He was speaking at the seventh annual general meeting for SELF, a national project that seeks to enable rural poor eradicate poverty through access to financial services. He said, "The Micro finance Act will provide for among other things the regulatory and supervisory approach for micro-credit business, which is currently not regulated, posing a serious concern for the public given the abusive and collection practices employed by micro finances institutions."
He said that in efforts to address the existing gaps in the regulatory and supervisory framework for microfinance in relation to financial literacy and financial consumer protection in the country, the Ministry of Finance is at an advanced stage in the process to review the National Microfinance policy.
This comes amid a section of public sentiment that some micro finance institutions were not treating their consumers with integrity. He also revealed that the Credit Reference databank shall be ready by September this year. He said the credit reference bureau will enhance information sharing for regulated banking institutions including regulated Microfinance institutions.
There will also be a framework for financial literacy education which would ensure consumers are well informed on the financial products and services they consume. The central bank and World Bank are at preliminary stages of conducting a diagnostic study on financial consumer protection in the country to cover all the financial sub sectors—banking, insurance, pensions, securities and microfinance.
The study will pave way for putting in place a financial consumer protection framework in the country. The Minister for Finance Mustafa Mkulo, who was represented by his deputy, said 80 percent of the population wants financial literacy education. SELF 1 was launched in 2000 and concluded in 2007 and its second phase, which started in 2011 enables rural poor households to access credits to invest in potential profitable investment opportunities for poverty reduction.