In May 2001, the Inter-American Development Bank (IDB) and the Consultative Group to Assist the Poor (CGAP) launched a joint initiative called the Microfinance Rating and Assessment Fund. The European Union subsequently joined the Rating Fund in January 2005.
The primary objectives of the Rating Fund are:
i.
Market-building for MFI rating and assessment services by encouraging greater demand from MFIs for professional external evaluations, as well as strengthening the quality of supply. ii.
Improved transparency of MFI financial performance, as a basis for improved performance and increased flow of commercial funding to MFIs. To this end, the Rating Fund is based on the following principles: • Transparency:
Promote and facilitate the public disclosure of MFI performance information through the increased use of ratings and assessments.
• Availability of Information:
Promote information-sharing to increase the amount of reliable information on MFI performance, for example, through the Rating Fund and MIX Market (www.mixmarket.org) web sites. (The MIX Market is a website that links MFIs with investors.)
• Quality of Information:
Ensure that ratings and assessments financed by the Rating Fund contain enough information to enable investors to make informed decisions about MFI performance. • Cost-Sharing/Value Realized:
Require MFIs to bear an increasing portion of the cost of a rating or assessment so that they recognize the benefits of undertaking a rating exercise and build it into their normal business costs.
The Rating Fund is managed by a small steering committee composed of representatives of the IDB, the EU, and CGAP.
For more information please
www.ratingfund.org
