Association lobbies for non-deposit taking microfinance institutions to be regulated in a bid to create a more conducive business environment for its members
By George Gichuki
The Association of Microfinance Institutions – Kenya ( AMFI-K) – the umbrella body of the microfinance sector in Kenya – recently organized a forum for its members. That was in line with one of its major activities – policy advocacy. This area of activity aims at enhancing collective action by AMFI-K members and other stakeholders for an enabling policy and regulatory environment for the microfinance sector in Kenya. Ultimately, this promotes growth and income among the low-income people – the main target market of its players. “ The members’ forum gave us an opportunity to go through some pertinent issues and pain points that our sector has been experiencing as we endeavour to create a more conducive environment for our business,” said Caroline Karanja, Chief Executive Officer ( CEO), AMFI-K.
Lobbying strongly
AMFI-K has over the years been lobbying for the regulation of the non-deposit taking microfinance institutions. The Microfinance Act was enacted in 2006 and operationised in 2008. Nevertheless, despite a push by the non-deposit taking microfinance institutions to be brought under a regulatory ambit in line with Section 3 of the Act, they still remain unregulated. “ As an association, we met the Cabinet Secretary, National Treasury in March and he guided us on how to embark on this noble exercise,” says Caroline. “ He advised us to make use of the microfinance banks’ regulations since they are already in place ( as opposed to developing new regulations for the non-deposit taking microfinance institutions) and then evaluate the point of convergence,” she adds. This opinion was based on the fact that microfinance banks and non-deposit taking microfinance institutions are both engaged in lending business. Their only point of departure is taking deposits.
forum.
With the support of a legal partner, AMFI-K has been working on the convergence between microfinance banks’ and non-deposit taking microfinance institutions’ regulations, while still evaluating whether there are other areas of the Microfinance Act that need to be amended. The aim is to create a conducive business environment for the entire sector. During the said forum, AMFI-K members gave their feedback regarding this initiative. “ The outcome of that forum will help us to finalize on a document that we shall present to the Cabinet Secretary, National Treasury, before tabling the same in the National Assembly,” said Caroline. “ We are delighted because of this development since it will help our members to overcome the dilemma that they have been facing on whether to apply for licensing under the digital credit providers’ regulations,” she added. She was emphatic that microfinance banks and non-deposit taking microfinance institutions are not digital credit providers. On the contrary, they only use the digital platforms in enhancing service delivery to their customers and developing products that are responsive to their needs. AMFI-K is optimistic that time is now ripe for the sector to have a regulatory framework that will help it to align vital issues affecting the business of its members.
