• Photo : MicroWorld





Microlending gains transparency in western Africa

Interview MF Transparency, a US-based NGO, works towards making interest rates transparent, one country at a time. We interview Mélina Djre, project manager for MF Transparency in western Africa. She holds a Master's degree in microfinance and has worked in the sector for several years.

Why is MF Transparency putting efforts into west African microfinance?

In western Africa, microfinance is very dynamic and is regulated by the Union Monétaire Ouest Africaine. However, customers still lack necessary tools. For example, they do not have access to basic presentations about interest rates.
On the other hand, when microfinance institutions are legally obligated to publish rates, these MFIs do not necessarily know how to implement this procedure.

How is MF Transparency taking action in Senegal?

The first stage, which took place from August to December 2010, was focused on collecting data about costs. This was done on a voluntary basis. The participating MFIs shared information about interest rates, application fees, and mandatory savings plans which are associated with loans. This last item is a hidden cost. Next, we compiled all these figures and came up with an overall cost for each MFI which allows us to make comparisons. These results will be presented in March 2011 before being published on our website. They will be updated every year.

The second stage is geared to protecting consumers. We try to identify best local practices or best tools. For example, we look for the clearest repayment schedules and we give these models to other MFIs.

How many MFIs have agreed to work with you?

NouWe launched this initiative with the support of the Direction de la microfinance et de l'"association professionnelle des IMF sénégalaises". Afterwards, thirteen MFIs supplied us with pricing information. This is fewer than we expected, but it does account for over 80% of the sector.

In which other francophone countries will you intervene?

After starting out in Senegal in July and August 2010, our work continued in Burkina Faso, Benin and Togo. After February and March 2011, we plan to work in Mali and Niger, and then move on to Guinée Bissau. If the political situation allows us, we will intervene in the Côte d'Ivoire.

Is the interest rate the only criteria that a customer takes into account?

No, it is not the only criteria. When choosing a microlender, location is an important factor, along with how clients are treated, the range of products, and how these products are adapted to the needs of a specific microentreprise. If the borrower is able to compare different MFIs, he or she would obviously make a better choice.

traduction : Catherine Jan

This article is part of the special report: