Microfinance regulatory body in the offing

By Oyet Okwera

TIER 4 financial institutions which include Microfinance Institutions, (MIs), Savings and Credit Co-operatives Organizations (SACCOs) among others are to acquire a regulatory authority.

This authority will be mandated to license and monitor all Tier 4 financial institutions in the country.

According to Hon. Caroline Okao Amali, state minister for microfinance in Uganda, a regulatory authority for tier 4 financial institutions will reduce fraud cases.

Okao was optimistic that resources accruing from this regulatory body will boost business investments resulting in increased incomes.

She was addressing financial stakeholders recently at Sheraton Hotel, Kampala during a micro entrepreneurship awards organized by Association of Microfinance Institutions of Uganda (AMFIU) and Citibank.

Okao noted that government rolled out a strategy to fight poverty through encouraging enactment of microfinance institutions across the country.

“The different microfinance institutions has in turn developed at least one SACCO in every sub-county to empower Ugandans economically,” said Okao.

Currently, she noted that over 1000 sub-counties are covered by microfinance institutions although some of them are not doing well.

“This is the reason we thought we should have a regulatory body to double check the operations of these institutions to benefit especially the rural people,” Okao explained.

Last week in cabinet, ministers discussed financing mechanisms for a programme dubbed Programme for Financial Inclusive in Rural Areas (PROFIRA). This programme will aim at not only supporting SACCOs but also other organized financial groups across all parishes and villages in Uganda.

Government in collaboration with International Fund for Agricultural Development (IFAD) is working on the financial mechanisms of this project. Already, $19billions has been put aside to facilitate this project which is further expected to positively transform the standards of living of those in rural areas.

According to Chinedu Ikwudinma, managing director Citibank Uganda, the current status of microfinance institutions in Uganda is promising. Ikwudinma noted that there is need for all stakeholders to work with an aim of changing lives of people. He explained that the initial process to strengthen microfinance institutions is to strengthen financial literacy across the country.

Ikwudinma believes that all entrepreneurs can appreciate microfinance institutions with financial literacy and increase job opportunities in the country. She called on other financial stakeholders to work collectively in transforming lives of Ugandans who are living in abject poverty.  

Wilson Twamuhabwa, president of AMFIU urged entrepreneurs to exhibit greater innovations in their projects for increased financial gains.

He called on other stakeholders to help in empowering entrepreneurs whose impact has a positive effect in the agricultural sector. He was optimistic that the micro entrepreneurs’ awards will motivate more Ugandans to become entrepreneurs.

Some of the winners of the micro entrepreneurship awards in the category of Silver, Bronze, Gold and Platinum respectively include; Francis Twesigye, Silver Aloysius from Gulu, Peninah Tibenda from Hoima and Washabe Protase.