Show Me Your Pricing Data: Transparency Helps Philippines Lead Global Microfinance

Wednesday, September 7, 2011

“The Philippines receives a perfect score…for the way it regulates the microcredit activities of established financial institutions.” — Economist Intelligence Unit,”Global Microscope on the Microfinance Business Environment”[1]

The microfinance industry has taken a beating lately. In March, Nobel Prize winner Muhammad Yunnus was ousted from his position as managing director of the microcredit lender Grameen Bank in Bangladesh, which he founded in 1983, by the nation’s central bank, citing his age and “irregularities.”[2] Then in June, the Evidence for Policy and Practice Information and Co-ordinating Centre (EPPI-Centre), part of the University of London’s Social Science Research Unit, released the report “What Is the Evidence of the Impact of Microfinance on the Well-being of Poor People?” which found that “no clear evidence yet exists that microfinance programmes have positive impacts.”[3] And now, SKS Microfinance founder Vikram Akula is reportedly facing pressure to step down. His Hyderabad-based non-banking finance company, India’s only listed microfinance institution, posted a FY2011 Q2 net loss of Rs 218.7 crore (USD 4.76 billon).[4]


But in the Philippines, the microfinance sector has been doing rather well. In 2009, the nation was ranked third behind first-place Peru and second-place Bolivia, atop the Economist Intelligence Unit’s first annual global microfinance index. “The Philippines receives a perfect score of 4 (out of a possible 4) for the way it regulates the microcredit activities of established financial institutions,” according to the report, “Global Microscope on the Microfinance Business Environment.” The researchers state, “Since the adoption of a National Strategy for Microfinance in 1997, the government has promoted a regulatory and policy framework that is conducive to microfinance operations.”[5]

In March, the Lancaster, Pennsylvania-based non-profit MFTransparency, whose stated mission is “to be the venue for the microfinance industry to publicly demonstrate its commitment to pricing transparency, integrity and poverty alleviation,”[6] launched the “Transparent Pricing Initiative in the Philippines,” a project whose aim is to collect and publicize pricing data to achieve transparency and consumer protection. Last month, the NGO announced that ASA Philippines Foundation is the first microfinance institution (MFI) in the Philippines to submit pricing data to the initiative.

Source: Justmeans (link opens in a new window)

financial inclusion