MICROFINANCE SUPERVISION MINIMISES RISKS—RBM
The Reserve Bank of Malawi (RBM) has said regulations and supervision of microfinance institutions opens up commercial funding opportunities and attracts the calibre of management and employees needed to run operations viably.
RBM deputy governor for bank supervision Grant Kabango, speaking at the opening of a Microfinance law workshop in Blantyre last Thursday, said central bank’s regulation minimises the institutions’ susceptibility to risk.
“The workshop will also hear from the industry on challenges encountered in the implementation of the legal framework and thereby provide explanations over some areas of the [Microfinance Act] and the directives which remain unclear currently,” he said.
The day-long workshop tackled issues to do with legal and regulatory framework that was designed and adopted to effectively improve the sector.
Kabango noted that microfinance institutions are important because they extend financial services to the financially excluded.
He said in developing countries such as Malawi, microfinance institutions are important for credit support in the unbanked sector of the society.
The Microfinance Act became effective in 2010 after what the RBM said was a consultative process of all stakeholders.
Speaking on the sidelines of the workshop, Malawi Microfinance Network executive director Duncan Phulusa said the gathering gave them an opportunity to air their challenges to the RBM.
He also noted that some of the laws that regulate microfinance in Malawi do not coordinate while some impinge on the performance of the sector.
According to the 2013 RBM’s Financial Stability Report, the industry reported a 15.7 percent decline in overall assets which closed the period under review at K13.9 billion from K16.5 billion in March 2013.
The report noted that the total number of microfinance institutions decreased to 38 from 40 in March 2013 while the number of financial cooperatives decreased to 45 from 46.
