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Promoting Inclusive Markets and Financial Systems

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Sharon’s visit in Africa: Monitoring RFLL Partners in Senegal, Rwanda and Uganda

by on Sep 30, 2013  |  posted in Association Services, Responsible Finance  |  2 Comments

For about a year, SEEP’s Responsible Finance through Local Leadership Program (RFLL) funded by the MasterCard Foundation, has been working with eight microfinance associations (MFAs) in Benin, Burkina Faso, Cote d’Ivoire, Ghana, Mozambique, Rwanda, Senegal and Uganda. From August 22nd to 30th, SEEP’s Executive Director and Director for Association Development visited the MFAs in Senegal, Rwanda and Uganda to monitor program implementation progress and review some of the advances and challenges encountered in promoting responsible finance.

As I've mentioned in earlier blogs, SEEP coordinated with the MFAs to first conduct baseline capacity assessments (NCATs) in September 2012, then to develop institutional strengthening plans (ISPs). This January, the eight MFAs began to reinforce their own capacities and implement their responsible finance agendas, working on some of the issues brought to light by the NCATs. All in all, the visits confirmed some of the MFAs’ reported achievements, including the use of the ISP as a dashboard for internal capacity building activities and real efforts to implement the ISP to its fullest. The team found that:

  • Each of the MFAs visited in this trip had implemented or begun to implement most of the activities listed in their respective ISPs. These activities ranged from strategic planning to human resource management, building information and communication capacity, and member training related to consumer protection. Where planned tasks were not taking place, it was mostly due to delays in pre-requisite activities. The visiting team felt it was very likely that at least 75% of the activities in these MFAs’ ISP would be implemented by the end of the year—a welcome achievement, given the delays in finalizing and funding the ISPs.
  • The MFAs are quite central to their countries’ microfinance and general financial industry. The authorities involve them in most, if not all, activities and discussions related to the microfinance sector and, in Senegal and Rwanda, see them as working towards the public good and therefore provide them with financial and technical support to help them achieve their objectives.
  • As a result, there might be some local government and donor resources that the MFAs could tap into, especially for activities related to consumer protection, an increasingly important topic for the authorities.
Government and regulator efforts in these countries also impressed the SEEP team. In each of the countries visited, there was a flurry of activities or initiatives that sought to regulate the microfinance sector, use consumer protection principles (CPP), or to promote the application of some of these principles.

Code of Conduct (CoC): In Rwanda, the national microfinance strategy includes the intention to assist the MFA in enforcing its CoC. This would be a significant step for advancing the CPP agenda, since the MFA has just validated its updated Co, which takes into account all CPPs. The ministry of finance is already looking into a process to provide this assistance to the MFA.

External recourse: In Senegal, there is a government agency (OQSF, Observatoire de la Qualité des Services Financiers) that acts as ombudsman between clients and providers of financial services, including microfinance providers. Even though the (bureaucratic) processes used by the agency makes it a little difficult for MFI clients to fully use the service, it is an important initiative, and the first of its kind in French-speaking West Africa. In addition, agency executives showed real interest in learning from similar institutions to improve processes and better serve financial services users. In Rwanda there is a similar ombudsman for financial services, and there are plans to extract its microfinance department to make it a microfinance-dedicated Ombudsman. In Uganda, the RFLL program partner itself receives complaints from microfinance clients.

Financial Education/Financial Literacy: For each of the countries, financial education and/or financial literacy is big. It is a part of the national microfinance strategy in Rwanda and Senegal and a strategy to grow financial literacy is  spearheaded by the Central Bank in Uganda. There are government and donor-funded projects in all the countries geared to helping clients borrow responsibly and understand the services they are being provided. The programs are also trying to start financial education at a young age, introducing it in curricula at the elementary school level, instilling knowledge in the future users of financial services.

Credit Information Sharing Systems (CIS): There is a lot of movement in this area, especially in francophone West Africa.  Senegal and the other countries that are part of the same economic and monetary union and are supervised by one central bank (BCEAO, Central Bank of West African States) are poised to have a credit reference bureau for microfinance activities established by BCEAO sometime in 2014. Since the system’s delivery date is not known yet, our Senegalese RFLL partner is looking into developing a provisional CIS to serve the immediate needs of its members. During our visit, this MFA was in the process of selecting a firm to conduct a feasibility study for its CIS project. Both Rwanda and Uganda have CIS. The Rwandan association’s new CoC requires all members to report to the CIS. In Uganda, the exclusive CIS contract has come to an end and the market has been open for new providers, thus breaking the existing monopoly. The contracting process is underway and the Ugandan association may find a role as partner to one of the bidders, and help to set up a new CIS. These and other initiatives in most of the RFLL implementation countries confirm that the project has come at just the right moment for the partner MFAs, helping them to seize these opportunities and to really promote various aspects of responsible finance with their membership.

2 Comments

Jean Damascene HAKUZIMANA says:
Nov 11, 2013

It has been a pleasure to receive SEEP’s Team. Various talks energized our work especially RFLL=CPP work.We hope this agenda to the next step with huge success.

RUDOLF AYESU-SIAW says:
Feb 02, 2014

Keep on educating the world

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