Microfinance : for a more realistic and risk-based supervision
To adapt to the advent of new players in the field of financial inclusion (limited companies, mobile phone operators…), regulators have had to change their approach to the legislation and supervision of microfinance.
In developing countries, financial services to the unbanked are no longer exclusively provided by microfinance institutions, particularly NGOs or savings and credit cooperatives, that have shown signs of weaknesses (in terms of governance, undercapitalization, technological investment, etc.). Hence, some of these traditional actors have left part of their clients to new players (limited companies, mobile phone operators, etc.), which today define the scope of financial inclusion. In this new context, regulators have had to adapt their practices and to change their approach to the legislation and supervision of microfinance.
n a previous article published on the iD4D blog, the French Development Agency (Agence Française de Développement) already exposed the role of microfinance supervisors. Everything that was written in this post in 2015 still holds true....