Implementation of the European Code of Good Conduct for Microcredit Provision

Establishing good practice guidelines to assess the performance and functioning of MFIs
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This paper discusses the acceptance of the 'European Code of Good Conduct (CoGC) for Microcredit Provision' as identified by the European Commission as an important element to promote best practices in the sector. The CoGC is intended to set a high bar for microfinance operations in Europe in line with international policies and worldwide development of the sector. The CoGC is divided into five indexed sections - customer and investor relations, governance, reporting standards, management information systems, and risk management comprising 166 clauses and 20 priority clauses. The paper highlights some thoughts to be considered by MFIs:

  • Implementation of CoGC if is to be developed and existence of specific funds would be vital. This is to do both: train the institution and follow them during and after the implementation;
  • Technical support dedicated to the implementation of the CoGC is fundamental in guaranteeing equal opportunities within the sector;
  • External evaluators have to be sensitive to national context characteristics, national regulations, and the diverse nature of institutions as the CoGC cannot be implemented in an identical manner across EU countries;
  • Evaluators have to exercise judgment in assessing compliance. Factors such as the appropriateness of processes and procedures and the compliance of non-microcredit activities with the CoGC need to be taken into consideration.

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