Thank you. I am sorry I cannot attend this programme (note the spelling, that's where I am, and why I can't come), but I hope you can cover small loan pricing in the UK and USA as well as in so-called 'developing' countries.
I am often asked why UK and USA-based critics of microfinance in other places don't take a look at 'the mote in their own eye'. Why is it worth bothering with 'financial literacy training' for busy illiterate village women when millions of fully literate men and women here regularly borrow from the likes of 'Wonga' (www.wonga.com) and many others at annual interest rates (APR) of 2000% and more, that are openly stated, in big letters as the law requires, in all their websites and posters and so on ?
The cost of a loan to the lender consists of three costs; 1. The cost of the money, what interest the lender pays to the 'wholesaler', bank, whoever it is. 2. The 'transaction costs', advertising, administration, follow-up, management.... 3. The risk costs, the chances that the borrower won't repay. It's the same with any business, selling the use of money (moneylenders, MFIs, banks...), or selling onions, except that most onion sellers sell for cash so there's no risk of non-payment (although the onions may go rotten if they are not sold.....)
If I lend you $100 for a month, which you will repay at the end of the month, and I am paying 12% for my money (1% a month), it costs me $10 to administer your loan, and there is a 2% chance that you will not repay it, my cost will be $1 + $10 + $2 = $13. Annualised, with no compounding, that's $13 X 12 = $156, 156% interest !
Cries of horror ! Send for MFT ! But actually quite reasonable. I hope you deal with this issue.
Malcolm
----- Original Message -----From: Ranya Abdel BakiSent: Tuesday, September 17, 2013 2:21 PMSubject: [MFP] Upcoming MFTransparency Training
Dear All,MFTransparency is organizing a one-day training titled "Calculating and Analyzing Microcredit Prices: From Confusion to Clarity" on Monday, November 4th 2013 from 9:00 am to 5:00 pm at the Sheraton Pentagon City Hotel in Arlington, Virginia, USA, which is being hosted by SEEP as part of the 2013 SEEP Annual Conference pre-conference training sessions.For more information on the content of this training, please read the blog on the MFTransparency website. For any specific inquiries about the content of this training you can contact: info@mftransparency.org. For all inquiries related to registration, please contact: annualconference@seepnetwork.org. To register directly for this training please click here.Best regards,
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