldwide to verify their commitment to the Campaign’s core “Client Protection Principles” through third-party assessors. To date, approximately 1,600 MFIs, microfinance support organizations, investors, donors and individual industry professionals have endorsed the Smart Campaign, which is headquartered in Washington, DC, at the Center for Financial Inclusion (CFI) of nonprofit ACCION International.

The certification is intended to indicate to customers and investors that an MFI’s practices are aligned with the six Client Protection Principles, which are: avoidance of over-indebtedness, transparent and responsible pricing, appropriate collections practices, ethical staff behavior, effective complaint management and securing the privacy of client data. Signatories of the Smart Campaign presently have the option of gauging their own client protection practices by using a set of self-assessment tools.

The certification program is currently undergoing pilot testing. The Smart Campaign anticipates launching the program by the end of 2011.

By Jacqueline Foelster, Research Associate

About Center for Financial Inclusion (CFI): CFI was started by a private US-based nonprofit organization ACCION International with the goal of connecting the microfinance community with major drivers of the global economy. CFI works with microfinance experts, banks, investors, regulators, technology firms, universities and others to facilitate global financial inclusion.

About ACCION International: ACCION International is a private, US-based nonprofit organization with the mission of alleviating poverty by providing financial products, such as microenterprise loans, business training and other financial services to its clients. ACCION was founded in 1961 and issued its first microloan in 1973 in Brazil. ACCION’s partner microfinance institutions provide loans to men and women entrepreneurs in 23 countries in Latin America, Asia, Africa and the United States. As of 2009, ACCION’s network serves 3.3 million active clients and has a gross loan portfolio of USD 31.8 billion.

Sources and Resources:

[1] The Smart Campaign Press Release, “The Smart Campaign to Launch a Certification Program for Client Protection in Microfinance”, http://www.smartcampaign.org/news-a-highlights/press-releases/4-2010/387-the-smart-campaign-to-launch-a-certification-program-for-client-protection-in-microfinance

MicroCapital.org Article, June 2, 2010, “Smart Campaign Announces 1,000 Endorsements of Consumer Protection Principles”, http://www.microcapital.org/microcapital-brief-smart-campaign-announces-1000-endorsements-of-consumer-protection-principles/

MicroCapital Microfinance Universe Profile: Center for Financial Inclusion (CFI): http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Center+for+Financial+Inclusion+%28CFI%29

MicroCapital Microfinance Universe Profile: ACCION International, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ACCION+International

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