By George Kalisa
Microfinance experts are currently pushing for the harmonisation of polices, laws and regulations of microfinance in the East African community bloc to scale up convenience and efficiency.
They have decried the differences in the operations of microfinance and indifference by some governments as they pose main bottlenecks in the progress of the financial subsector in the region.
Of the six partner states, only Rwanda and Burundi have moved to fully regulate microfinance activities through the central banks while the Microfinance in Kenya is partly regulated.
“The Microfinance Subsector in the region is currently undergoing harmonisation where we’re trying to harmonise policies, laws and regulation in order to have laws that promote convenience in all the six countries,” observes Joel Mwakitalu, the Coordinator of East Africa Microfinance Network (EAMFINET).
EAMFINET is a body that brings together Microfinance associations from Burundi, South Sudan, Uganda, Tanzania, Uganda and Rwanda.
Mwakitalu called on the government in the region to work closely with the Microfinance subsector other than distancing themselves from Microfinance activities stressing that they serve the same citizens.
Underlining the importance of the compatibility between the EA governments and Microfinance institutions Mwakitalu said:
“This kind of annual summit is intended demonstrate the contribution of Microfinance in the regional economies and lives of the citizens throughout the region,”observed during a sideline interview with The Light Magazine at fifth edition of the EA Microfinance Summit on November21in the capital Kigali.
“So we call upon our governments to be supporting these kind of initiatives because Microfinance is serving the same people governments are serving, they should instead work closely with us – and our niche is very unique because we’re serving people in the poor and low income brackets,” he added.
Mwakitalu said that the governments should not distance themselves from Microfinance events and to let them work in isolation.
He said that differences in policies, legal and regulatory frameworks between countries, limited access to funding, and high cost of the loans were the major challenges in the subsector. It is only the Rwandan government that accepts Microfinance to accept deposits from the public.
Others include problems of certification and low financial literacy among beneficiaries that explain poor conduct of the professionals and Microfinance staff.
Rwanda first held the same Summit in 2014 before it went to Kenya, Tanzania and Uganda in 2015, 2016 and 2017 respectively. The Summit that goes by rotation skipped 2018 because Burundi was not ready to host it.
Though there are still hiccups in statistics of Microfinance, penetration is currently estimated at 10 million people in the region falling far below the target audience.
Mwakitalu, however, said that formally everyone is reached by Microfinance in rural areas in one or another through services of savings and credit banks, village savings, Microfinance companies, NGOs among other players in the subsector.
On expectations of the Summit, Mwakitulu said: “This Summit focuses on empowering women and youths on financial services, especially access (…)”.