Taking microfinance further

One of the objectives of Oikocredit is to promote SPM internationally and in that respect many activities have been undertaken and results achieved.

• participated in two panels on social performance and the Progress out of Poverty Index at the Africa-Middle East Regional Microcredit Summit and the Microfinancial Services World in Amsterdam;
• been elected to join the Social Performance Task Force steering committee;
• been proposed by the Dutch Microfinance Platform as a member of the Task Force on the Evolution of the Client
  Protection Principles;
• been proposed by the European Microfinance Platform as a member of the Steering Committee of the Smart Campaign;
• joined the Board of the Social Microfinance Facility;
• has been accepted as a member of the IMP-Act Consortium;
• received requests from both SNS Bank and Developing World Markets to use the social scorecard developed by Oikocredit

Through its capacity building fund, Oikocredit helps project partners develop skills and expertise in the following areas:

• Social performance management
• Risk management
• Product development
• Market coverage and strategic positioning.

Capacity building is done in collaboration with partners such as ICCO, Terrafina, Rabobank, Social Microfinance Foundation and Church of Sweden. In 2009, Oikocredit allocated € 2 million in capacity building support to its project partners.

Oikocredit sought to be better informed on the present situation of overindebtedness and invited partner MFIs, microfinance investors (known as MIVs) and microfinance networks to share what they are doing and seeing in the field.

The survey also asked for recommendations on how the issue might be addressed. With over 250 responses including 236 MFIs spread across 39 countries, this is an issue many in the industry are keen to act on. Initiatives or approaches MFI project partners found most effective in preventing over-indebtedness include improved credit analysis, adaptation of loan products and the addition of other financial products such as insurance and savings.

The establishment of industry codes of conduct and the use of information sharing through credit bureaus (or informal information sharing) were highly regarded and desired by the respondents. Building good client relationships with regular contact and feedback mechanisms were also identified as sound strategies to minimize over-indebtedness. MFIs warned MIVs against flooding markets with too much debt, which increases competition levels and fuels irresponsible lending.