‘Law key for microfinance growth’
May 10, 2010
REGULATING the micro-finance sector will encourage more people to use its services and protect clients’ savings, Ruth Nankabirwa, the micro-finance state minister, has observed.
By Sylvia Juuko
REGULATING the micro-finance sector will encourage more people to use its services and protect clients’ savings, Ruth Nankabirwa, the micro-finance state minister, has observed.
“One area that will give confidence to the masses is to have a law under which all micro-finance institutions can be regulated and supervised,†she said.
Nankabirwa noted that the law would improve delivery of financial services, especially in the rural areas. A policy framework to regulate micro-finance activities is expected before the reading of the 2010/2011 budget in June.
The minister was speaking at the third financial inclusion advisors conference convened by the Bank of Uganda, the Bank Negara Malaysia and the CPTM smart partnership movement at the Kampala Serena Hotel recently.
It brought together financial services providers, policy-makers and regulators to seek efficient ways to deliver financial services to the rural areas through micro-finance institutions.
According to statistics presented by the minister, a huge portfolio of funds within the savings and credit organisations is not regulated. Nankabirwa also revealed that out of the 1,085 administrative units, 613 had SACCOs.
“The results so far are promising because the membership of savings and co-operatives has grown from 644,318 in 2008, to 1,154,715 in 2009. Savings have risen from sh55m to sh83b,†she explained.
She said the loan portfolio within the unregulated institutions stood at sh122b.“The rural financial services programme has shown that poor people can save and are trustworthy, but they need guidance. The rural folk borrow money and pay back.
“These small loans have made big differences in their lives. For instance, women have been able to pay fees for their children,†she noted. According to Nankabirwa, there are over 1,340 micro-finance firms in Uganda that are not regulated.
Justine Bagyenda, the Central Bank’s executive director for supervision, suggested that the financial service providers adopt home-grown technologies that can support branchless banking to reach the unbanked population.
However, leveraging mobile phone technology to provide banking solutions to a wider population could face challenges of poor infrastructure and high branch start-up costs.
“The sector should devise ways to establish branchless banking so that we can extend financial services to the rural areas. “We need policies that can guide the implementation of financial inclusion for the unbanked,†Bagyenda explained.
REGULATING the micro-finance sector will encourage more people to use its services and protect clients’ savings, Ruth Nankabirwa, the micro-finance state minister, has observed.
“One area that will give confidence to the masses is to have a law under which all micro-finance institutions can be regulated and supervised,†she said.
Nankabirwa noted that the law would improve delivery of financial services, especially in the rural areas. A policy framework to regulate micro-finance activities is expected before the reading of the 2010/2011 budget in June.
The minister was speaking at the third financial inclusion advisors conference convened by the Bank of Uganda, the Bank Negara Malaysia and the CPTM smart partnership movement at the Kampala Serena Hotel recently.
It brought together financial services providers, policy-makers and regulators to seek efficient ways to deliver financial services to the rural areas through micro-finance institutions.
According to statistics presented by the minister, a huge portfolio of funds within the savings and credit organisations is not regulated. Nankabirwa also revealed that out of the 1,085 administrative units, 613 had SACCOs.
“The results so far are promising because the membership of savings and co-operatives has grown from 644,318 in 2008, to 1,154,715 in 2009. Savings have risen from sh55m to sh83b,†she explained.
She said the loan portfolio within the unregulated institutions stood at sh122b.“The rural financial services programme has shown that poor people can save and are trustworthy, but they need guidance. The rural folk borrow money and pay back.
“These small loans have made big differences in their lives. For instance, women have been able to pay fees for their children,†she noted. According to Nankabirwa, there are over 1,340 micro-finance firms in Uganda that are not regulated.
Justine Bagyenda, the Central Bank’s executive director for supervision, suggested that the financial service providers adopt home-grown technologies that can support branchless banking to reach the unbanked population.
However, leveraging mobile phone technology to provide banking solutions to a wider population could face challenges of poor infrastructure and high branch start-up costs.
“The sector should devise ways to establish branchless banking so that we can extend financial services to the rural areas. “We need policies that can guide the implementation of financial inclusion for the unbanked,†Bagyenda explained.