harmonisation of the microfinance sector policies in East African Community (EAC) will improve financial inclusion, ensure efficiency and support poverty eradication efforts across the bloc, according to the Association of Microfinance Institutions in Rwanda (AMIR).
Jean Pierre Uwizeye, the senior programmes manager at AMIR, said the law will also ease market entry for MFIs across the region, noting that it calls for mutual recognition by EAC sector regulators to enable MFIs to operate freely across the bloc without any restrictions. “For instance, if a Ugandan-registered MFI wants to operate in Rwanda, the National Bank of Rwanda, as regulator, will facilitate its entry because the draft policy provides for recognition of certificates and licences from member states,” he added.
Uwizeye was speaking to The New Times on the sidelines of a consultative workshop on the EA microfinance draft policy last week in Kigali to get the views of local stakeholders to enrich the final draft of policy before it is presented before the regional assembly, EALA. The regional consultation exercise covered Kenya, Tanzania, Rwanda, Burundi and Uganda.
The draft policy recommends interventions like liquidity gaps in the sector and policy actions whereby regional governments and the EAC secretariat will seek to institute funding mechanisms to support groups like the youth and women.
“Generally, the draft law reinforces the current thinking in Rwanda and among the local microfinance stakeholders represented by AMIR. Otherwise, we are happy for the opportunity to contribute to EAC microfinance policy framework formulation and efforts that aim at improving the sector,” Uwizeye said.
More about the draft policy
The main objective of the policy is to establish a basis for organising and managing an efficient, effective and sustainable microfinance sector in the region, and thereby contributing to socio-economic development in general and, particularly, reduction in poverty, according to David Kihangire, the regional financial policy advisor (sectorial analysis) at the EAC secretariat.
It also covers various issues, including consumer protection and financial literacy, as well as need for legal provisions to address emerging finance challenges like enforcing ethical practices, balancing financial profitability goals and social goals, managing staff turnover; financing start-ups, limited infrastructure, and expensive rural outreach, among others.
The draft policy was developed by key stakeholders, CEOs of the microfinance sector, and validated in September 2015, according to Kihangire.