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Finance
Progress Report
July 2015
Momentum
Momentum to improve client protection is accelerating,
with scores of FIs across the globe improving their practices
and being recognized for it through certification.
ISABELLE BARRS
Director, Smart Campaign
Our Mission
Letter from
The Campaign
Director
Page One
It is in everyones interest to ensure that when low-income people seek formal financial services,
they can be confident of receiving fair and appropriate treatment. Around the world today, this
confidence is often lacking. The Smart Campaign works from a provider perspective to embed
the Client Protection Principles throughout the microfinance industry and, increasingly, into the
broader financial inclusion sector. The campaigns standards of care address such critical issues
as prevention of over-indebtedness, transparency, privacy, respectful treatment, and means for
resolving problems.
The signature program of the Campaign is Smart Certification, launched in 2013. The program
publicly recognizes financial institutions (FIs) that meet all 30 of its standards of care. We envision
certification as a signal to investors, regulators and, ultimately, clients that an FI upholds the Client
Protection Principles. To date, 37 institutions including some of the worlds largest and most
influential microfinance providers have achieved certification through a third-party evaluation
of their policies and procedures. Together, those FIs serve more than 19 million clients, or nearly
10 percent of the worlds microfinance clients. In India, Smart-Certified FIs account for 25 percent
of the nations microfinance customers. Increasingly, funders look for an FIs commitment to
Smart Certification when deciding where to invest.
In 2014 the Campaign commissioned two external evaluations, one on its overall strategy (conducted
by the Aspen Planning and Evaluation Program) and one on the certification program (by BSD
Consulting). We were pleased that both evaluations affirmed the widespread industry awareness
and acceptance of the Client Protection Principles, as well as respect for and use of the Campaign
as a resource. Both evaluations made recommendations that we are working to incorporate.
Recommendations on streamlining certification have already resulted in changes announced in April
2015, with further improvements to be released in December.
As we move into a new strategic phase covering 2016-2018, the Campaign is adopting two
significant new directions, both supported by evaluation results. First, the Campaign will expand
to address the broader financial inclusion sector, including digital financial services. Second, it
will work more specifically to improve the market-level environments that strongly influence the
behavior of individual providers. As always, the collaboration of allied organizations CGAP, the
Social Performance Task Force and many others is key in successfully achieving these goals.
The journey continues to be a dynamic and rewarding one, and we are moving forward together
for the benefit of low-income clients across the globe.
Isabelle Barrs,
Campaign Director
The Campaign
in Review
Gaining Momentum
As the world increasingly embraces financial
inclusion, two recent research projects undertaken
by the Smart Campaign, Client Voices and What
Happens to Microfinance Clients Who Default,
remind us that if financial inclusion is to fulfill its
promise, client protection must be front and center.
The Client Voice research details, from clients
themselves, the various ways that the microfinance
experience can turn stressful and destructive. The
Default project makes it clear that in countries with
weak regulation, lack of credit
reporting infrastructure and low
client financial capacity, risks to
clients increase notably. Our mission
is to build an ecosystem that
minimizes client risk and champions
good client protection practices,
country by country.
Client Protection Certification
is the tip of a long spear. While
the Campaign aims ultimately
to establish certification as a
competitive necessity for FIs, it is
also the fruit of an extended effort
in improving FI practices that has
reached different stages in different
global regions, as well as among
the thousands of FIs worldwide.
Before launching its certification
program, the Campaign and
its allies had to define client
protection; win recognition
and buy-in across the global
industry; create tools and deploy trainers to make
implementation feasible; build processes of internal
and third-party assessment for FIs; and work with
donors, investors and regulators to create incentives
for sustained client protection efforts. All this laid
the groundwork for certification. All of these efforts
are ongoing.
We are poised to do more to leverage the work of
partners. That means engaging more certifiers,
assessors and trainers; working closely with the most
capable microfinance associations and networks;
coordinating efforts with other global organizations
focused on social performance and client protection;
Campaign
by the Numbers
Page Three
4,496
303
2,193
Individual
Endorsements
184
Network and
Association
Endorsements
184
1,584
Microfinance
Institution
Endorsements
Page Four
Why Certification?
Certification requires an investment of time and
effort from an FI, though most are not left to shoulder
the entire burden, thanks to support from investors,
networks and others. The standard is rigorous: to
date, slightly more than two thirds of the FIs that
have sought certification have achieved it.
Given the many pressures under which an FI
operates, the Campaign has worked to clarify
why they should focus their attention on client
protection and undergo the rigorous certification
process. We make this case:
Any financial institutions credibility is undercut
when clients get into too much debt, are sold the
wrong services, fail to understand their payment
obligations, feel intimidated or disrespected by FI
personnel, or cant get their complaints addressed.
