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Rwanda Data Launch
Hosted by
MFTransparency and AMIR
Webinar September 27th, 2011
Promo-ng Transparent Pricing in the Microfinance Industry
enabling APR & EIR Program
� enabling Africa to Price Responsibly and Educate on Interest Rates
� Sponsored by the MasterCard FoundaEon
� Eight countries in 18 months: Malawi, Uganda, Rwanda, Ghana, South Africa, Tanzania, Zambia, Mozambique
Transparent Pricing Ini;a;ve in Rwanda
� Rwanda is the third country in the enabling APR & EIR Program
� Transparency workshop in Kigali on December 10th, 2010 to launch the Rwanda Ini-a-ve.
� This iniEaEve includes three major components: ◦ CollecEon and publicaEon of pricing data ◦ Training on pricing transparency ◦ Development and disseminaEon of educaEonal materials
Transparent Pricing Ini;a;ve in Rwanda
The enabling APR & EIR Program is sponsored by:
Thank you to our local partner in Rwanda:
AMIR Opening Remarks
Par;cipa;ng Ins;tu;ons
Ins;tu;ons Par;cipantes
Transparent Pricing Ini;a;ve in Rwanda
Par;cipa;ng MFIs Rwanda Microfinance Limited
Union des CLECAM Wisigara
Umutanguha Union of Savings and Credit CooperaEves (UCU)
Urwego Opportunity Bank
Vision Finance Company S.A
Zigama Credit and Savings Society
Par;cipa;ng MFIs Amasezerano Community Bank
COOPEC Comicoka
COOPEC Zamuka
COOPEDU
COOJAD
Duterimbere – IMF
Goshen Finance S.A
IMF Inkingi
Type of Ins;tu;on (14 Ins;tu;ons)
21%
36% 7%
36%
CoOp
NGO
Other
Privately-‐owned 'For-‐Profit'
Regulated vs. Unregulated • All 14 insEtuEons are regulated
100%
0%
Regulated
Unregulated
Product Pricing Analysis
Loan Purpose (63 products)
42%
9% 11% 12%
7%
18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Business Housing Emergency Consumer EducaEon Any Purpose
Percen
tage of P
urpo
ses
Purpose as a Percentage of Purposes
Loan Purpose (63 products)
73%
10% 13% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1 2 3 >3
Percen
tage of P
rodu
cts
Number of Product Purposes
Number of Purposes per Product
Eligibility
18%
78%
Product Eligibility
Must be a salaried worker
Must own a home
Must run a business
3% 3%
94%
Gender Focus (Eligibility)
Women only
Men only
Either
Lending Methodology
66%
30%
4%
Individual
Solidarity
Village Banking
Other Services Offered
34%
21%
10%
23%
9%
3%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Credit EducaEon
Credit Insurance
Group MeeEngs
Business Training
TA Visits to Workplace
Other Training
Percentage of services offered
Other Services Offered with Loan Product
Repayment Frequency
13% 7%
56%
13% 11%
0%
10%
20%
30%
40%
50%
60%
Weekly Every 2 weeks Monthly Quarterly Single end payment
Percentage of frequencies
Reasons for Varia;ons in Price � 16 products have a range of interest rates
10%
12%
17%
12% 15%
10%
24%
Branch office locaEon
Client profile/Client risk
Length of Eme as client
Loan size
Purpose
Collateral
Other
Interest Calcula;on Method
49% 51%
Declining Balance
Flat
Fees & Insurance � 60 products (95%) have a fee � 28% of all fees are for the purpose of insurance
95%
5%
Products with a Fee
Fee
No Fee
72%
28%
Fee & Insurance
Other Type of Fees
Insurance
Fees & Insurance
10%
90%
Fees Disclosed on Repayment Schedule
Disclosed
Not disclosed
100%
0%
Disbursement vs Ongoing
Disbursement
Ongoing
External Insurance -‐ Fee Parameters
• Out of 32 products with insurance charges, 20 are charges paid to insurance companies using a matrix of determinants to calculate the amount paid by each borrower
• Determinants of insurance charge to borrowers: o Loan amount o Loan term o Age of borrower
Compulsory Savings � 40 products out of 63 require compulsory savings � Of the 40 products that require savings, 13 disclosed the amount of compulsory savings on the repayment schedule
� For 4 products, borrowers control savings internally
54% 36%
10%
Compulsory Savings
Required for all loans
Never required
Required for some loans
22%
37%
33%
8%
Compulsory Savings according to Type of Ins;tu;on
Coop
NGO
Privately-‐owned for profit
Other
Pricing Calcula;ons
Interest Rate Calcula;ons
Interest Fees Insurance Taxes Security Deposit
APR (Interest + Fees + Insurance) X X X
APR (Including Taxes & Security Deposit)
X X X X X
EIR (Interest + Fees + Insurance) X X X
EIR (Including Taxes & Security Deposit)
X X X X X
APR Ranges by Ins;tu;on Type APR (Int + Fees + Ins)
19%
60%
27%
56%
00%
20%
40%
60%
80%
100%
120%
140%
160%
CoOp NGO Other Privately-‐owned For-‐Profit
