Gabriel Davel, a veteran voice for client protection in microfinance and the first CEO of South Africa’s Micro Finance Regulatory Council, entered the business of protecting client well-being before the industry was paying any attention.
Since 2000, the Micro Finance Regulatory Council has implemented microfinance regulation, created an extensive framework of mechanisms to deal with over-indebtedness in South Africa, established a national register of micro-loans, introduced “reckless lending rules,” and set up simplified disclosure requirements.
The Smart Campaign sat down with Davel to hear his story.
The Smart Campaign: Why did you endorse The Smart Campaign?
Gabriel Davel: The Smart Campaign is making an important contribution in raising awareness of consumer protection, and in doing this as an initiative of the microfinance industry, rather than being externally imposed. Consumer protection received far too little attention in the microfinance community for too long, and the industry has for too long resisted regulation. The developments in India and elsewhere indicate that it is urgent to address this weakness, and The Smart campaign is really important in raising the level of awareness.TSC: What consumer-protection-related accomplishments in your career are you most proud of?
GD: I was the first CEO of South Africa’s Micro Finance Regulatory Council (MFRC). I was part of the team who developed the National Credit Act and I was appointed as the first CEO of the National Credit Regulator. Already in 2000, the MFRC implemented microfinance regulation and there is much to learn from that experience. Since 2000, we created an extensive framework of mechanisms to deal with over-indebtedness in South Africa, at a time when many people refused to talk about the risks of over-indebtedness. Over these years we established a National Register of micro-loans, we introduced ‘reckless lending rules’ and implemented simplified disclosure requirements.Since then, national credit legislation has been passed, covering all forms of credit, including money-lenders, banks, and retail credit. Money-lenders is of particular significance as a category which receives disappointingly little attention in the development community.TSC: Do you believe the National Credit Act has been successful in creating accessibility to the credit market for poor people? What are some major challenges that remain?
GD: The NCA was a massive step forward, in creating an integrated set of regulations which covers all forms of consumer credit. Since the Act, there has been much broader access for low-income consumers to mainstream credit. It improved the conditions under which low-income consumers receive credit, and includes an enforcement framework and penalties to address abusive practices.
[There are still] challenges: In South Africa, greater access to micro-enterprise and small business finance remains a big challenge. South Africa also needs more innovation in providing affordable savings services to low-income consumers.
TSC: What's next in your career?
GD: I am currently working in an advisory capacity with a number of institutions on establishing more effective regulatory mechanisms for the development finance as well as mainstream credit markets.
TSC: Any additional comments related to The Smart Campaign, Client Protection, and microfinance?
GD: Protection against over-indebtedness is clearly the highest priority right now and The Smart Campaign plays an important role. Much more work should be done in integrating the regulation of microfinance with mainstream regulation, including increased protection for consumers who only have access to money-lenders. An exclusive focus of microfinance separate from mainstream credit is not sustainable over the long term.