Rwanda Data Launch Presentation
This Powerpoint PDF presents data analysis on the pricing data collected as part of the Transparent Pricing Initiative in Rwanda. It was presented as a webinar in September 2011. The transparent pricing dataset for Rwanda can be accessed by clicking here.
The powerpoint presentation covered the following aspects:
- Pricing dynamics in the Rwandan microfinance market: Using actual pricing data collected from microfinance
institutions in Rwanda and published on the MFTransparency website, MFTransparency pricing experts presented their analysis of pricing of microloans in the context of the Rwandan microfinance market characteristics. - Training on transparent communication of prices to clients:
MFTransparency COO of Global Programs Alexandra Fiorillo presented best practices for transparent communication of pricing to clients, through loan documentation, loan officer interactions with borrowers and price-setting decisions for maximum transparency. This training built off of trends observed through the Transparent Pricing Initiative in Rwanda as well as MFTransparency’s experiences in microfinance markets internationally. - Discussion of the results of the Initiative: This virtual event provided a unique opportunity for stakeholders of the Rwanda microfinance market, as well as the international microfinance industry, to engage in discussing the results of the Transparent Pricing Initiative in Rwanda.
About the enabling APR & EIR Program:
The Transparent Pricing Initiative in Malawi is part of a broader project funded by the MasterCard Foundation and known as the enabling APR & EIR Program (enablingAfrica to Price Responsibly & Educate on Interest Rates). This project began in August 2010 with Malawi and continued with Uganda, Rwanda, South Africa, Ghana, Tanzania, Zambia and Mozambique. In each of these countries, MFTransparency collects and publishes data on the interest and fees charged on microfinance loan products in order to calculate their accurate, true prices (Effective Interest Rates). As part of the enabling APR & EIR Program, MFTransparency also conducts training seminars, offers technical assistance to financial institutions, facilitates discussion on policy for pricing disclosure and client protection and produces educational materials tailored to the specific needs of different stakeholder groups, including financial education programs for borrowers.
I have been told in Rwanda that a borrower gets charged an up from VAT of 18% on their loan plus the interest the MFI charges and then another 18% on repayment of the loan. Is this correct? Thanks Robert Evans President People Helping People Int.
Hello Robert,
You can investigate on our Rwanda pricing page and look at the products of the different MFIs.
http://www.mftransparency.org/microfinance-pricing/rwanda/
For example, here is the link for one of the products of ACB-SA. Scroll down and you’ll see the tax of 18% listed midway down on the right side:
http://www.mftransparency.org/microfinance-pricing/rwanda/001-ACBSA/P04-Hembwa_Wage_MT_LT/
Not that the tax is on FEE Income, not principal and not interest. If you scroll further down, you’ll see that the VAT only adds about 1% to the total cost of the loan.
You can open up any of the price calculations clicking the PDF buttons in the samples chart. Here is one of the samples of URWEGO:
http://www.mftransparency.org/download/pdf/Rwanda/RW-012-Urwego/pdf/RW-012-V03-Urwego-P02-PriceCalc-S1-1-20140818_PDF
From that, you can see the 18% of the fee income, and even if the fee is fairly large, it isn’t that much more that the client has to pay. There are other countries where we have done the research, and the VAT is also on interest payments, and then the VAT can add considerably to the cost of the loan.
If you have any additional questions, or information that is different than what we have stated here, please let us know.
Chuck Waterfield
CEO, MFTransparency