> Posted by Center Staff

Contact: Andrew Sprung/212-242-2788

Washington, D.C. (February 8, 2011) — The Smart Campaign, a global initiative to incorporate strong client protection principles across the microfinance industry, today announced a plan to launch a certification process that will enable microfinance institutions (MFIs) worldwide to demonstrate their adherence to the Campaign’s core Client Protection Principles as verified by third-party assessors.

While over 1,600 microfinance institutions, microfinance support organizations, investors, donors, and individual industry professionals have endorsed the Smart Campaign, the Campaign recognizes that neither pledged adherence nor self reporting can ensure that the Client Protection Principles are actually being followed.  Verification by an objective third party is needed. 

Microfinance institutions that undergo such verification and earn certification will be able to assure clients and investors that they follow responsible practices that uphold the Client Protection Principles: 1) Avoidance of over-indebtedness; 2) Transparent and responsible pricing; 3) Appropriate collections practices; 4) Ethical staff behavior; 5) Effective complaint management; and 6) Securing the privacy of client data.

Groundwork for certification has proceeded under the Smart Campaign’s pilot program in which 14 leading MFIs opened their institutions as laboratories for examining and assessing client protection practices on the ground.  The assessment tools developed and tested in five countries have been made available to all Campaign signatories.  Member MFIs and investors worldwide are currently deploying these tools to assess and strengthen their client protection practices.  Certification is a vital next step.

Since July 2010, the Smart Campaign’s certification task force has been developing a process that can be rolled out across the industry.  On February 1, 2011, the Campaign Steering Committee approved a work plan for launching certification by the end of the year, after a period of field-testing, public comment, and final design of the program.

“After gaining broad-based industry buy-in, the Smart Campaign is moving quickly to deepen implementation. Certification will add rigor and impetus.  As programs such as Fair Trade have demonstrated, third party verification can generate strong market incentives in favor of socially beneficial practices,” said Anne H. Hastings, CEO of  the Haitian MFI Fonkoze, and a member of the Smart Campaign Steering Committee.

“Microfinance has the potential to contribute significantly to peoples’ self-empowerment throughout the Arab world. Certification will provide the confidence that institutions can be relied on,” said Essma Ben Hamida, executive director of the Tunisian MFI Enda Inter-Arabe, and a Smart Campaign Steering Committee member.

“Certification is a vital tool for investors who want to make their due diligence as rigorous with regard to social aspects as it is on the financial side,” said Asad Mahmood, a Managing Director of the Global Social Investment Funds & Community Development Finance Group at Deutsche Bank and a member of the Smart Campaign’s Steering Committee.  “We aim to make strong client protection practices a threshold requirement for MFIs seeking capital from donors and investors alike.”

About the Smart Campaign

The Smart Campaign is a global campaign consisting of microfinance leaders from around the world who believe that protecting clients is not only the right thing to do but the smart thing to do. To date, over 1,600 microfinance and other financial institutions, microfinance support organizations, investors, donors, and individual industry professionals have pledged adherence to  the Smart Campaign’s core Client Protection Principles.  By providing microfinance institutions with the tools and resources they need to deliver transparent, respectful, and prudent financial services to all clients, the Smart Campaign is helping the industry maintain a dual focus on improving clients’ lives while attaining financial sustainability. The Campaign is headquartered at the Center for Financial Inclusion (CFI) at ACCION International and is governed by a Steering Committee representing a broad cross-section of the industry.