MICROCAPITAL BRIEF: European Microfinance Platform (e-MFP) Calls for 'Deeper' Reform of Industry

Christoph Pausch, Executive Secretary of the European Microfinance Platform (e-MFP) of Luxembourg, recently argued in the Financial Times newspaper for “deeper” reform of the microfinance industry. He says that transparency of interest rates to enhance competition and inform borrowers is only one step in the right direction. Another move he proposes is that microcredit providers avoid over-lending to borrowers by implementing a policy that he terms “one loan one client.” Microfinance institutions should make a habit of regularly checking client credit and assessing needs and cash flows. Lastly, he adds, information exchange must be a “two-way process” whereby clients are fully informed of the financial products at their disposal and of the consequences for failing to repay [1].

About the European Microfinance Platform (e-MFP): The European Microfinance Platform (e-MFP) was founded in 2006. It is a network of approximately 120 microfinance organizations and individuals. Its objective is to promote cooperation among European microfinance institutions working in developing countries by facilitating communication and the exchange of information. e-MFP members include banks, financial institutions, government agencies, NGOs, consultancy firms, researchers and universities.

By Diana Baide, Research Assistant

Sources and Additional Sources:

[1] Financial Times. “Microfinance industry needs deeper reform” by Christoph Pausch, 4 November 2010

http://www.ft.com/cms/s/0/9338e7d6-e7b1-11df-8ade-00144feab49a.html

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