The government has started to enact a new law that would govern the rapidly growing micro finance institutions (MFIs), the Deputy Permanent Secretary in the Ministry of Finance, Dorothy Mwanyika has said.
Speaking on Wednesday in Dar es Salaam at the launch of SELF Microfinance Fund (SELF MF), she said, the government wants to see that the subsector provides more services, hence change the people’s livelihood.
“We are in the process of enacting a law that would provide close supervision to all microfinance institutions in the country so as to make them operate under a conducive environment,” she said.
She also said the government is planning to establish an independent microfinance coordination unit within the ministry.
According to her, the unit will deal with all the microfinance institutions which are not managed by the Bank of Tanzania (BoT).
However, the government decision to enact the Microfinance Act would be good news for stakeholders since they have been appealing for its establishment for a long time now.
Expressing their professional views on the subject at a meeting this year, members of the Tanzania Association of Microfinance Institutions (TAMFI), said the subsector needs an improved regulatory environment if the government is to maximise its potential.
The meeting observed that a major impediment to the development of microfinance in Tanzania is lack of legislation to guide operations of the sub-sector.
They maintained that, with over 70 percent of Tanzanians still not using banks, microfinance institutions (MFIs) played a vital role in increasing access to finance which, in turn, necessitated for a proper regulatory environment guided by a Microfinance Act.
“The law should also include establishment of a microfinance credit reference bureau,” said Lucy Sondo a legal consultant.
Altemius Milinga, a TAMFI board member, said that over the years MFIs have gone through many challenges rooted in the lack of a clear regulatory framework tailored to meet the needs of the subsector.
“Absence of the microfinance law has to a large extent contributed to poor performance and diversity in institutional form, limited outreach, unhealthy competition, limited access to funds among many challenges,” Milinga explained.
He explained that TAMFI is advocating for the introduction of a microfinance law that is business friendly, inclusive and allows fair competition in the operation of financial services.
“Despite many gains, the sector can do much better if it is clearly regulated to enable it improve its outreach and sustainability,” he said.
“We want a law that will provide legal guidelines and ensure that the interests of all microfinance institutions are catered for to enable them provide better services to more people and in a much more efficient way,” he said.
SOURCE: IPP Media
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