Microfinance services providers now to be licensed, regulated

08Feb 2020
Correspondent
Morogoro
The Guardian
Microfinance services providers now to be licensed, regulated

​​​​​​​PROVIDERS of micro finance services in the country have been required to license their businesses or register themselves as per the requirement of the law and according to the levels of their businesses, as October 31 this year will be the end for them to engage in the-

Dr Charles Mwamaja.

-business without licensing.

The implementation of the directive will start immediately after enactment of the law that will administer the microfinance sector so as to remove existing legal challenges that affected supervision, control and growth of the sub sector.

The government through the Ministry of Finance and Planning has prepared special and general regulations for the implementation of Microfinance Services Act of 2018 that came into effect November last year for implementation.

Permanent Secretary in the Treasury, Dotto James revealed this recently in Morogoro in a speech read on his behalf by the Commissioner of Finance Development Sector in the country Dr Charles Mwamaja.

James said challenges that affected the supervision, control and growth of the microfinance subsector in issuing loans to the wananchi included stringent loan conditions and huge interests and other levies, lack of transparency in the conditions in the agreements thereof.

Other challenges he cited were rampant issuance of loans that caused huge volume of unpaid debts on the debtors, unsuitable procedures in debt collection that caused some debtors to lose their property and eruption of fraudulent people who took advantage of the absence of the law governing the sub sector.

James said another problem that was identified is the lack of procedure for the protection of those using the microfinance sub sector and loopholes for people to engage in money laundering and other financial frauds.

In his speech James said apart from the policy, the law and regulations that will govern the microfinance subsector will given to the editors of various media outlets, they will also educate other groups in the society so that they use the microfinance laws diligently in order to alleviate poverty.

Speaking on behalf of the media, Azam Media Editor Ben Mwang’onda said the ministry has done a good thing to educate editors from various media outlets as one strong pillar depended to convey the right information to the citizens.

He added there have been gross misinformation about the law as some people say it aims to collect tax even from wedding meetings and other issues that do not concern at all with micro financing.