Critics of microfinance express concern that financial service providers are more interested in maximizing profits than meeting the real needs of their poor clients. Even some advocates believe that the industry has been driven primarily by supply and not demand. A new global effort, known as the Smart Campaign, aims to right this wrong.
By identifying a set of common standards to guide all microfinance operations, the Smart Campaign provides a useful framework around which those who value putting clients first can rally. The seven Client Protection Principles include:
- Appropriate product design and delivery
- Prevention of over-indebtedness
- Responsible pricing
- Fair and respectful treatment of clients
- Privacy of client data
- Mechanisms for complaint resolution
The Hunger Project recently signed on as an endorser of the Smart Campaign to demonstrate that it agrees with the idea that all microfinance clients deserve transparent, respectful and prudent services. As an organization, THP already complies with many of these principles. We work with community members to design financial products and services that meet local needs and require that borrowers fulfil debt obligations elsewhere first. We set interest rates that will enable the rural banks to be sustainable but member businesses to be profitable and treat clients as partners to end hunger and poverty. And we recently started asking for consent before sharing any information collected through individual interviews. But there is always room for improvement, most notably with respect to principles one and seven. To address specific gaps, THP aims to develop plans at the country and epicenter (cluster of villages) level. With the goal of eventually being certified by the Smart Campaign!
We hope the list of supporters will continue to grow as more and more organizations deem the effort worthy. Upholding these principles results in happier and more satisfied clients, which positively impacts both the financial bottom line and the social one. Let’s make client protection part of the microfinance culture!
- Smart Campaign website
- How THP’s Microfinance Program Works
- Meet some of our microfinance program partners
July 1, 2013