The Real Changemakers in Microfinance

> Posted by Laura Galindo
Few international microfinance events aim to provide commercial MFI staff with guidelines and practical approaches for their professional development. The VI International Summit for Microfinance Staff, seeks to change that, and the Smart Campaign was fortunate enough to be a part of a select group of presenters.
Organized by Fundación Alternativa in Quito, Ecuador on June 20-21, the Summit was well attended by 172 loan officers, branch managers, coordinators, supervisors and office managers from 58 microfinance institutions from Guatemala, Ecuador, Bolivia and Perú.
Days before the summit, Rafael Correa, Ecuador’s president made a strong statement about over-indebtedness in his country. President Correa’s statement generated a strong reaction throughout Ecuador. He revealed that “41 percent of the families in Ecuador who asked for loans are over-indebted.” This amounts to approximately 400,000 families and could have serious consequences, not only for those affected, but also for the Ecuadorian banking system and economy. Correa blamed the excessive liquidity of banks and the increase in the minimum wage for the problem.
The Smart Campaign was the focus of one of the main tracks of the conference, Efficient Management based on the Smart Campaign’s Client Protection Principles, and within that track the Campaign addressed over-indebtedness from a front line staff perspective.
Correa’s over indebtedness alarm was provocative and generated sometimes heated conversations during coffee breaks and informal conversations. There were many views on the topic. Some Ecuadorian loan officers were hesitant to believe the President’s statements. Others said that it could be possible, citing the lack of institutions that report to credit bureaus and the lack of oversight from authorities as the reason why many clients have more than two loans.
But Rolando Virreira, the Campaign’s presentation leader, got the conversation started based on materials developed by the Campaign, the conversation became less political and more practical. Key conversation topics included the role of credit teams, loan officers, supervisors, and field staff in microfinance institutions.  Participants discussed how their actions as loan officers or executives could ultimately impact clients.
Participants identified with others’ opinions and first hand experiences with over-indebtedness. Incentive pay, clients with multiple loans, the role of financial education and the competitive landscape were all part of the mix of topics raised. If one participant expressed concern about how hard it was to meet the sales targets and obtain bonus pay at his institution, a second participant would have a similar story, despite working at a different organization in a different country.
Regardless of the country context, we share many issues that must be addressed from an industry perspective. Knowledge sharing and convening with those people who deal with clients on a day to day basis is an important part of the conversation, for ultimately they are the real changemakers.
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Have you read?
Banana Skins 2012: Overindebtedness Tops the Risk Charts
Money Management: What’s a Bank Account For?
The Psychology of Risk