KAMPALA, February 28, 2024 – The Uganda Microfinance Regulatory Authority [ UMRA ] is against the move by government to push it back to the mother Ministry of Finance, saying that its functions will not be effectively carried out within the ministry.
Meeting parliament’s Committee on Finance, Planning and Economic Development yesterday, the Executive Director UMRA, Edith Tusuubira said it is best to separate policy and regulation formulation from implementation and enforcement since the decision of the regulator can have a significant impact on particular interest and therefore the need to protect its impartiality.
“UMRA’s unique role in safeguarding the public against adverse consequences resulting from non-compliance, coupled with its notable contributions to the government’s long-term revenue generation underscores the necessity for its continued autonomy,” Tusubira said.
“Globally, regulators who are able to set rules independently are more likely to be motivated to enforce them,” she added.
The Committee on Finance is considering the Rationalisation of Government Agencies [Financial Sector] [Amendment] Bill, 2024 that seeks to among others, mainstream the functions of UMRA into the Ministry of Finance, Planning and Economic Development.
A section of MPs agreed that it would be wiser to retain UMRA as an independent body, arguing that rationalisation would undo the gains that the Tier 4 Mincrofinace Institutions [MFIs] and Moneylenders Act 2016 which established UMRA achieved.
Apach Municipality MP, Patrick Ocan, queried the manner in which the rationalisation Bill was brought and accused government of not doing enough research before presenting the Bill.
“Government ought to consider many things before rationalizing. We need a detailed statement on the cost benefits and certificate of financial implication before merging entities. Moreover, we have been asked to process the Bill in five days. We need more time to scrutinise the issues,” he said.
In the same vein, West Budama County North MP, Maximus warned that it would be a mistake to abolish UMRA, saying that the regulator plays a vital role in supporting and regulating the microfinance sector.
However, Faith Nakut, the Napak District Woman Member of Parliament raised the concern that UMRA is not present countrywide, and that their interest is in protecting money lenders and not caring for the majority of borrowers.
Dicksons Kateshumbwa, Sheema Municipality MP, advised UMRA officials to desist from being defensive but instead proactively come up with plan B and demonstrate it by providing a structure to the committee.
“Have you wondered why of all entities you were chosen? Instead of being defensive you should ask yourselves what is next and plan, because you could actually be merged into the ministry,” he said.
For his part, the Committee Chairperson, Amos Kankunda asked UMRA to return with a comprehensive response on what gap they have been able to fill and their achievements in figures since the authourity was established.
UMRA was established to license, regulate and supervise all Tier 4 microfinance institutions and money lenders in Uganda with capital of less than 500 million.
The Tier 4 MFIs include savings and credit cooperatives [SACCOs], Non-Deposit Taking Microfinance Institutions, Self Help Groups, and moneylenders.
UMRA which came into existence On January 1, 2017, also seeks to protect interests of members and beneficiaries of tier 4 microfinance institutions including the promotion of transparency and accountability by applying both prudential and non-prudential standards, promote stability and integrity of the financial sector through ensuring stability and security of Tier 4 microfinance institutions and other functions.
https://thecooperator.news/minister-kyeyune-to-umra-dont-issue-licences-to-online-money-lenders/
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