Back to the news
In Kenya, Yehu Impact Limited, a partner of Soluti, SIDI's subsidiary for East Africa, recently obtained certification for its commitment to protecting vulnerable clients.
What role do international rating agencies play?
Since the late 2000s, rating agencies have developed along the lines of their conventional financial counterparts, to ensure that microfinance institutions follow sound management practices. Indeed, against a backdrop of massive demand for financial services from small-scale entrepreneurs in the informal sector, some players may have seen this as a huge market with more potential for profit than impact… as evidenced by the recurrent scandals in certain countries that have been reported in the media.
These agencies, including MicroFinanza Rating, a pioneering leader based in Milan, play an important role in this respect, since they analyze in detail the data and practices of microfinance institutions, leading to an independent rating. More importantly, they help to spread best practice in the sector, leading to the development of internationally recognized standards. These standards are then set by the Social Performance Task Force, an NGO that brings together all the players involved.
Customer protection: what exactly are we talking about?
One of the major challenges of these best practices is to protect customers. Vulnerable populations, often poorly educated in financial matters, can easily fall into spirals of over-indebtedness, or even be the target of fraud. These standards will therefore ensure that the microfinance institution takes every measure in its power to prevent a beneficiary from becoming over-indebted.
Similarly, microfinance institutions must ensure that customers can fully understand the conditions of the loans (rates and various fees, procedures in the event of arrears, etc.) they are about to take out. For example, microfinance institutions offer contracts in local languages, with explanations given orally and not just in writing. This set of best practices has been brought together in a recognized standard known as the “Client Protection Pathway”.Client Protection Pathway“.
In Kenya, Yehu Microfinance rewarded for its efforts to help the most marginalized populations
Kenya is East Africa’s leading economy. It is a leader in technological innovation to enable financial inclusion of marginalized populations, with the invention of “Mobile Banking”, i.e. the possibility of paying or saving with a simple cell phone, long before the arrival of smartphones. Microfinance has also been developing very dynamically for over 20 years, but without any real regulatory framework.
By obtaining the silver level of ” Client Protection Certification “, Yehu Impact Limited demonstrates that it has met and exceeded a set of rigorous criteria on the quality and ethics of its practices to protect its clients. This recognition reinforces Yehu Impact Limited’s credibility in terms of social impact: the money invested serves the development and autonomy of vulnerable communities, and their economic integration.
Who is Yehu Microfinance?
Yehu Impact Limited is a microfinance institution founded in Kenya in 1998 by Choice Humanitarian, an international NGO. It began its activities by organizing women’s groups and facilitating their access to savings. Today, Yehu Impact Limited reaches over 70,000 beneficiaries, mainly rural women, with the aim of empowering their communities through affordable, sustainable and socially responsible microcredit.
Yehu Impact Limited provides financial education to the most vulnerable populations through a series of training courses on financial management. In this way, the microfinance institution supports the creation of income-generating activities in agriculture, green energies, micro-insurance and other areas.
SIDI is particularly proud of the Yehu Impact Limited teams’ commitment to inclusive finance. This client protection certification is part of the recognition of this microfinance institution’s efforts to empower the most marginalized communities in rural Kenya.