Failure to prevent these ills can lead to severe
backlashes, both for an institution and an entire
regional or national microfinance industry.
Certification provides several competitive
advantages. Satisfied customers return, and
refer friends. Staff morale improves. The mark
of excellence generates prospective customers
trust. Certification is a potent marketing
advantage that boosts an FIs reputation and
attracts investors.
Certification has a multiplier effect. When
industry leaders win certification it becomes a
competitive imperative. The drive to ensure client
protection leads to vital cooperation in matters
such as avoiding client overindebtedness and
setting uniform pricing transparency norms.
Page Seven
Certification Improvements
Page Eight
Looking Ahead
Page Nine
Client Portraits:
The clients of
Smart Certified
MFIs around
the world
Market Profile:
India - A Quarter of
all Clients Covered
MFI Profile:
First Certified Institution in
Africa: Bayport, Botswana
Page Eleven
Market Profile:
Partner-led Progress
in Kyrgyzstan
The Smart Campaign benefits from effective
partnerships in Kyrgyzstan. Three of the
countrys largest MFIs, serving more than 50
percent of microfinance clients - Kompanion,
FINCA Kyrgyzstan and Bai Tushum Bank have achieved certification, thanks to the
encouragement of IFC, Deutsche Bank and
FINCA. Partners such as these are playing a
similar role in countries such as Cambodia,
where Agence Franaise de Dveloppement
(AFD) and the Cambodia Microfinance
Association (CMA) have partnered to enable
the markets largest MFIs to become certified;
and Pakistan, where the Pakistan Microfinance
Network (PMN) has commissioned assessments
for over 20 of its members. Leveraged
partnerships are integral to expanding the
Campaigns reach and providing incentives
to providers to improve.
Steering
Committee
Page Twelve
FELIPE ARANGO
Director
BSD Consulting
United States
DAVID BAGUMA
Executive Director
Association of Microfinance
Institutions of Uganda (AMFIU)
ABOUBACRINE DATE
CEO
Bank for the Microfinance
Institutions in West Africa
ROSAMUND GRADY
ANNE HASTINGS
Manager
Microfinance CEO Working Group
United States
CARLOS LOPEZ-MOCTEZUMA
Global Director of
Financial Inclusion
BBVA
Mexico
ASAD MAHMOOD
Executive Director
The SEEP Network
United States
Vice President
Global Social Enterprise and
Financial Innovation
FINCA International
United States
DAVE GRACE
KATE MCKEE
SHARON DONOFRIO
Senior Advisor
CGAP
United States
TOMAS MILLER
Chief
Access to Finance Unit
IADB-Fomin
United States
SYED MOHSIN-AHMED
CEO
Pakistan Microfinance Network
BETH PORTER
LARRY REED
Director
Microcredit Summit Campaign
United States
ELISABETH RHYNE
VIPIN SHARMA
Managing Director
Access Development and
Access Alliance
India
BEN SIMMES
Chair
Dutch Microfinance Platform
Netherlands
JAMI SOLLI
Managing Director
Center for Financial Inclusion
at Accion
United States
SAHAR TIEBY
PIA ROMAN
MARIELA ZALDVAR
RUPERT SCOFIELD
President & CEO
Finca International
United States
Executive Director
Sanabel
Jordan
Acknowledgements
The Smart Campaign gratefully acknowledges the financial support of Agence Franaise de Dveloppement,
Asia Development Bank, Credit Suisse, Deutsche Bank, the Ford Foundation, the Inter-American Development
Banks Multilateral Investment Fund, the International Finance Corporation, The MasterCard Foundation,
the Small Industries Development Bank of India (SIDBI), USAID and Accion, and thanks the many partners
who enable and facilitate its work:
Access/Assist, India
Association of Microfinance Institutions in Rwanda
Association of Microfinance Institutions of Uganda
Association Professionnelle des Systmes Financiers
Dcentraliss du Cte dIvoire
Azerbaijan Microfinance Association
Bangko Sentral ng Pilipinas, Philippines (BSP)
Bankable Frontier Associates
Cambodia Microfinance Association
CDF Network
Centre for Microfinance Nepal
CERISE
Consortium Alafia and National Advisory Council
Consultative Group to Assist the Poor
COPEME, Peru
EDA Rural Systems, India
Emprender, Colombia
Entrepreneurs du Monde
Financial Inclusion Equity Council
Ghana Microfinance Institutions Network
Good Return
Keeping
Clients First
in Inclusive
Finance
Progress Report
July 2015