Sergio Guzmán conducting a Smart Assessor’s Training in Budva, Montenegro

The month of May was filled with many exciting events for the Smart Campaign. Smart Campaign director, Isabelle Barrès traveled to Guatemala and Bosnia and Herzegovina for two Client Protection Certification events (please see our last blog post). Smart Campaign Lead Specialist, Sergio Guzmán also traveled to this corner of the world to conduct a Smart Assessor’s Training and to attend the 16^th Annual Microfinance Centre Conference in Budva, Montenegro. Although the Campaign is based in Washington, D.C., Campaign staff thrive on opportunities to engage in client protection efforts beyond the office.

It’s a good thing that Sergio does not have a fear of heights. With the amount of time that Sergio spends in the air each month, he might as well be Superman. The Smart Assessor’s Training in Budva brought together a diverse group of financial services experts including donors, investors, consultants, and CEOs of microfinance institutions (MFIs), among others in the Eastern Europe/Central Asia region. Even with the ranging backgrounds of these participants, Sergio notes that the evident common denominators are the enthusiasm to incorporate the Client Protection Principles (CPPs) into their work and a keen desire to improve their commitment to those they serve.

It is very exciting for the Campaign to generate interest among such a wide range of actors at events like the training in Budva. The Smart Campaign’s growing involvement in activities among participants from different backgrounds reflects client protection’s increasing foothold. This layered interest and further desire to cement client protection into business practices is a promising achievement for the movement.

In the discussion of adequate client care at the Microfinance Centre Conference, there was much interest in what Client Protection Certification entails and what it means for MFIs that gain the status. Since each institution has a unique history, style, structure, and mission, no one way to implement the Principles can be prescribed. The attendees of the training were examples of this. They all want to apply the CPPs in their businesses, but each institution works differently. Institutions won’t necessarily approach achievement of certification in the same way, but keeping clients at the forefront of their efforts should always serve as the guiding light.

Certification means being a client-centric institution in which all operations incorporate adequate standard of care based on the seven CPPs. It is important to keep the goal of certification in mind. As Sergio says, “Client protection certification is not an end in itself. The end goal is to treat clients responsibly.” Sergio noted no two institutions achieve certification in the same way, and that satisfying the 95 indicators to become certified is a selective process. This echoes Isabelle Barrès’ point from the client protection certification webinar series in April that it will take some MFIs time to reach the status, but it is most important that they be on the path (please follow the link to a recording of this webinar). Even though each institution needs to individually evaluate how it should achieve certification, it also means that institutions are not limited in how they can approach the best way for them to successfully treat clients using adequate standards of care. Some areas of their business may need to be improved, while others may not need to change a lot. The diversity among those who aim to treat their clients according to the Client Protection Principles only enriches the potential for the Smart Campaign’s future engagements on other stages somewhere in the world.

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Smart Campaign Shaping the Landscape of Microfinance in Bosnia and Herzegovina

One good deed often leads to another. Whether it’s by learning about new opportunities to do good or by an increase in peer pressure, positive changes are contagious. This also applies to business practices, including how financial institutions treat their clients. Still new on the microfinance scene, the Client Protection Certification program has certified six MFIs to date – three in India and three in Bosnia and Herzegovina. As more institutions become certified, it increasingly changes the expectations for how financial institutions are to serve the poor, especially the expectations in markets where groups of institutions have been certified, like those in India and Bosnia and Herzegovina.

Smart Campaign Director Isabelle Barrès recently traveled to Bosnia and Herzegovina for an event to publicly congratulate and recognize the country’s three MFIs that were certified earlier this year, EKI, Mi-Bospo, and Partner. Organized by stakeholders in the Bosnian market, in particular the IFC, the event also highlighted the significance of certification, for the institutions and for the market at large. Of the three Bosnian MFIs Isabelle said, “The three client protection certified financial institutions, EKI, Mi-Bospo and Partner, can distinguish themselves in a highly competitive market, as organizations that are meeting adequate standards of customer care. They deserve the spotlight, and the attention from responsible funders and from clients.”

The achievements of these three MFIs and the Bosnian microfinance market are deepened when considered in the context of recent history. It was just in 2008 that the country’s industry experienced an over-indebtedness crisis, where at its peak around 28 percent of all MFI clients were described as “seriously indebted or over-indebted.” In the local microfinance market today, three of the 15 MFIs shown on the MIX Market are Client Protection Certified. In other words, 20 percent of MFIs in Bosnia and Herzegovina meet the 30 adequate standards of care in the treatment of their clients – including Client Protection Principle 2: Prevention of Over-Indebtedness.

