> Posted by Holly Padgett
In December 2011, a bill was introduced in the United States Senate that would advance concepts of financial inclusion in USAID’s (United States Agency for International Development) approach to microfinance and international development.
The bill, called the “Microfinance and Microenterprise Enhancement Act of 2011”, highlights some of the steps that need to be addressed if we are to achieve full financial inclusion by 2020. The bill addresses the need for more financially inclusive practices and highlights the Smart Campaign’s Client Protection Principles:
“The United States Agency for International Development should ensure that providers of financial services benefitting from United States Agency for International Development assistance adhere to client protection principles, such as the Client Protection Principles of the ‘Smart Campaign’, and take concrete steps to protect clients from potentially harmful financial products and to support equitable and fair treatment.”
Specific approaches to financial inclusion are also discussed, such as the need for a wider variety of financial products for poor populations:
“The Administrator of the United States Agency for International Development shall support the development of a range of financial products adapted to the needs of enterprises, including working capital for inputs, labor, and production services; long-term asset finance; and agriculture, animal husbandry, and rural enterprise loans. Such products should be provided through a diversity of financing schemes, including financiers along the value chain such as input suppliers, traders, and processors.”
The bill also lays out several more specific programs for USAID, such as the development of country/regional funding targets based on poverty indicators to create needed financial products. The bill would also authorize USAID to use 1% of its development assistance budget (for 2013-2017) to develop an innovation challenge fund to support improvements to current financial products and technologies.
The bi-partisan bill is currently in review by the Senate Committee on Foreign Relations. After review, it can be moved to the Senate floor for a vote. This bill, if passed, could mark an exciting movement towards incorporation of the Client Protection Principles into the work of US government international development agencies. I look forward to seeing how this bill is received in the Senate and, if passed, how it will affect the microfinance industry.
Image credit: maggiesnotebook.com
Have you read?
MicroSave Asks Clients in Andhra Pradesh: How Are You Coping without MFIs?
In the News: ‘Implementing Client Protection in Microfinance – The State of the Practice, 2011′