The Speaker of Parliament, Anita Among, has tasked the Minister of Finance, Planning and Economic Development and other stakeholders to find a lasting solution to the challenges affecting the growth of microfinance and saving groups in the country.
She said as a country, there are challenges of high level of financial exclusion, high cost of credit, limited bank coverage and the need for better regulation of the microfinance sector.
The Speaker made the remarks at the close of the inaugural Annual National Microfinance and Savings Groups’ Conference on Wednesday, 30 November 2022 at Hotel Africana in Kampala.
The conference themed, “Drivers for Sustainable Microfinance and Savings Groups” is testimony of the Government’s commitment to widening and deepening financial inclusion and promoting of wealth creation.
Among said that although numerous studies have been done, notably, the Financial Capability Survey, 2020 by the Bank of Uganda and the Uganda National Household Survey 2019/2020, various challenges still exist in the sector.
“Currently, there is the Microfinance Deposit Taking Institutions (Amendment) Bill, 2022 before the Parliamentary Committee on Finance, Planning and Economic Development. However, even if we commit to ensure its expeditious consideration, we need to harmoniously find a lasting solution to the challenges affecting the growth of the economy,” she emphasised.
She added: “We need interventions that can enable the growth and transformation of the numerous Merry-go-rounds, Rotating Savings and Credit Association (ROSCA), Accumulating Savings and Credit Associations (ASCA) and Village Savings and Loan Association (VSLA). It is through such interventions that we shall accommodate the segment of the populace that the formal financial institutions deem risky.”
Among also noted that there are technical, operational and capacity challenges affecting microfinance and savings groups, something that needs urgent intervention.
“While formal conventional financial services providers particularly commercial banks, microfinance deposit taking institutions and credit institutions have mechanisms such as the Deposit Protection Fund and Credit Reference Bureau, savings groups lack such safeguards. This is largely attributed to their informal nature,” she asserted.
Hon. Haruna Kasolo Kyeyune, the Minister of State for Finance, Planning and Economic Development (Microfinance) appreciated Parliament for passing numerous financial bills saying it brought sanity to the Microfinance sector.
Prof. Waswa Balunywa, the Principal of Makerere University Business School reiterated the need for microfinance and savings groups to innovate and regulate so as to provide commendable change to communities.
The two-day conference was attended by stakeholders from commercial banks, microfinance institutions and civil society.