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Djibouti City: East Africa: Regional Microfinance Institutions Advised to Apply for Observer Status

2015/01/04

Regional microfinance institutions are poised to benefit from regional integration, if they apply for an observer status at the East African community secretariat, Innocent Safari, the permanent secretary, Ministry of East Africa community affairs has said.

The advice follows plans by sector players to move towards integrating legal and regulatory frameworks during the recently concluded microfinance CEO's summit in Kigali.

During the summit, top micro finance managers resolved to explore ways in which laws, regulations and supervisory frameworks governing the sector can be harmonised to enhance cross-border business.

However, according to Safari, there is need for the sector through their East Africa Mincrofinance Institutions Newtwork (EAMIN) to apply for an observer status at the EAC secretariat in Arusha "because this is how they will be able to influence decision making and fast track their efforts to integrate."

According to article 3(6) of the treaty establishing the East African community, being an observer would entitle the sector to participate upon invitation at specified meetings of the Permanent Tripartite Commission or of those of any other organs and institutions of the East African Community without a right to vote.

Jamarie Vianney Nzagahimana, the chairman, Association of microfinance institutions in Rwanda (AMIR), said being an observer will help engage policy makers in the region to address urgent policy matters that hinder the sector.

"It will as well provide an avenue for tackling the challenges being faced by the different microfinance institutions regionally. We are presently shifting from individual microfinance schemes to building financial systems that are well integrated with in the region," Nzagahimana,said.

Establishing the EAC Microfinance Excellence Award

Meanwhile, the EAC Excellence Award for best performing MFIs in the region will be launched begining 2015.

The award will go to MFIs that exhibit the best financial practices and their endless efforts to contribute to financial inclusion, Peter Rwema, AMIR's programmes director noted.

Eric Rwemalika, director, Inkingi microfinance, said that the EAC Execellence Award is an opportunity for Rwandan credit institutions to market their potential in the region.

It will help us strenghen our capacity and foot print in the region, he added.

Rwanda's microfinance sector's investment size registered an increase of 14.5% between December 2013 and June 2014, rising from Rwf128.7 billion to Rwf147.4 billion.

The increase was mainly driven by the liquid assets and gross loans which increased from Rwf42.1 billion to Rwf53.4 billion and from Rwf73.5 billion to Rwf81.2 billion, respectively.

However, the non-performing loans ratio deteriorated to 7.6% at end June 2014 from 6.8% end December 2013 due to poor performance of the loan portfolio reported by some large MFIs.

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