Microcredit services regulator in pipeline, says BoT

The government plans to set up an agency to licence, regulate and give guidance to microcredit service institutions.
This was revealed in Bagamoyo at a workshop last week by Microfinance Supervision Department manager at the Bank of Tanzania (BoT), Harry Ndambala.
He was presenting a paper titled Overview of Microfinance Regulation from the Regulator’s Performance.
He said the report on improving the enabling environment and business conduct of microcredits in Tanzania has already been submitted to the Ministry of Finance and Economic Affairs for recommendations and approval.
The agency might start its work next year, he said, adding that the approval process is not likely to take long.
Ndambala said the setting up of the agency would play a key role in microfinancing since the sector contributes significantly to the development of the economy.
Some participants explained their expectations on the agency, saying the sector has been operating without clear regulations.
"The agency will help to regulate the activities of microcredit institutions only," said Altemius Millinga.
Some of the institutions have helped to improve the living standards of the people, while in others they have resulted to chaos due to poor management.
The agency would help stimulate the smooth movement of financial services especially in rural areas.
“We are told that only 12 per cent of Tanzanians have access to financial services, it is my hope that the agency might increase,” he stated.
Milinga, an economist, who is also the executive director of Youth Self Employment Foundation (YOSEFO), a micro finance services organization, said the agency would reshape the good image of microcredit industry in Tanzania.
Hellena Lutege, who is another microcredit expert, said the agency would provide wide services to those who until now have not been reached.
“It is my hope that the agency would open up offices up to the village level, hence enable provision of financial services to Tanzania’s low-income entrepreneurs hence enables them to educate their children and improve their overall standard of living,” she said.
She said once established the agency would put a new code of conduct for microcredit services.
Microcredit service players have been carrying out their activities without an organization to give them guidance, a thing that has brought misconception of the industry.
The two day meeting organised by Tanzania Association of Microfinance Institutions (TAMFI) brought together more than 40 microfinance experts from various organisations.