Microfinance Institutions (MFIs) in Rwanda will start using transparent pricing, an initiative that aims at improving and promoting consumer protection.
The move is spearheaded by MFTransparency, which will be charged with collecting data on the interest rates and fees charged on each microfinance loan product in order to calculate the accurate, true price on those loans.
Ambassador Claver Gatete the Vice governor of the National Bank of Rwanda (BNR) who launched the initiative yesterday said it will build trust and confidence of MFI customers.
“MFIs reach a wide range of people especially the Rwanda rural community and this will boost their trust hence growth of the industry,” Gatete said.
It is also inline with central bank’s required standards for pricing disclosure and facilitating a fair exchange between suppliers and consumers of microfinance products.
In collaboration with Association of MFIs in Rwanda, MFTransparency yesterday hosted a workshop to train stakeholders and launch the transparent pricing initiative.
Gatete said that quality and better services are expected because the initiative will promote competition in the MFI industry.
Alexandra Fiorillo, the Vice President of MFTransparency said the initiative has progressed with strong industry participation in Malawi.
“Since its inception, AMIR has been a strong unifying force in the Rwandan microfinance industry, we believe it will be a valuable partner in facilitating dialogue and bringing Rwandan microfinance practitioners together to promote transparency,” Fiorillo.
Rwanda is the third country to launch the initiative, and the MFTransparency will facilitate discussions related to pricing transparency as well as develop and disseminate financial literacy materials for microfinance clients.
“Transparency is a core business value and an indispensable tool in servicing the poor and vulnerable, MFTransparency has come at the right time for the correct purpose and intent,” Faustin Zihiga Chairman of AMIR said.
Zihiga noted that two important things are expected including educating customers and consumer protection.
“We expect MFTransparency will educate MFIs clients to differentiate MFI loan from other sources of money from friends and relatives which will boost loan performance, it shouldn’t be a try and error game.”
MFTransparency is an international non-governmental organisation founded in 2008 targeting to facilitate transparent markets through the dissemination of true cost information to all market stakeholders.