Kenya: Microfinance Act to be effected next month

microfinance act kenya

Nairobi, Kenya, June, 12 2007 - The Central Bank of Kenya (CBK) Wednesday said the Microfinance Act would come into effect on the 1st of July.

CBK Governor Professor Njuguna Ndungu said the bank was reviewing a draft containing a set of regulations needed before the Bill is implemented.

“The July 1st date is still tenable. There is nothing to prevent us from having the Bill available before that date,” he assured.

The Microfinance Act 2006 is one of the 11 Bills that President Mwai Kibaki signed into law in December last year which provides for the licensing, regulation and supervision of microfinance business.

Prof. Ndungu said once the draft had been finalized, it would be sent back to a microfinance consultative forum for approval and then forwarded to the Finance Minister Amos Kimunya for gazettement.

Upon adoption, the regulations would make it cheaper for the public to access funds from microfinance institutions (MFIs) by allowing them to establish agency arrangements with non- bank entities and pay cut-rate licensing fees.

In May this year, CBK announced that it had waived the license application fee for MFIs, and recommended a significantly lower level of annual license fees and branch license fees to promote the provision of microfinance services.

The policy also aims to clearly define the roles played by the Government, the CBK and microfinance practitioners.

Meanwhile, Ndungu said the Central Bank was constrained in safeguarding people’s investments in 'get-rich-quick' schemes due to the lack of a Money Laundering Bill.

Under the Bill, pyramid schemes would be considered as money laundering because they are not licensed to take deposits or pay interests on deposits.

He denied reports that Kenyans were joining pyramid schemes due to the low savings rates offered by commercial banks.

He said CBK was working to promote competitive savings rates and better returns on deposits to ensure people don’t lose their money in the pyramid schemes.

“We have to educate the public that this is not an investment but a financial scam. It benefits those who get into the scheme first and everybody else falls. We have to ensure that we protect the economic vibrancy and the financial boom from these crooks,” he warned.

At the same time, Prof. Ndungu launched a Programme Steering Committee for a unique Master’s programme pioneered by the Kenya School of Monetary Studies (KSMS) in collaboration with the African Capacity Building Foundation.

Almost all KSMS operations are funded by the CBK while Treasury’s contribution is one percent.

The Master’s programme will be offered by the school in collaboration with Moi University. The two institutions signed a four-year training and research collaboration agreement expected to enable students to be examined, certified and graduated by the University.

“The financial sector training is complex and competitive and thus requires highly trained expertise and substantial resources. The development of a curriculum that meets industry and academic requirements is even more important and crucial for the acceptability of the programme and marketability of its graduates,” he noted.

The Professor said the move to start the Masters programme had been necessitated by the scarcity of experts and trainers in the field of finance and banking.

“Sourcing and retaining of lecturers capable of facilitating the programme will therefore be a critical challenge for the steering committee,” he added.

Source: www.syminvest.com

Category: Payday loans

Similar articles: