THE PARIS APPEAL FOR RESPONSIBLE MICROFINANCE CAMPAIGN

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The Paris Appeal for responsible microfinance. THE PARIS APPEAL FOR RESPONSIBLE MICROFINANCE CAMPAIGN. EUROPEAN MICROFINANCE WEEK 2011 NOVEMBER 3rd, 2011, LUXEMBOURG. The Paris Appeal for responsible microfinance. Moderator:. Axel DE VILLE Executive Director, ADA. Speakers:. - PowerPoint PPT Presentation

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  • THE PARIS APPEAL FOR RESPONSIBLE MICROFINANCECAMPAIGN

    EUROPEAN MICROFINANCE WEEK 2011NOVEMBER 3rd, 2011, LUXEMBOURG

    The Paris Appeal for responsible microfinance

  • Axel DE VILLEExecutive Director, ADA

    Moderator:The Paris Appeal for responsible microfinanceSpeakers: Jean-Luc PERRONGeneral Delegate, Grameen Credit Agricole FoundationBoard Member, Convergences 2015

    Michal KNAUTECEO, OXUS Group & Octopus Microfinance SoftwareExecutive Director, Convergences 2015

  • In some MFIs, profitability obstructs the social mission

    MFIs clientele is rapidly growing, at the risk of weakening the relation of proximity and trust, and leading to over-indebtedness of the client

    High expectations on MFIs ROI and market saturation are fuelling over-indebtedness

    MFIs have increased their credit portfolio at a very fast pace, with the risk of weakening the progressive implementation of financing cycles, reimbursement discipline, and the attention paid to the nature of the activities

    IPOs of large MFIs have triggered animated debates among the sector

    To refinance their booming credit portfolio, some institutions have incurred excessive debtsMission drifts overview:Excessive commercialization of microfinance along with other negative trends have led to a crisis.

    The Paris Appeal for responsible microfinance

  • As a result of those drifts and excesses, MFIs are exposed to: Credit risk

    Reputation risk

    Governance risk

    Political interference risk

    * Source: Microfinance Banana Skins 2011 The Paris Appeal for responsible microfinance

  • The excessive commercialization of microfinance have thus led to several self-regulation initiativesConsequences:

    Microfinance reports in the media have put the stress on the crisis and raised concerns that seriously undermine both the reputation of microfinance and its very essenceThe Paris Appeal for responsible microfinance

  • Social Performance Task Force: universal standards for social performance

    MFTransparency: a global initiative for a fair and transparent pricing

    Seal of Excellence for Poverty Outreach and Transformation in Microfinance: a label to certify MFIs using microfinance as a tool against poverty

    Pocantico Declaration: the first step toward a common ground and set of principles to bring microfinance back to its social mission

    CGAP Key Principles of Microfinance: key principles for a sustainable microfinance

    Smart Campaign: a global effort to ensure clients remain the industrys driver

    Several initiatives in place:

    Principles for Investors in Inclusive Finance (PIIF): a framework for responsible investment in inclusive finance

    AFIs G20 Principles for Innovative Financial Inclusion: principles to promote financial inclusion

    Prudential regulation guidelines- Basel Core Principles for Effective Banking Supervision of microfinance activities- Microfinance Regulation Bill in India

    The Paris Appeal for responsible microfinance

  • To bring microfinance back to its original mission: a social mission dedicated to the poor

    To create and rally a movement involving all MF stakeholders, including regulators, supervisors and international organizations

    To renew the interest of international organizations, media and other observers in microfinance as a tool to fight against poverty and financial exclusion

    It is neither a label nor a certification procedure and does not aim to certify a small minority of highly committed players

    It is neither a criticism nor a rejection of all the self-regulation policies yet implemented in the sectorThe Paris Appeal has been launched:The Paris Appeal for responsible microfinance

  • Convergences 2015 Forum 2011 Edition200 experts on microfinance, social economy and social businessA high attendance: over 3000 participants3 days mixing networking and thinking40 round tables with a focus on 3 major issues: impact, investment, efficiencyA market place and a library to stimulate exchangesThe launch of the Convergences 2015 Awards3 Great Debates with prestigious speakers, hosted under the patronage of Le MondeThe Paris Appeal for responsible microfinance

  • The Launch of the Paris Appeal for responsible microfinanceOfficially presented at the 4th annual Convergences 2015 Forum in May 2011, the Paris Appeal for responsible microfinance is part of a campaign of advocacy and action among all concerned actors: decision makers, microfinance professionals and people art large. The Paris Appeal for responsible microfinance

  • The signatories,

    1. Consider that microfinance institutions must pursue a long-term double objective of financial viability and social impact, by offering products and services adapted to the poor, by leading a policy of moderate interest rates, and by complying to the highest standards of information and client protection. The compliance of policies and practices must be certified by recognized social performance indicators.

    The Paris Appeal for responsible microfinance

  • The signatories,

    2. Remind of the importance of solid governance of adapted prudential rules and efficient reporting and control systems. Such rules and practices must be given an efficient and objective supervision and notation system.

    The Paris Appeal for responsible microfinance

  • The signatories,

    3. Call on to microfinance institutions, their national and regional associations, and regulation authorities, to systematically apply the principles and rules established by the industry to adjust and prevent the sectors mission drifts, and to prevent and complete them with regulations adapted to the context in each country.

    The Paris Appeal for responsible microfinance

  • The signatories,

    4. Encourage investors specialized in microfinance to subscribe to a Code of conduct serving the long term interests of the MFIs they support, allowing them to strengthen financial viability and to reach their social objectives.

    The Paris Appeal for responsible microfinance

  • The signatories,

    5. Encourage researchers and universities to scale up cooperation with MFIs to conduct impact studies and disseminate best practices.

    The Paris Appeal for responsible microfinance

  • The signatories,

    6. Call on to donors and private foundations to uphold their microfinance commitments, to encourage innovation and diversification, to support and train clients and to focus programs on geographical regions, particularly Africa, sectors such as agriculture, and products and services such as micro-insurance and credit for the poorest, where the needs are manifest.

    The Paris Appeal for responsible microfinance

  • To breathe life into this fundamental basis of rules and regulations, in the respect of the diversity of microfinance, the signatories are launching an appeal for the organization of a General Assembly for Responsible Microfinance under the aegis of an Organization Committee mandated by the G-20.

    A few steps towards the G-20:

    July 2011, the G20 Microfinance in Paris (France) November 2011, the European Microfinance Week in Luxembourg November 2011, the Global Microcredit Summit in Valladolid (Spain) November 2011, the G20 Cannes (France)

    The Paris Appeal for responsible microfinance

  • They have already signed the Paris Appeal

    More than 400 beneficiaries, regulators, investors and operators have already responded positively and an increasing number of individuals and organizations are expressing their support,

    Including public figuresGrard Andreck, the Grand Duchess of Luxembourg, Anne Hidalgo, Natalie Portman, Jean-Michel Severino, Jean-Michel Servet, Chuck WaterfieldAnd organizations ACTED All Mcnat Crdit Coopratif Crdit municipal de Paris e-MFP Entrepreneurs du Monde ESG Microfinance European Microfinance Platform Grameen Credit Agricole Foundation I&P pour le Dveloppement MACIF Oikocredit OXUS Microfinance Network REM SIDIThe Paris Appeal for responsible microfinance

  • Tell your colleagues:www.appeldeparis.orgWe would like to invite you to join us in supporting this Appeal. We believe that your signature will give a significant echo to this engagement and this initiative within the sector, towards policy makers and audiences at large:

    The Paris Appeal for responsible microfinanceSign the Appeal:eMFP Plaza : stand 10

  • Thank you for your attention and your support !The Paris Appeal for responsible microfinance

    ****

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