REMARKS BY EXECUTIVE DIRECTOR , UGANDA MICROFINANCE REGULATORY AUTHORITY AT THE INFORMATION SHARING WORKSHOP BETWEEN UMRA LICENSEES AND CRAFT SILICON LIMITED HELD AT HOTEL AFRICANA 24/06/19
The Head of Craft Silicon Limited
CEOs/MDs for UMRA Licensed Institutions
Ladies and Gentlemen
First I would like to thank you all for creating time out of your busy schedules to attend this important workshop. I thank Craft Silicon Limited, for organizing this event. I also congratulate Money Lenders and Non Deposit Taking MFIs who have acquired Licenses from UMRA.
You are all aware that The Tier 4 Microfinance Institutions and Moneylenders Act, 2016 is now effective. The Act provides a framework for licensing, regulating and supervision of all Tier 4 Microfinance Institutions and Moneylenders in Uganda, and the establishment and operationalization Microfinance Regulatory Authority (UMRA).
UMRA is mandated to license, regulate and supervise including savings and credit cooperatives (SACCOs), credit-only microfinance Non-governmental organizations (NGOs), private businesses and individuals engaged in financial services (including money lenders), and other community-based and informal financial groups, such as village savings and loan associations (VSLAs).
A key objective of UMRA is to improve the confidence of Ugandans in working with Tier 4 institutions and Money Lenders. Part of this will be achieved through improving the actual performance of institutions via the licensing and supervision aspects.
It is important that consumers believe they are treated fairly. Having avenues to complain, being treated respectfully in this process and receiving timely resolution to problems is also crucial toward improving confidence in this sector.
This event is a key milestone in our drive for financial inclusion, and is part of the various initiatives being implemented by government, UMRA and other stakeholders in the financial services’ industry.
The National Financial Inclusion Strategy (2017-2022) spearheaded by Bank of Uganda, the Ministry of Finance, Planning and Economic Development, UMRA and other Financial Sector regulators, defines financial inclusion as “having access to and using a broad range of quality and affordable financial services”.
Clearly, the above definition encompasses several dimensions of financial services such as access, diversity of products and services, a cost element and financial literacy that deals with the ability of consumers to optimally partake of the services.
Let us also recall that the cardinal role of the financial services sector in an economy is to mobilize resources and intermediate them efficiently to the most deserving economic agents and sectors. For this to happen, the sector must be sufficiently developed and thus the need to look at the various dimensions of financial sector development –Size, efficiency, access and stability -to assess if our industry is on course.
The Finscope survey 2018 found that the breadth of access to financial services is quite wide in Uganda, with 78 percent of Ugandan adults having access to some form of financial service from the formal or informal sectors, and that 58 percent of adults have access to some form of formal financial service. The percentage of the adult population with access to formal financial services has more than doubled since 2006.
In spite of the positive trajectory, Uganda’s financial sector still lags that of our peers like Kenya. From the foregoing, we must identify the various factors impeding access and use of financial services. Key among them, are the interest rate spreads, operational inefficiencies of the institutions and their capacity to design appropriate products or provide financial instruments suited to the unique needs of the various consumers.
This workshop is therefore critical in partly addressing some of the above challenges through affecting the cost structure of operations and the means and ways to diversify and deliver financial solutions.
I do hope that the institutions present at this workshop will pass on benefits shared to the final consumer. In addition, leveraging technology, as has been evidenced by the mobile money revolution, should also permit increased outreach and product innovation informal financial services.
Before I conclude my remarks; I want to stress the following; one is the need for the financial services providers to adapt their risk management frameworks in light of the very dynamic operating environment and the need to minimize any adverse impact of these new products/platforms on the soundness of the industry. Second, is the need for the institutions to leverage the experience shared, by engendering interoperability of all other digital services. Third, Innovations entail good business and employment opportunities. However, the benefits in terms of lower costs, and business growth can only be fully realized when prospective institutions execute their responsibilities with the utmost integrity and conformity to the guidelines as issued by the Regulators.
Allow me to conclude by reiterating that UMRA will remain steadfast in working with you and giving necessary support to ensure compliance. Once again I thank you all.
I now officially declare the workshop open.
FOR GOD AND MY COUNTRY
Thank you for listening.