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Microfinance ratings: the Rating Initiative redefines its goals

source : Microcapital

Credit-rating agencies specialising in microfinance are less well known than Standard & Poor’s and “classical” credit-rating agencies, yet they play a vital role. Avoiding any form of speculation, they help public and private donors find their way in the multi-faceted world of microfinance… And at the very best, they encourage Microfinance Institutions to strengthen their social component.

As from 2008, the microfinance rating sector had been able to count on subsidies from the Rating Initiative, a campaign jointly run by Luxembourgian and Swiss development aid agencies, with the support, in particular, of the ONG Oxfam Netherlands (Oxfam Novib). The aim of these subsidies was firstly to encourage Microfinance Institutions to strengthen the social support they provided with microloans.

However, the Rating Initiative, which has just started the second phase of its activity, announced that these subsidies stopped on 21 December last. From 2012 to 2013, the Rating Initiative will focus on harmonising the methods of the four main specialist rating agencies, together with advocacy work regarding investors to encourage them to use rating services, especially social ones.

All in all, the Rating Initiative will have jointly funded 206 rating procedures on social criteria (focused on the poorest, on respecting the customer, etc.) and 125 purely financial rating procedures. The reports are available free of charge on its website.