Microfinance institutions have been urged to be transparent in pricing financial products in order to increase access to finance for all.
According to the Governor of the National Bank of Rwanda Claver Gatete, MFIs should devise means of reducing interest rates that inhibit the capacity of customers to be able to refund their loans thus increasing the number of non performing loans in the sector.
“Transparency in pricing requires that the effective interest rates and other fees are included in the contract and ensure that the client clearly understands the terms in the contract,” he said during a workshop on institutionalising client protection in the local microfinance sector in Kigali yesterday.
He also added that the central bank is working on a deposit insurance scheme and the establishment of Access to Finance at the district level to solve constraints that bar people from accessing finance
In the recent past, the MFI industry was marred by poor governance practices as well as lack of qualified personnel to provide reliable financial information leading to the closure of many MFIs.
To address the issues, Rita Ngarambe, the Executive Secretary of AMIR, said that there is need to improve the quality of service, promote transparency and appropriate pricing, which are the international principles that govern microfinance institutions.
“These are new concepts in Rwanda which we need to emphasise on if we are to improve the microfinance sector which mostly serves the poor population,” Jules Theoneste Ndahayo, the first vice president of AMIR said.
He added that many MFIs have lost clientele due to poor customer care which makes many people perceive MFIs services as expensive.
“We are aware that MFIs defer far from banks because they go to clients, monitor their projects which in a way increases their costs,” he said as he defended the high interest charges from MFIs.