MicroLead: A new Microfinance Policy on our door step

With inputs from CARE Tanzania, the government has completed a new microfinance policy, which will regulate the work of Non-Financial Institutions (NFIs). The completion of the policy was announced by the Principal Economist of the Ministry of Finance and Planning Ms. Dionisia Mjema during CARE’s Microlead Regional workshop at Uhuru Hotel in Moshi on 19th April. The revised policy has been approved by the Cabinet now awaiting approval from the President. The policy puts special emphasis on the promotion of financial inclusion through usage of technology. VSLAs and other Savings groups will now be regulated by the Local Government Authorities, while SACCOS initiatives will be registered, licensed and regulated by the Tanzania Cooperative Development Commission. The community Banks and other Financial Institutions will be licensed and regulated by the Bank of Tanzania.

Inputs provided by CARE

CARE in Tanzania was among the key stakeholders reviewed the draft policy. We submitted our written comments to the Ministry highlighting the following key issues:

  •         The need for parameters that will guide product diversification specifically for targeting low income and rural market segments;
  • The need for an inclusive economic growth mechanisms taking into consideration the needs of different people;
  • Linkages should be promoted to include benefits such as improving a saving culture and security;
  • VSLAs should be considered to be exempted from taxation;
  • Gender analysis is required to determine gender specific needs to be addressed by the policy

While the announcement of the new policy was one of the highlights of the Microlead event, there were also introductions of new products by by Mwanga Community Bank and NMB, debates on the advantages and disadvantages of the franchisee model with recommendations for remedial measures and a discussion about how to ensure a healthy competition among banks which will lead to product improvement.

The Regional Microlead workshop was attended by UNCDF (the donor), Franchisees, CBTs, Community and national Banks, CSOs, representatives from the (Central and Local) Government, including the Bank of Tanzania.

A similar event was organized by CARE’s Link-up program for a slightly different audience in Dar Es Salaam. A review of the newly proposed microfinance policy was also an agenda item here.