Tamfi calls for microfinance reforms
The chief executive officer of Yetu Microfinance PLC, Mr Altemius Millinga
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Tamfi board member and the chief executive officer of Yetu Microfinance PLC, Mr Altemius Millinga, said that microfinance institutions are still out of the regulatory regimes due to absence of the microfinance Act which they have been advocating for for a long time.
Dar es Salaam. Tanzania needs an improved legal and regulatory framework for microfinance to increase access to financial services across the country, according to the Tanzania Association of Microfinance Institutions (Tamfi).
Tamfi board member and the chief executive officer of Yetu Microfinance PLC, Mr Altemius Millinga, said that microfinance institutions are still out of the regulatory regimes due to absence of the microfinance Act which they have been advocating for for a long time.
Making a presentation to the sector’s stakeholders last week, he said the informal players like Vicoba have a dominant role in providing financial services to majority but they are still unregulated.
Microfinance Institutions (MFIs) are licensed through the NGOs Act, Companies Act, Banking and Financial Institutions Act, Cooperatives Act, Cooperative Act (Zanzibar) or Registration, Insolvency and Trusteeship Agency.
“But some of these registrations do not address issues regarding ownership, governance and management capacities, unhealthy competition, access to funds and accountability simply because they lack the appropriate regulatory oversight machinery that can enforce compliance,” noted Mr Millinga.
Tamfi has been working with stakeholders for years to advocate for improved microfinance policy and regulatory architecture, so as to achieve better regulation and supervision of the MFIs.
The stakeholders’ meeting was part of Tamfi advocacy project supported by BEST Dialogue, a Danida-funded programme that works in parallel to the government of Tanzania, striving to achieve a more professional and fairer business environment. One of the participants Mr Abubakar Othman said that the cost of saving and borrowing in informal groups was friendly and many times less expensive.
Tanzania has 58 banks but only 13.9 per cent of its adult population have bank accounts while 49 per cent use mobile money services.
Even with the digital revolution -- convergence of banking and mobile money transfer services, internet banking -- informal players continue to play a dominant role, he said.
After a study which highlighted legal and regulatory constraints faced by the Microfinance Industry, Tamfi drafted a microfinance bill, which is not yet ready as promised in the recent budget speeches.
