OCTOBER 2011
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OCTOBER 2011. Client Protection session. The perspective of a microfinance rating agency. Presented by: Edouard Sers, Expert Analyst [email protected] 2 nd Azerbaijan Micro-finance Investor Fair. Planet Rating 44 rue de Prony, 75017 Paris France

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OCTOBER 2011

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October 2011

OCTOBER 2011

Client Protection session

The perspective of a microfinance rating agency

Presented by: Edouard Sers, Expert Analyst

[email protected]

2nd Azerbaijan Micro-finance Investor Fair

Planet Rating

44 rue de Prony, 75017 Paris France

Tel : 33 1 49 21 26 30 – Fax : 33 1 49 21 26 27

[email protected] – www.planetrating.com


Role as a microfinance rating agency

MFI

Funder

Rating Agency

Role as a microfinance rating agency

Providing the information needed for a sound development of the sector by facilitating the development of relationships between MFIs and their partners

Opinion of the funder based on due diligence and/or desk review

On-site 5 to 7 days evaluation mission

Provide a detailed second opinion; report designed

to meet the specific

needs of funders

Social Ratings provide an opinion on the level of compliance with each of the client protection principles


Analysis of client protection in our ratings

Analysis of client protection in our ratings

Rated in social ratings since 2007; emphasized since January 2010

  • Appropriate product design and delivery

  • Prevention of Over-indebtedness

  • Responsible pricing

  • Transparency of pricing

  • Privacy of client data

  • Fair and respectful treatment of clients

  • Mechanisms for complaint resolution

Grids of analysis of client protection principles in line with those defined for the SMART campaign


Analysis of client protection in our ratings1

Analysis of client protection in our ratings

Included in our pilot Responsible Financial Rating

Context

  • Microfinance crises have shown that the performance of MFIs could be impacted by factors that are more closely looked at in Social ratings than in current financial ratings.

  • Direct correlation between Client Protection and long term Portfolio Quality

  • The reputation of some actors (and thus of the sector), has also been affected by management practices considered not to be in accordance with the claimed social goals

  • Through its GIRAFE ratings, Planet Rating aims at providing an opinion on the long term sustainability of MFIs.

  • The responsible financial rating therefore includes Client Protection and Social Performance Management factors.


Simple social performance rating scale

Simple Social Performance Rating Scale

5 - Advanced

4 - Convincing

3 – In Progress

2 - Incipient

1 - Intangible

0 - Negative


Observations from our database of ratings

Observations from our database of ratings

Client Protection Principles are being implemented in more than 70% of the rated MFIs, but with important room for improvement in 50% of the cases (database for 75 ratings)

71%


Observations from our database of ratings1

Observations from our database of ratings

Compliance with Client Protection Principles is highly correlated with institutional performance


Observations from our database of ratings2

Observations from our database of ratings

Compliance with Client Protection Principles is not correlated with ROA


Observations from our database of ratings3

Observations from our database of ratings

Compliance with Client Protection Principles is highly correlated with Governance


Observations from our database of ratings4

Observations from our database of ratings

Other preliminary observations

  • High correlation observed between Client Protection and…

    • Regulation

    • Governance

    • Social Performance Management

    • Financial Services Management

    • Funding Strategy


October 2011

Thank you ! Teşekkür edirem !

Questions and Answers


Contacts

Global Headquarters

44 rue de Prony

75017 Paris – France

Tel: +33 1 4921 2630

Fax: +33 1 4921 2627

Latin America

Francisco de Paula Ugarriza 813 – Oficina 301

Miraflores, Lima 18 – Peru

Tel: +51 1 242 4597

Fax: +51 1 242 4597

Asia

444 EDSA 21st floor, Guadelup Viejo

1211 Makati, Manila – Philippines

Tel: +63 907 385 0035

Middle East & North Africa

Piccadilly Bldg #407

Hamra Street

Beirut – Lebanon

Tel: +961 1 35 32 10

West Africa & Central Africa

Immeuble Sokhna Astou Lo

4ème étage – Sacré Coeur 2

BP 5695 Dakar – Senegal

Tel/Fax: +221 33 825 75 40

East Africa & Southern Africa

Shelter Afrique House – Mamlaka Road

PO Box 16658, 00100 Nairobi – Kenya

Tel: +254 20 271 42 20

Contacts

www.planetrating.com - [email protected]


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