MICROCAPITAL.ORG STORY: MicroFinance Transparency Launches First Publicly Available True-Cost Pricing Data for Microfinance Loan Products

MFTransparency, founded in July of 2008 as part of a global initiative for fair and transparent pricing in the microfinance industry, has launched the first phase of its “Data Launch Rollout Plan,” beginning with Bosnia and Herzegovina. The publicly available data include up-to-date interest rates for microfinance loan products throughout specific countries. According to MFTransparency, “It will be the one and only place to find the ‘market price’ for the majority of micro-credit products within a country” [1].

Data from Bosnia and Herzegovina include loan product information from all 13 members of the Association of Microfinance Institutions in Bosnia and Herzegovina [2, 3]. In addition to Bosnia and Herzegovina, MFTransparency is planning a phased rollout of data from Cambodia and Peru over the next two weeks, followed by an educational webinar on November 9^th. The Cambodia data, which will be made public on October 26^th, represent 95 percent of the microfinance market in Cambodia. The Peru data, set to be released the following week, on November 2^nd, include information from 35 microfinance institutions (MFIs) reporting on more than 150 loan products used by over one million borrowers. For more information, click here.

Rather than relying on the “average portfolio yield” as a proxy for interest rates, MFTransparency bases its pricing data on original loan contracts from MFIs. This system provides “a better understanding of how individual products are priced,” as opposed to a single weighted average. The Consultative Group to Assist the Poor (CGAP) predicts that by using MFTransparency’s data, analysts will soon “be able to explain the differences in APRs based on criteria like loan size, client characteristics, and location of the MFI” [4].

Previous MicroCapital stories on pricing transparency can be found in the Bibliography section below, [5] – [10].

By: Stefanie Rubin, Research Assistant

Bibliography

[1] MFTransparency.org: http://www.mftransparency.org/pages/data-launch-summary/

[2] MFTransparency.org: Bosnia and Herzegovina Data: http://www.mftransparency.org/data/countries/ba/

[3] Association of Microfinance Institutions in Bosnia and Herzegovina: http://www.amfi.ba/eng/index.php?option=com_frontpage&Itemid=1

[4] Consultative Group to Assist the Poor: “More Transparency, Please!”: http://microfinance.cgap.org/2009/09/29/more-transparency-please/

[5] MICROCAPITAL.ORG STORY: CGAP Microfinance Blog Supports Efforts Of MFTransparency To Promote Transparent Pricing And Enhance Consumer Protection In The Microfinance Industry

[6] MICROFINANCE EVENT: MicroFinance Transparency (MFTransparency) & the Azerbaijani Microfinance Association (AMFA) to Hold Workshop & Kick off Transparent Pricing Initiative in Baku, Azerbaijan October 8th, 2009

[7] MICROCAPITAL PAPER WRAP-UP: Financial Infrastructure: Building Access Through Transparent and Stable Financial Systems by the World Bank

[8] MICROCAPITAL STORY: Client Protection In Microfinance – Observations by ACCION and Prizma Mikro From A Hanson Wade Conference On Microfinance Investments

[9] MICROFINANCE PAPER WRAP-UP: Microfinance Sector’s Consumer Protection Initiative, By Maheen Saleem and Aban Haq