EAST AFRICA – The EAC is studying the possibility of eliminating Microfinance Institution licenses in the five member states to encourage greater access to financial services to SMEs.
This is one of the moves the EAC is considering as it seeks to harmonise MFI regulations in the region.
In a workshop recently held in Kigali to discuss the matter, 26 regulators of the Microfinance sector from the EAC region discussed how the harmonization of the MFI regulations would affect the performance of the sector, access to financing, supervision and regulation of the institutions.
The EAC observed that elimination of the Microfinance license would enable more microfinance institutions to set up and expand their operations in the region.
MFIs operating in either of the five states comprising of Kenya, Uganda, Tanzania, Rwanda and Burundi would then be allowed to operate anywhere in the region without requiring a license.
Microfinance institutions have played a key role in the region by providing financing for small businesses in rural areas, most of which are considered to be high risk by commercial banks.
Microfinance institutions have been providing training and financial services such as loans and insurance policies through partnerships with other organisations to mostly women and the youth.
This has contributed considerably to improving access to financial services in rural areas, the emergence and growth of entrepreneurs and the eradication of poverty.
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