The following was posted on the blog of the Center for Financial Inclusion. http://centerforfinancialinclusionblog.wordpress.com/2010/04/15/princess-maxima-and-client-protection/
I like what is being said, but think that the potential for it have significant value in improving performance to be quite limited. My comment on their post is below their post
Posted by Kanika MetreI commented on this post as follows:
Last week at the Africa-Middle East Regional Microcredit Summit in Nairobi, we were happy to hear the UN Secretary-General’s Special Advocate for Inclusive Finance for Development, Princess Maxima of the Netherlands, highlight client protection as one of the top three priorities for the future of inclusive finance. Here is an excerpt from her speech at the Summit opening:
“The third priority is client protection. Of course, more than 700 MFIs, associations, investors and individuals have already endorsed the Client Protection Principles that are becoming the industry standard. But this is only the first step. Financial institutions must put these principles into practice, and this requires both thought and action. That’s why I’m urging the whole sector to get involved with The Smart Campaign, a global effort to get client protection on everyone’s radar.
The global financial crisis underscores the importance of these principles. I fully agree with the Smart Campaign that pricing, terms and conditions of financial products should be as transparent and responsible as possible. That customers shouldn’t be sold financial products they don’t need, or end up borrowing money they can’t repay. And their complaints about financial services should be taken very seriously. So I’m delighted to see workshops on client protection on the Summit’s programme.”
This is an interesting post ... and seems to reflect a useful initiative ... but I am fairly certain it is not as powerful as it appears.
I learned quite early in my career to differentiate between what was in the procedures and what was actually done. Later in my career I found that this explained to a great extent the difference in performance between the project designs from the World Bank and the actual performance in practice.
Decades later, the problem is now way worse than it ever has been. Now there are workshops and conferences and the Internet to promulgate the talk about what should be done ... and to my great disgust, almost no use of great modern technology to report on what is actually being done.
The Smart Campaign has an attractive look ... it has many organizations signing on ... but what metrics are there about what is actually happening between the thousands of MFIs around the world and the millions of clients they serve.
The problem with the way we are all trying to "manage" is that most of the process is a variant of the UN / World Bank management model ... that is a huge amount of analysis before and project all in the theoretical space, and then rather little data, analysis, oversight and rethinking based on what actually happens during implementation.
I concluded a long time ago that performance gets improved when there are data about performance ... and from my days in the audit world, I also know that when there are no data, or the data are not being accessible, there are problems. And worse, without these data, there are going to be no solutions.
Over the years I have also come to understand the importance of multi-sector linkages. The performance of microfinance and its value depends to a large extent on the many other sectors that are part of a functional society. Single silo development does not work. It never has. It never will.
Of course this is the raison d'etre for Community Analytics (CA) ... the goal is to get the community to have a better quality of life and a better future ... and for this microfinance can be an important part, but the results depend not only on microfinance but also all the other sectoral activities.