Program: Purpose: Amount: Term: Start date: Location:

Microfinance Improve pricing transparency in Africa $1.2 million One and a half years April 2010 Africa

Why We Partnered

Microfinance Transparency (MFTransparency) was founded in 2008 in response to growing global demand for pricing transparency within the microfinance industry. It is the only organization dedicated to analyzing and disseminating standardized data on pricing and the effective interest rates of microcredit products to promote client protection and informed decision-making by industry stakeholders.

The true price of microcredit products is widely unknown and misunderstood. What is disconcerting to many stakeholders is the reality that poor people pay higher prices for accessing credit than wealthier people. This is largely driven by the higher costs associated with servicing very small loans to poor, often in rural communities. The lack of understanding about interest rates has generated negative media coverage of the microfinance industry in recent years. And, in some countries, this has invited political and regulatory reactions such as interest rate caps, which have an unintended effect of reducing the availability of credit to the poor.

MFTransparency will collect, analyze and disseminate data on microcredit products in the following eight African countries: Malawi, Uganda, Rwanda, Tanzania, Ghana, South Africa, Zambia and Mozambique. MFTransparency will also create educational materials for MFIs to use with their staff and clients. The collected data will inform institutions, investors, donors and other industry stakeholders and will solidify the reputation of industry.

Anticipated Impact

• Provide valuable data on the true costs of loans.
• Cover 80 percent of products offered in each market, or about to 1,000 loan products reaching five million clients.
• Improve practices and understanding of MFIs, regulators, donors and other stakeholders.