Governance, Transparency and Accountability (Presentation)

This presentation discusses the market trends in microfinance, discusses microfunds, and argues for the adoption of a charter of fiduciary rights. It discusses:

• Market trends in microfinance funds;
• Changing loan conditions;
• The deficiencies in MFI rating agencies;
• The improper job done by the Rating Fund.

Describing fiduciary trends, it states that:

• There is a lot of variation in fund structures;
• Fund return calculation and reporting vary according to funds structure, mission and management;
• Management expenses are very high;
• There are no benchmarks to see how managers create value.

It examines the disadvantages of fiduciary practice and states that:

• Inefficiencies will continue;
• However, they could be better monitored through a set series of indices and benchmarks;
• To raise the trust of investors, fiduciary practice must be raised up to the level of conventional asset managers.

The paper outlines the following 24 months action plan:

• Adopt charter of fiduciary rights;
• Introduce fund valuation/presentation standards;
• Set up fiduciary rating of MFIs within 18 months;
• Create market indices and various analytical tools.

The paper concludes by arguing for the adoption of a charter of fiduciary rights that would include full disclosure, reliable trusteeship and sound governance.