Having three of Bosnia and Herzegovina’s MFIs certified is a great start, but as with all good deeds, there’s a component to consider that’s almost as important as the deed itself: Does anyone actually know about this? Do current and prospective Bosnian MFI clients know about and understand certification? In addition to offering EKI, Mi-Bospo, and Partner their much-deserved congratulations, the recent event – and its extensive press coverage – served as part of a planned outreach campaign to make Bosnian clients aware of the meaning of certification. Without this awareness, clients are missing out on support that could be the difference between enrolling in microfinance services that are an empowerment and enrolling in microfinance services that are a detriment.

The Smart Campaign welcomes your support in getting the word out on certification in the Bosnian market and elsewhere. If one good deed truly does lead to another, this will help certification shape the landscape of microfinance in good time.

Image credit: the Smart Campaign

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Courses featuring microfinance can be found in most colleges or universities, and the development of the syllabi for these courses has begun to create a sort of “microfinance canon.” As the next generation of microfinance professionals enters the market, there are a few things that many of them have read, and a few questions that many of them have been required to consider.

I took 10 syllabi (a small sample size, admittedly) and looked for trends in what is being taught, what is being read, and what is being assigned. Here are a few things I found:

• Students are reading Collins et al., Armendariz and Morduch, and Rhyne more than any other authors (Helms was a close fourth). These three authors represent a nice diversity of method and emphasis. Collins et al.’s Portfolios takes more of a client perspective, Armendariz and Morduch explain the more technical nuances, and Rhyne offers a more practical business approach.

• Guest speakers are a major part of class time. Given that microfinance is still very much practitioner (rather than academic) oriented, it is no surprise that guest speakers are used quite frequently in class time. Most, if not all, of these speakers are in top positions at well-known microfinance institutions.

• Assignments range from case study examples, to policy briefs, business plans, and product designs. In a few of the syllabi, students were required to make presentations, including one that assigned an investor pitch in lieu of a final exam.

Beyond these content-related observations, I noticed that microfinance classes don’t seem to have an agreed-upon disciplinary “home” in academia. Classes are typically hosted in business, economics, public policy, and international relations departments. In addition (and this is probably related), professors tend to not be tenure-track academics. Often, they are involved in microfinance as practitioners in some way.

Despite this lack of an academic “home” or identity, however, microfinance classes are increasingly common. A simple Google search brought up dozens of publicly available syllabi. Compared to the offerings as early as five or 10 years ago, this prevalence is quite encouraging.

To explore these syllabi for yourself, head to the following sources:

• Harvard University John F. Kennedy School of Government: Microfinance in Theory and Practice, taught by Guy Stuart

• New York University Stern School of Business: Building and Financing Microfinance Institutions and their Financial Products, taught by James B. Carlson

• Carnegie Mellon University Heinz School of Public Policy: Microfinance, taught by Tayo Fabusuyi

• University of Michigan: Introduction to Microfinance, taught by Michael Gordon

• Georgetown Public Policy Institute: Introduction to Microfinance for Development, taught by David Roodman

• Berkeley Haas School of Business: Introduction to Microfinance, taught by Sean Foote

• Denver University Josef Korbel School of International Studies: Microfinance and Sustainable Development, taught by Janney Carpenter

• Johns Hopkins School of Advanced International Studies: Microfinance and Development 1, taught by Elissa McCarter and Kate Druschel Griffin

• Johns Hopkins School of Advanced International Studies: Microfinance and Development 2, taught by Victoria White and Isabelle Barres

Image credit: Justin Sullivan/Getty Images

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Smart Campaign Director Isabelle Barrès is the latest to write for the CGAP Microfinance Blog‘s new series on responsible finance.

“Client Protection: Are We There Yet?” begins:

Since its launch, the Smart Campaign has made enormous strides toward ensuring that clients of microfinance would receive transparent, respectful, and prudent treatment.  The Campaign is proud to now have more than 1000 institutions as endorsers and these organizations that serve over 40 million low-income people.  

 In the last year, at least 10 major microfinance investment funds managing over US$2 billion have integrated client protection into their due diligence and reporting.

The Campaign is a truly global effort.  It is governed by a 28-member Steering Committee whose membership represents all facets and geographies of the sector and its work is accomplished through partnerships with virtually every facet of the industry.

If you’d like to learn more, you can click on the link to read the rest of “Client Protection: Are We There Yet?”

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