Eriosi Nantaba

KAMPALA, UGANDA - In an effort to promote transparency in microfinance pricing in Uganda, MFTransparency has invested $ 2 million in Ugandan microfinance institutions.

The funds will help in promoting consumer protection and sustainability of microfinance institutions in the country. The project will be implemented in conjunction with the Association of Microfinance Institutions of Uganda.

"With shared focus on consumer education, transparency will ensure the deep lasting impact on the Ugandan microfinance industry," said Alexandria Fiorillo, the vice president of MFTransparency.

Uganda became the second country project to embrace setting of prices responsibly and receiving education on interest rates. It came after Malawi and will be followed by Rwanda.

Many people have been claiming about the high prices and interest rates of financial institutions especially when it comes to microfinance institutions.

"The benefits from transparency pricing will enable borrowers to know the real price and therefore decide whether or not they want to borrow," explained Justine Bagyenda, the executive director supervision, Bank of Uganda.

Bagenda noted that Bank of Uganda is drafting guidelines to financial institutions on financial consumer protection and pledged to ensure that microfinance institutions provide efficient financial services to their clients.

At a ceremony launch the initiativein Kampala recently, Fiorillo advocated for pricing transparency by urging all microfinance institutions to practice and implement self-imposed 'truth-in-lending.

"Effective pricing of financial services will, to a great extent determine the short and long term success of microfinance institutions," added Bagenda.

"Traditionally the cost of any borrowing was set as the rate of interest charged by the lender plus any other up-front charges connected to borrowing," said Bagenda.With this investment, MFTransparency plans to provide training on pricing transparency to a range of local industry stakeholders, regulators, funders and other support organizations. MFTransparency is an international NGO founded with a purpose of facilitating transparent markets through the dissemination of true cost information to all market stakeholders.