How is Oikocredit contributing to transparency of the microfinance industry?

Protecting end-clients against malpractice of microfinance institutions is also imperative to our mission. Oikocredit has actively facilitated many industry-wide initiatives which promote transparency and ensure the microfinance industry maintains its social mission.

These include:

Client Protection Principles: Oikocredit was one of the first microfinance investors to sign on to the Client Protection Principles. The principles are designed to create consistent practices and policies for the fair financing industry as a whole. The six major principles are as follows:

• providers will take reasonable steps to ensure the borrower has adequate ability to repay the loan and is not at risk of over-indebtedness;
• pricing, terms and conditions of financial products are transparent;
• debt collection practices are not abusive or coercive;
• staff will adhere to high ethical standards in their interaction with staff members (especially in regard to corruption or mistreatment);
• providers will have timely and responsive mechanisms for complaints or problems from their clients;
• an individual's privacy will be respected.

Social Scorecard: Oikocredit is implementing a screening process for MFIs that includes an analysis of how they serve their clients (social scorecard). E.g. transparency of costs to clients, systematic client satisfaction, evaluation of client's ability to repay the loan. It possible to get an in-depth insight in the way a MFI implements its social mission.

MFTransparency: In October 2008, Oikocredit signed the MFTransparency agreement which signifies our commitment to making the communications between Oikocredit and our consumers (MFIs) more transparent. MFTransparency which exposes the prices of financial products per country.Using this tool will help ensure costs of financial services to the poor are clear and fair for both Oikocredit and the organizations we work with. That way we can better monitor pricing, integrity and our ultimate goal of poverty alleviation in microfinance. 

Social audit: It is important to evaluate our own actions as a microfinance investor. Oikocredit has looked beyond the performance of the microfinance institutions. Last year, Oikocredit was the first private financier to be audited on its own social performance.

Progress out of Poverty Index: To assist MFIs to assess the poverty level of its clients, Oikocredit very actively supports the implementation of the Progress out of Poverty Index as is developed by Grameen Foundation.

• Oikocredit offers financial and technical support to those MFIs that want to assess thoroughly the translation of their social mission into practice, the so-called social assessment tool.
• Oikocredit itself has been one of the three first investors that have undergone an assessment on the implementation of its own social mission.