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Promoting Inclusive Markets and Financial Systems

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Lessons in Responsible Finance: Learning from the SEEP training in Dakar, Senegal

This post was written by Bintou Ka-Niang, Director of Association Development for the SEEP Network. Bintou is an international development and microenterprise finance specialist with over 20 years of experience throughout Africa, Europe, and Central America.

On March 24th-26th, in partnership with The MasterCard Foundation, SEEP hosted the first training session for the eight participating African Microfinance Associations (MFAs) in the SEEP Responsible Finance through Local Leadership in Sub-Saharan Africa Program. The Responsible Finance Program is a four year-partnership between the SEEP Network and The MasterCard Foundation to improve management capacity of microfinance associations, advance financial transparency, and promote consumer protection, in order to further the goal of promoting inclusive and responsible finance in Sub Saharan Africa. This workshop was part of a larger effort to develop a strong learning platform to scale and sustain microfinance industry development in the region. Its specific goals were to increase knowledge of:
  1. Codes of conduct and systems to support their application, by providing concrete examples of application and discussing strategies, processes and tools for putting these codes into practice, and
  2. How to improve access to and use of relevant market information by a range of stakeholders, through discussion of tools, available reporting systems, and possible uses of collected information for deeper industry analysis.
For this workshop, SEEP convened close to thirty people comprised of MFA and SEEP staff, consultants working in the program, technical partners from MIX and ADA, and the Senegalese agency managing financial service consumer grievances, OQSF. Network Capacity Assessments conducted for all the participating MFAs had shown large gaps in the areas of consumer protection and transparency and the ability of associations to address these needs in the market. The assessments revealed that while most of the MFAs had developed and adopted a code of conduct, they were facing challenges in their application. At the same time, financial and social reporting on members’ performance was still quite limited, creating problems for monitoring, tracking and informing decision making around financial, social, and consumer protection performance and compliance. The training attempted to address these issues by exploring the evolving state of consumer protection and transparency in the different African markets represented. Sessions looked at general consumer protection principles (CPPs) along with the three pillars of responsible finance, and drew heavily from participating network practices to link theory to tangible challenges on the ground. Participating MFAs were asked to develop draft action plans for their work around consumer protection and transparency that they will continue to work on and refine under the project. These plans will become the basis for further tailored trainings on the topics to advance the consumer protection and transparency agendas in their countries.

Key lessons from the training included:

Code of conduct and Grievance systems
  •  Implementing codes of conduct benefits all members; by holding them up to strict standards it indicates good quality of that MFI.
  • In countries where membership in an MFA is mandatory and the MFA has no real power to exclude members, self-regulation of the sector is more difficult to achieve.
  • The level of authority and the support provided by sector regulators to the MFA can make a big difference the degree to which associations are able to implement self-regulation
  • The type of MFIs represented by the MFA has a bearing on the effectiveness of compliance. The experience of one of Ghana’s MFAs for private companies has been that profit seeking MFIs value the high standards kept by the MFA and contribute more readily to activities that uphold these standards.
  • Advocacy that pushes regulators to commit to CPPs and require reporting on these principles could be a good way to get MFIs to adopt the principles.
  • Client education on the MFA code of conduct is important. But in order for MFAs to feel that their rights are being protected as well, this should be done at an MFA and clients level so that clients know not just their rights but also their obligations.
  • In countries where MFI financial reporting is directed to regulatory agencies that consolidate and publish the information for the whole sector, it is seen as less relevant for the MFA to focus on collecting and processing member performance, especially when all MFIs are required to be members of the MFA.
  • Grievance systems at the MFA level were not common. For the most part, consumer complaints are handled by government agencies or by MFIs directly; however, some of the participating MFAs are looking into building such systems
  • It is important for grievance systems to take into account the profile of the typical microfinance client, i.e. income and education level, geographic location, gender, etc. in order to put in place complaint submission and follow up mechanisms that are accessible to clients
For more information on the training and to access materials, please visit the Responsible Finance Program Activities page.

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