> Posted by Calum Scott, Program Impact Director, Opportunity International
An Opportunity International client talks with her loan officer while examining her cocoa beans.
As a network of 40 microfinance institutions in 22 countries, Opportunity International is well positioned to play a powerful role in supporting the positive development of the microfinance industry. For client protection, we believe that the Smart Campaign’s Client Protection Certification represents the highest standard of assurance that an institution’s practices are responsible.
To promote client protection and certification among our network, we’ve engaged the support of MicroFinanza Rating – a specialized microfinance rating agency and one of the Smart Campaign’s licensed certifiers.
The agreement with MicroFinanza will facilitate our network partners to undergo certification missions, and promote the sharing of lessons learned from certification experiences across our network of institutions. This agreement also demonstrates our confidence in the quality of the work that MicroFinanza does.
At the same time we recognize that the implementation of all indicators to satisfy the Certification Standards requires commitment on the part of each individual institution, its management, and board of directors. Ensuring that all our affiliates reach this level of practice will take time and effort.
We believe this collaboration founded on the support for certification will strengthen the movement and encourage industry momentum around protecting and empowering clients.
Image credit: Opportunity International
Have you read?
Microfinance CEOs: Smart Campaign Certification is a “Clear Step” Toward Responsible Microfinance
Microfinance CEOs Make Six Major Commitments at 2013 Partnerships Against Poverty Summit
The Financial Inclusion 2020 Global Forum: A Letter to Microfinance Institutions
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November 27, 2013 at 9:33 pm
B. Yerramraju
A very good initiative at the right time. Congratulations.
November 29, 2013 at 7:22 am
Hugh Sinclair
It will be interesting to see how Opportunity fares with the 4th client protection principle of responsibe pricing: “Pricing, terms and conditions will be set in a way that is affordable to clients while allowing for financial institutions to be sustainable. Providers will strive to provide positive real returns on deposits.”
According to http://www.mftransparency.org, Opportunity charges interest rates up to 135% in Kenya, 124% in Ghana, 144% in Malawi, 153% in Mozambique, 103% in Uganda. The microfinance sector, and Smart, fail to define “exploitative” interest rates, and the precise meaning of “affordable” remains vague. Also of note is that while MFTransparency is able to calculate the interest rates of Opportunity International to two decimal places, Opportunity’s own website fails to mention the rates charged. Despite these high interest rates, most of Opportunity’s MFIs are not sustainable, with negative returns on equity.
If there are valid reasons to charge such interest rates, why does Opportunity not embrace the mantra of transparency and publish these openly? My personal suspicion, for which I have no evidence, is that Opportunity are likely rather ashamed of these interest rates and would prefer to keep such facts as far from their donors as possible. The general public could well find such rates as exploitative, particularly when charged to poor women in developing countries. There are many Christian references to helping the poor, but I have been unable to find any references on Opportunity’s website to a related Biblical concept – that of usury.
A quick online search for Biblical references to usury is enlightening, and regardless of Smart’s nebulous description of “affordable” loans, perhaps the more relevant question is whether Opportunity’s donors, many of whom may be Christian, view interest rates well over 100% to poor vulnerable people. Here is a selection:
Exodus 22:25 “If you lend money to one of my people among you who is needy, do not treat it like a business deal; charge no interest.”
Leviticus 25:37 “You must not lend them money at interest or sell them food at a profit.”
Psalm 15:5 “who lends money to the poor without interest; who does not accept a bribe against the innocent. Whoever does these things will never be shaken.”
Ezekiel 18:13 “He lends at interest and takes a profit. Will such a man live? He will not! Because he has done all these detestable things, he is to be put to death; his blood will be on his own head.”
Ezekiel 22:12 “In you are people who accept bribes to shed blood; you take interest and make a profit from the poor. You extort unjust gain from your neighbours. And you have forgotten me, declares the Sovereign LORD.”
I am no theological scholar, and charging zero interest would drastically reduce the credit available to the poor. However, it appears that exploiting the poor is frowned upon not only in the Bible, but more broadly, and I do wonder whether 130% APR could fall into this category? However, it is not my opinion that matters, but that of Opportunity’s donors, and for this reason I find it disturbing that they are unable, or unwilling, to present this information openly on their website. Then Opportunity’s donors could form their own, informed, opinion.
November 29, 2013 at 10:58 am
John Gitau
Aha, here comes the never ending debate on value, price and values.
December 4, 2013 at 12:35 pm
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