> Posted by Mary Ellen Iskenderian, President and CEO of Women’s World Banking, and Michael Schlein, President and CEO of Accion, who are Co-Chair and Founding Member, respectively, of the Microfinance CEO Working Group

The following post was originally published on the Microfinance CEO Working Group blog.

As leaders of international organizations dedicated to financial inclusion, we welcome and support initiatives that hold the microfinance industry to the highest standards of client protection, social performance, and pricing transparency. This is the principal reason why the members of the Microfinance CEO Working Group came together – a shared commitment to these principles as well as a shared recognition that enforcing them takes work that none of us can do alone.

When our group first formed in 2011, we scanned the landscape of actors and initiatives working to enforce high quality microfinance industry standards. Chuck Waterfield and MFTransparency (MFT) stood out. Pricing transparency is widely considered the most challenging standard to uphold in our industry, and there was no denying that Chuck and his small but dynamic team had created something unprecedented with MFT.

Publicly reporting pricing information is extremely complicated, which is why all industries struggle with it. The microfinance industry, however, is actually further along than most, and that is largely due to MFT’s efforts. Chuck and his staff developed a methodology to present credit pricing information in a clear and consistent way, so all stakeholders can learn the true price of credit products for clients. As a direct result of MFT’s methodology, microfinance institutions in many countries now report their pricing data. Multiple institutions also reduced their prices after publishing data and determining that they were out of line with other institutions in their market. Since MFT has been operating, many governments have also started to require pricing transparency in their regulation of the microfinance industry.

After seven years of hard work, MFT is suspending operations, making way for a new chapter in microfinance pricing transparency. We are grateful for Chuck’s work – work that clearly demonstrates that transparent pricing information is not only essential to our industry but also possible to achieve. We recognize that his was often an uphill battle. It’s now time for us to step up, identify the lessons of this battle, work on solutions, and build on MFT’s achievements and momentum.

As we learned from watching MFT over the last several years, achieving pricing transparency is not limited to successful data collection. It requires advocacy, education, training, and funding to ensure that all players – from regulators, to investors, to practitioners – understand not just the value of pricing transparency as a principle of client protection but as an essential element of our industry’s success.

We all have a role to play. The Microfinance CEO Working Group, of which we are founding members, collectively reaches more than 61 million people in 80 countries. We need to support and encourage the institutions serving those clients to report their prices – not just as a compliance measure but to fulfill their missions as organizations that serve low-income clients and serve them well. Institutions that do not comply are not “getting away with it”; they do not belong in this industry. Pricing transparency should never be a threat to competitive advantage, but a requirement to operate as a responsible microfinance institution.

We applaud Chuck’s efforts with MFTransparency over the last several years and look forward to his continued involvement in holding microfinance institutions to the highest standards. We call on our colleagues throughout the industry to join us in this new chapter for pricing transparency. Without it, sustainable financial inclusion that responsibly serves low-income clients cannot happen.

Have you read?

On the Pathway to Responsible Microfinance: An Update on the Microfinance CEO Working Group’s Progress

New Microfinance CEO Working Group Papers Examine Causes and Potential Remedies for Over-Indebtedness

Microfinance CEOs Make Six Major Commitments at 2013 Partnerships Against Poverty Summit