Insight on the MFRC’s Education and Communication Initiatives

June 2004

Presentation to the

Association of Micro Finance Institutions of Uganda

Structure of PresentationStructure of Presentation

MFRCMFRC

… … & mandate& mandate

… … & structure& structure

Regulatory ToolsRegulatory Tools

Educational ActivitiesEducational Activities

MFRC:-MFRC:-Mandate, structure, ‘teeth’ ?Mandate, structure, ‘teeth’ ?

Mandate: Mandate: ““Growth of industry to Growth of industry to serve serve unserved credit needsunserved credit needs, whilst ensuring , whilst ensuring consumers protected”consumers protected”

o Credit focused, but many tools “generic”Credit focused, but many tools “generic”o Focus on protection & “market conductFocus on protection & “market conduct””

Conditional Exemption from Usury ActConditional Exemption from Usury Act Compliance with requirements & registration with MFRCCompliance with requirements & registration with MFRC

Broad representation on Board !!Broad representation on Board !!

Market share of entitiesMarket share of entities

Loan book share of market

Banks51.6%

Section 210.3%

Cooperatives1.6%

Furniture Retailers24.0%

CC's, Trusts and Public Co

2.8%

Private Companies19.7%

Returns, compliance certificate &

AFS

Disciplinary Action

“RESEARCH & DEVELOPMENT”

Education & Communication

Complaints

MFRC operational structure

Investigations

Registration

= minimalist entry

requirements

Re-Registration

= review compliance

Staff 40, budget $2m/y ≈ 1,400 lenders

““Regulatory tools”:Regulatory tools”:predatory practices & indebtednesspredatory practices & indebtedness

National Loans

Register

“Truth in lending” loan summary

“Reckless lending” rules

Debt Relief Program

Ed

ucation

, comp

laints

Inve

stig

atio

ns

& p

rose

cuti

ons

How we communicate with:How we communicate with:“Borrowers”“Borrowers”

Borrowers

•Employed •Earn from 1000 - 6000•LSM 4-6•Previously did not have access to credit

Direct communication•Media•Call Center•OBs•Workshops

MFRC

Education and Communication Division

Function: Communicate and Educate

Indirect communication•Relationship and Capacity building workshops with NGO’s•Relationship and Capacity building workshops with Trade Unions•Relationship and Capacity building workshops with with the Employers(private and public sectors)•Relationship and Capacity building workshops with Consumer Directorates• Relationship and Capacity building workshops with community leaders

Education and Communication Education and Communication Campaigns in 2002/2003/2004Campaigns in 2002/2003/2004

Development of Development of Educational materialEducational material

Consumer Education Consumer Education WorkshopsWorkshops

Capacity Building Capacity Building WorkshopsWorkshops World Consumer Rights Day CelebrationsWorld Consumer Rights Day Celebrations

All the 9 ProvincesAll the 9 Provinces

Borrowers Focused

Media RelationsMedia Relations Radio & TVRadio & TV Press ReleasesPress Releases MagazinesMagazines PSAPSA OBsOBs

Media Exposure in 2002/2003/2004Newspaper Newspaper

reportsreports344344 214214 5858

TV interviewsTV interviews 1616 88 77

Radio interviewsRadio interviews 101101 8888 3636

PSAPSA 243243 200200

OBsOBs 00 44 44

Education and Communication Education and Communication Campaigns in 2002/2003/2004Campaigns in 2002/2003/2004

Public Service AnnouncementsPublic Service Announcements TV - SABC 1,2,3 and e TVTV - SABC 1,2,3 and e TV Community Radio StationsCommunity Radio Stations

Borrowers Focused

NGO CommunicationNGO Communication Consumer ExpositionsConsumer Expositions International Consumer Rights ConferenceInternational Consumer Rights Conference Borrow Wisely CampaignBorrow Wisely Campaign

Trade Union CommunicationTrade Union Communication Trade Union briefingTrade Union briefing Information disseminationInformation dissemination

Employer CommunicationEmployer Communication Public SectorPublic Sector Private SectorPrivate Sector

Education and Communication Education and Communication Campaigns 2002/2003/2004Campaigns 2002/2003/2004

ExhibitionsExhibitions Rand Easter ShowRand Easter Show Parliament - Cape TownParliament - Cape Town

Capacity Building CampaignCapacity Building Campaign Trade UnionsTrade Unions NGONGO Employers - EAPsEmployers - EAPs Government DepartmentsGovernment Departments

Borrowers Focused

Radio and TVRadio and TV PSA - Community radio stationsPSA - Community radio stations Carte BlancheCarte Blanche E-TVE-TV SABCSABC

