Overview:
According to the firms, this will give them visibility and help them to mobilise more resources.
Microfinance institutions and money lending companies in Uganda have asked the central bank to recognise them as microfinance banks.
According to the firms, this will give them visibility and help them to mobilise more resources.
The call was made by Ms Jacqueline Mbabazi, the executive director of the Association of Microfinance Institutions of Uganda (AMFIU), while appearing before Parliament’s Finance Committee.
Currently, all microfinance institutions are categorised as microfinance deposit-taking institutions (MDIs) and divided under four tiers.
“The MDIs majorly target low-income earners and the economically active poor and vulnerable groups such as the youth, women, people with disabilities (PWDs) and refugees, some of whom have been thrown out of the mainstream conventional banking,” she said.
“When the MDIs were regulated in 2003, by 2007, their performance had tripled, with serving more low-income earners and being able to ensure they have a place where to save and where they can borrow,” she added.
“We have all departments which regular banks have except the forex department, so we are already compliant. Our staff are all competent enough and many even join the main banks and perform exceptionally well. So we are already there,”
Shem Kakembo, managing director of EFC Uganda Limited
She said the average loan amount for the MDIs stands at Shs2.5m, while those of the conventional banking sector stands at Shs29m, making many people who cannot afford bank loans to run to the MDIs.
Mr Shem Kakembo, the managing director of EFC Uganda Limited, a microfinance institution, said all the microfinance institutions are providing services which regular banks are offering and wondered why they cannot be recognised as banks.
“We have all departments which regular banks have except the forex department, so we are already compliant. Our staff are all competent enough and many even join the main banks and perform exceptionally well. So we are already there,” he said.
Ms Shafi Nambobi, the executive director of UGAFODE Microfinance Limited, also said their books of accounts are audited by highly qualified audit firms in the country.
The committee chairperson, Dr Keefa Kiwanuka, said they will scrutinse all the documents and interface with other stakeholders before a decision is taken.