> By Sergio Guzmán
Bosnia, Morocco, India, Nicaragua – as we’ve learned from harsh experience, over-indebtedness concerns not only MFIs and their financial sustainability, but also clients who want to preserve their livelihood and policymakers who must look after the macroeconomic stability of a country.
Good news. Peru’s microfinance association, ASOMIF, is working with its members by recognizing that over-indebtedness, as set forth in the Smart Campaign’s Client Protection Principles, is an important issue that can best be dealt with through industry-facing initiatives.
Peruvian MFIs are striving to avoid client over-indebtedness by restricting the number of loans customers can have with other MFIs, especially in urban areas where the credit market might be saturated.
ASOMIF President Fernando Valencia Dongo on June 12 told the Peru News Agency that each MFI is aware of specific zones of saturation and that they are paying special attention to such areas to avoid client over-indebtedness.
The success of ASOMIF’s initiative depends entirely on all Peruvian service providers taking some basic actions to reduce both their own and their clients’ exposure to risky debts.
Image credit: CIA World Factbook
Have you read?
‘We Need to Keep Learning About Over-indebtedness’ – Beth Rhyne on CGAP Microfinance Blog
Study on Over-indebtedness in Microfinance Markets Published