September 5, 2014. Chuck Waterfield, CEO of MFTransparency spoke on the topic of “Making Markets Safe for the Vulnerable”at the 17th MicroCredit Summit held in Mexico.
Financial markets driven by profits as their primary objective can create great benefit for the poor, but can also exploit the poor. History gives many examples of products that were developed to benefit the poor, but end up being used to exploit them. In markets where providers and buyers have equal power, the principle of caveat emptor (buyer beware) prevails. But in markets like financial services for the poor, the provider has a lot more information and power than the buyer.
What regulations and practices need to be established so the market does not use that information and power advantage to exploit those living in poverty? Specifically, what roles do high interest and high profits play in encouraging over indebtedness and crashing markets? What steps can governments, regulators, associations and providers take to encourage the growth of markets that benefit those living in poverty and restrain practices that cause harm or market collapse?
Our organization publishes information on prices that MFIs around the world are charging the disadvantaged for microcredit. This information benefits the disadvantaged by making prices transparent, motivating price competition and increased pressures and expectations from the public that the MFIs charge a competitive price, which generally means a lower price.
I’m not sure what you mean by “criteria”. We do not provide assistance directly. We support the disadvantaged indirectly, through increased transparency. I hope this makes things clearer for you.