Exploitation Declines, a bit

I had a go at Opportunity International in November 2012 over their extortionate interest rates. I thought I’d update the findings, as new data has emerged on Chuck Waterfield’s excellent website www.mftransparency.org. The results were interesting:

The poor Kenyans saw the total APR on the most expensive loans increase by 1%, but they are unlikely to notice this in the repayment amount given it increased from 134% to 135%. Hardly a bargain, but neither is this the highest rate Opportunity charge, unfortunately.

The lucky Ghanaians are receiving a positive bargain from Opportunity. From an eye-watering 161.4%, the most expensive loan is now “only” 124.1%.

Alas Malawi did not benefit from such generosity, as it’s most expensive loan now costs 144.5%, up from 128.3% previously.

Mozambicans pay the same – 152.7% – also not the cheapest source of capital on the planet. I am not sure if this is because the rate didn’t change, or new pricing data wasn’t provided.

The Ugandans also benefitted, with a full 2% slashed from the overall APR, to a mere 103.1%. if this reduction in interest continues they could be paying double-digit interest-rates in a few years.

Rwanda also saw a substantial reduction, from 107.5% to 76.8%.

Last, but by no means least, Tanzania’s 92.1% is a relative bonanza compared to the previous rate of 109%.

Imagine if your mortgage company told you the interest rate was declining by 10% – you’d be over the moon! But spare a thought for those poor Malawians who saw rates increase by nearly this amount. I can’t be bothered to work out the weighted average etc., other than to say that on average it looks like Opportunity are slightly reducing their maximum rates. Still, triple digits always concern me, and one wonders how this will impact their bottom line – most of these MFIs were loss-making already.

The comments on the previous blog tended to focus on the irony of such interest rates being charged by a nominally Christian institution. I think the irony remains. The company’s FAQ section is still equally nebulous about the interest rates charged. It’s pure speculation, but I imagine they have no desire for all those generous donors to actually find out the rates they are fleecing from the poor Africans, and are probably not entirely happy with MFTransparency publishing the rates nor me writing about them, but this is publicly available information.

Do not understimate how powerful Chuck Waterfield’s site is: you can see precisely who is exploiting who, to one decimal place, and download the actual repayment schedules.

Long live transparency (and regulation)

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