Workshops conducted till to day: •300 workshops•37 901 participants

The objective of the PSA were to create and reinforce awareness among South Africans of:

the existence and role of the MFRC and the regulated micro finance environmentthe value that a regulated micro finance industry adds to the SA economythe existence of registered micro lenders and advantages of borrowing from registered lendersThe rights of consumers and how to lodge a complaint against illegal practicesThe key messages for TV and Radio were:

PSA 1: The Usury Act Exemption Notice (New regulations) and the MFRC exist to protect consumers. Be aware of them find out how they benefit you.PAS 2: Registered micro -lenders exist for your protection. Make sure you borrow from a registered lenderPSA 3: Consumers have rights and can lodge complaints against unscrupulous lenders with the MFRC.PSA 4: Avoid getting trapped in a dept circle, do not borrow more than you need.

All PSA’s included the MFRC’s toll share line 0860 100406 and website address for consumers to call for help or inquiries.

Public Service Announcements

Education and Communication Education and Communication Campaigns in 2002/2003/2004Campaigns in 2002/2003/2004

NewslettersNewsletters CircularsCirculars Lender workshopsLender workshops

In 2002/2003 the MFRC conducted workshops in Durban, In 2002/2003 the MFRC conducted workshops in Durban, Port Elizabeth, Cape Town, Pretoria and Johannesburg. More Port Elizabeth, Cape Town, Pretoria and Johannesburg. More than 1000 micro lenders attended these workshops.than 1000 micro lenders attended these workshops.

Micro Finance Skills ProjectMicro Finance Skills Project PDI Lenders involvementPDI Lenders involvement Lender CompetitionLender Competition

Lender Focused

The competition challenged micro lenders to showcase their involvement in Consumer Education, Housing Lending and Micro Enterprise lending, responsible lending etc,

Barriers and ChallengesBarriers and Challenges Financial Resources limit the amount of coverage that Financial Resources limit the amount of coverage that

MFRC should ideally achieve in terms of:MFRC should ideally achieve in terms of: Capacity building initiatives with NGO’s, Trade Capacity building initiatives with NGO’s, Trade

Unions most of which are already under financed Unions most of which are already under financed Media presence to achieve top of the mind Media presence to achieve top of the mind

awarenessawareness Support to initiatives by community based Support to initiatives by community based

organizations who interact with borrowers at grass organizations who interact with borrowers at grass root level (Financial) root level (Financial)

Robust impact analysis to determine the success or Robust impact analysis to determine the success or otherwise of our campaigns.otherwise of our campaigns.

What would improve the What would improve the efficacy of the Campaignsefficacy of the Campaigns

Education focused initiatives such asEducation focused initiatives such as:: Increased capacity building workshops with NGO’s, Trade Unions & Increased capacity building workshops with NGO’s, Trade Unions &

other relevant organisationsother relevant organisations Increased educational material - translated into various languagesIncreased educational material - translated into various languages Increased media coverage to complement the educational Increased media coverage to complement the educational

initiatives within communitiesinitiatives within communities Increased participation in workshops and education initiatives Increased participation in workshops and education initiatives

organized by other related organizations including lenders organized by other related organizations including lenders themselvesthemselves

Increased educational workshops in the rural areasIncreased educational workshops in the rural areas Increased participation of PDIs in Lending IndustryIncreased participation of PDIs in Lending Industry Inclusion of financial literacy into the school curriculumInclusion of financial literacy into the school curriculum

ConclusionConclusion Education and Communication will ensure that a greater % of the borrowing Education and Communication will ensure that a greater % of the borrowing

market can make informed financial decisionsmarket can make informed financial decisions It is important for MFRC to achieve top of the mind awareness within It is important for MFRC to achieve top of the mind awareness within

communities so that they can be able to take advantage of the services we offer.communities so that they can be able to take advantage of the services we offer. The inclusion of Financial literacy/consumer education in the school curriculum The inclusion of Financial literacy/consumer education in the school curriculum

will greatly contribute towards ensuring that we have well informed consumerswill greatly contribute towards ensuring that we have well informed consumers It is also imperative to ensure that effective Evaluation measures/Instruments are It is also imperative to ensure that effective Evaluation measures/Instruments are

put in place to determine the impact of the interventionsput in place to determine the impact of the interventions MFRC relies on the relationships it has build with sister institutions such as the MFRC relies on the relationships it has build with sister institutions such as the

paralegal movement and advice centers, however it would be more beneficial for paralegal movement and advice centers, however it would be more beneficial for MFRC to maintain and harness these relationships via:MFRC to maintain and harness these relationships via: Capacity building workshopsCapacity building workshops Distribution of micro lending informationDistribution of micro lending information Site visitsSite visits

THANK YOUTHANK YOU