Microfinance policy set to cut lending rates

Dar es Salaam/Dodoma. The government has officially launched the Microfinance Policy, 2017 through which it will regulate the sector and help an increased number of Tanzanians to access financial services.

It is also finalising the process of enacting a law that will regulate the subsector and help the newly launched policy to work effectively, the executive director for the Financial Sector Deepening Trust (FSDT) Tanzania, Mr Sosthenes Kewe, said in Dodoma yesterday.

As the subsector now becomes properly regulated, beneficiaries are expected to enjoy affordable lending rates on loans.

“The existing challenges in the legal framework is negatively impacting on the microfinance subsector and thus creating the need for the enactment of a new law as well as to amend others (laws) so as to simplify and bring efficiency in the implementation of the Microfinance Policy, 2017. That way, players will be able to offer quality and sustainable microfinance services across the country,” Mr Kewe said.

The event, which was graced by Vice President Samia Suluhu Hassan, was also attended by Finance and Planning minister Dr Phillip Mpango, his deputy Dr Ashatu Kijaji, Minister of State in the President’s Office (Regional Administration and Local Government) Selemani Jafo and Parliamentary Budgetary Committee chairperson Hawa Ghasia.

Speaking at the event, Ms Hassan exuded confidence that the policy will play an important role in fostering and monitoring the conduct of microfinance institutions across the country.

She said with the policy in place, players will now be able to reach the marginalised communities. The VP directed all district executive directors to survey and develop a database of the available microfinance institutions in their areas of jurisdiction.

“Some microfinance institutions have been imposing exorbitant interests on their customers, this makes loans to become an unbearable burden,” she said. In his remarks, Dr Mpango said he was hopeful that proper implementation of the policy would help to fight poverty in the country.

“The policy will also encourage more Tanzanians to make use the services of microfinance institutions, a move that will empower them by affordign them the possibility of securing capital to start income generating activities,” he said.

This comes at a time when microfinance stakeholders are still waiting for the government to prepare a law that will regulate the subsector. It was expected that Tanzania could have its microfinance law in 2015 but that could not happen.

Grouped under the umbrella of Tanzania Association of Microfinance Institutions (Tamfi), the players conducted a study a few years ago which highlighted legal and regulatory constraints faced by the sector in Tanzania.