News
Interest rates on microloans in Rwanda to drop
Posted Monday, January 3 2011 at 00:00
Rwandans will soon pay lower interest rates following the launch of the Transparent Pricing Initiative project in the country.
The initiative, which is already operational in Uganda, Kenya and Tanzania, is part of the broader MFTransparency programme aimed at impelling African microfinance institutions to price loans fairly and educate citizens on interest rates.
“Rather than attempt to control interest rates, we facilitate transparent pricing in microfinance products so that all stakeholders can be aware of the value of microloans in the market,” said Jordan Filko, the development and communications associate MFTransparency via e-mail.
This is done through training, and interest rate disclosure to the local industry stakeholders such as microfinance institutions and affiliates, regulators, funders, industry support organisations and research institutes.
“Transparency is a core business value and an indispensable tool in serving the poor and vulnerable. MFTransparency has come at the right time for the correct purpose and intent,” said Faustin Zihiga, chairman of the Association of Micro Finance Institutions in Rwanda (AMIR).
Typically, MFTransparency partners with a local microfinance institution network to launch the project.
Across the border, it partnered with the Association of Microfinance Institutions of Uganda and in Rwanda, AMIR.
MFTransparency collects microloan pricing data representing the majority of the market and publishes it on its website.
The organisation also creates financial literacy materials for clients to engage microloan borrowers directly.
Mr Filko said to ensure sustainable impact, new standards for communicating prices must be established, the flow of information between local actors must increase and the dialogue on how best to implement transparency for a strong market must continue.
MFTransparency operates on the premise that truly transparent markets are possible only through the combined efforts of all actors in the microfinance ecosystem.
“In order for clients to benefit, all stakeholders must be educated and informed about implementing transparent pricing practices,” said Mr Filko.
AMIR has been in operation since 2007, and is a key driver of the development of the Rwandan microfinance industry.
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