Consumer Protection in Microfinance Exceeds 15-Million-Client Mark via Smart Certified Institutions

> Posted by the Smart Campaign

It’s been an exciting few months for client protection in the microfinance industry. FINCA Kyrgyzstan, MBK Ventura in Indonesia, SKS Microfinance in India, and a number of other MFIs around the world demonstrated that they successfully integrate the client protection principles into their practices and joined the rapidly growing list of institutions that are Smart Certified. Today, we’re pleased to share that the number of clients across all the Smart Certified institutions surpassed the 15-million-client benchmark.

To date, 28 microfinance institutions, from Latin America to Eastern Europe and South Asia, have achieved Smart Certification, including some of the world’s largest and best-known MFIs. These institutions are not only ensuring that their clients are equipped and best positioned to effectively use financial services, they’re also demonstrating to their respective markets and the global industry the good business that is responsible microfinance.

“Momentum to improve client protection is accelerating, with scores of MFIs across the globe improving their client protection practices, and being recognized for it through certification,” stated Isabelle Barrès, director of the Smart Campaign, in a press release. In Eastern Europe, there are certified institutions in Azerbaijan, Tajikistan, Bosnia, Serbia, and Kyrgyzstan. In Kyrgyzstan, with the certification of the nation’s network of FINCA MFIs, the country’s market crossed an important threshold. “As measured by MixMarket data, more than 50 percent of all microfinance clients in Kyrgyzstan do business with certified MFIs,” noted Barrès. The certified MFIs in Kyrgyzstan include the first formal financial institution serving low-income entrepreneurs in the region, as well as a relatively young institution, and encompass a range of service offerings like individual, group, and agricultural loans. Elsewhere in the region, the proportion of clients in certified institutions by country market is about 45 percent in Bosnia, and 40 percent in Tajikistan.

India, which boasts the largest microfinance market in the world, is making significant client protection progress. There are six Smart Certified MFIs in the country, serving over 10 million clients, more than 25 percent of the market. Along with demonstrating the necessary standards of client care throughout their operations, these institutions stand out for unique practices that are exemplary for the industry. Ujjivan, in combating a previous incidence of multiple borrowing, created an educational video and disseminated it to over a million individuals, including every new client, using local television channels and lending group meetings. Of the expanding influence of certified institutions, Isabelle Barrès said, “When a critical mass of institutions in a market demonstrates good practices, pressure grows on other institutions to do the same.”

The Microfinance CEO Working Group, a collaboration comprising many of the world’s leading microfinance institutions, has advanced the cause of client protection. “We’re approaching the tipping point in the adoption of consumer protection standards for the poor,” indicates Anne Hastings, managing director of the Microfinance CEO Working Group. “Thanks to the unwavering commitment of the leadership of these organizations, the majority of the 220 MFIs in the Working Group’s networks are either certified or working hard to become certified.” The Working Group includes the CEOs of Accion, FINCA, Freedom from Hunger, Grameen Foundation, Opportunity International, Pro Mujer, Vision Fund and Women’s World Banking, as well as the directors of microfinance of CARE International, BRAC and BRAC International.

As you might know, in addition to our efforts to embed client protection in the microfinance industry through certification, the Campaign conducts a variety of projects to engage the industry and further responsible microfinance. We facilitate client protection trainings and capacity-building for stakeholders around the world, including through the recently-launched Responsible Microfinance Facility. A few weeks ago we released a research publication examining what happens to microfinance clients who default. The report along with other Smart publications is available on the Campaign website. Also on the Campaign website are dozens of tools and resources for providers – available in English, Spanish, French, Arabic, Russian, and Portuguese.

Stay tuned for more updates on certification and all our other Smart Campaign happenings in the months ahead.

*All client numbers are calculated using MixMarket data

Have you read?

Smart Certification: The View from Azerbaijan

How Smart Assessments and Client Protection Certifications Work Harmoniously

Taking It from the Top – How Market Infrastructure Sets the Rhythm of Default Management

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