APR by Ins;tu;on Type (Weighted Average, Minimum and Maximum)
APR Ranges by Product Purpose APR (Int + Fees + Ins)
Business Housing Emergency
Consumer
EducaEon
Any Purpose
Minimum APR 10% 13% 13% 13% 13% 13% Maximum APR 155% 102% 155% 155% 72% 111% Weighted Average APR 39% 16% 24% 25% 21% 21%
39% 16% 24% 25% 21% 21%
00% 20% 40% 60% 80%
100% 120% 140% 160%
APR (In
t + Fees +
Insurance)
APR by Product Purpose
APR Ranges by Geographic Focus APR (Int + Fees + Ins)
Both (50/50) Rural Urban Minimum 13% 10% 15% Maximum 102% 130% 155% Weighted Average APR 63% 23% 56%
63%
23%
56%
00% 20% 40% 60% 80%
100% 120% 140% 160%
APR (In
t + Fees +
Insurance)
APR by Geographic Focus
MFTransparency Interac;ve Price Graphs
MFTransparency
Graphiques Interac;fs de Tarifs
Price Graphs APR (Int + Fees + Insurance)
Graphiques Tarifaires
TIA (Int + Frais + Assurance)
Products with > 50 Ac;ve Borrowers
Products with > 50 Ac;ve Borrowers Loan Amount < 2,000,000 RWF
Products with > 50 Ac;ve Borrowers Ins;tu;on Type: Privately-‐owned for-‐profit
Products with > 50 Ac;ve Borrowers Ins;tu;on Type: NGO
Products with > 50 Ac;ve Borrowers Ins;tu;on Type: Coopera;ves
Products with > 50 Ac;ve Borrowers Purpose: Business
Products with > 50 Ac;ve Borrowers Purpose: Educa;on
Products with > 50 Ac;ve Borrowers Purpose: Consump;on
Products with > 50 Ac;ve Borrowers Purpose: Housing
Products with > 50 Ac;ve Borrowers Interest Calcula;on Method: Flat
Products with > 50 Ac;ve Borrowers Interest Calcula;on Method: Declining Balance
Summary � Ins;tu;on cost structure: Every insEtuEon has a unique cost structure which requires a unique pricing strategy.
� Product cost structure: Different loan products can have significantly different cost structures. It is therefore necessary to look at each loan product individually when assigning loan prices.
� Limita;ons of porbolio yield: If we do not analyze costs and prices on a product-‐by-‐product basis, our overall pornolio yield may be posiEve, but some individual products not profitable. This can cause sustainability problems in the future.
� Remember: Each product is unique and requires a disEnct pricing strategy.
Recommenda;ons
Loan Documenta;on: Considera;ons
• It is important to always consider the true price of a loan from the point-‐of-‐view of the client
• How much money does a client have to spend in order to access a loan?
Client perspecEve
• Shows the expected cash flow for the client • Should disclose all charges made at disbursement and during the loan term
Repayment schedule
• At the local industry level, lenders and other stakeholders should define a standard interest rate calculaEon and loan documentaEon system
• StandardizaEon allows for comparison across compeEng loan offers from the perspecEve of the client
StandardizaEon
Resources: Recommended Repayment Schedule Template
General Recommenda;ons Loan documentaEon
• Communicate as much informaEon on both repayment schedule and contract
Interest rate calculaEon method
• Switch from flat to declining balance to enhance transparency
Technical assistance
MFTransparency is happy to provide assistance to implement these changes
MFTransparency is currently pilo;ng
a in and
The educaEonal resources we will develop for Malawi and Rwanda will also be adapted to the unique context of other countries
We collaborate with our local partners to adapt these materials to the local context and implement them successfully.
Ques;ons & Answers
Ways to Get Involved � Endorse MFTransparency. More than 870 individuals and organizaEons have signified their support in principle of MFTransparency's mission by becoming an endorser. Add your name to the list: hrp://www.msransparency.org/endorsements/form/
� Educate about transparent pricing. MFTransparency develops and disseminates educaEonal resources covering a range of topics related to transparent pricing. These materials are all available free of charge through the Resources Library on our website.
� Par;cipate in country projects. We work with government agencies, networks, associaEons, donors, investors, academics and other stakeholders in every project country and always welcome new partnerships. MFIs can also acEvely parEcipate by submitng their data when MFTransparency launches the Transparent Pricing Ini-a-ve in their country.
Promo;ng Transparent Pricing in the Microfinance Industry
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