Possible Mechanisms to Regulate Tier 4 MFIs in Uganda
Staschen, S.
Publication Date: 2003
Published by: GTZ - Deutsche Gesellschaft für Technische Zusammenarbeit GmbH
Document Type: Paper
How can regulation of tier four microfinance institutions in Uganda be improved?
This report investigates the regulatory options for ?tier four? microfinance institutions (MFIs) in Uganda. Tier four MFIs are made up of savings and co-operative societies (SACCOs), non-cooperative MFIs and money lenders registered as either an NGO or company
The paper:- examines the different laws under which tier four MFIs currently operate and identifies weaknesses in these laws
- proposes mechanisms through which these weaknesses can be overcome
- suggests areas for legal amendments to strengthen existing laws
- proposes mechanisms to enforce these laws
The paper concludes that tier four MFIs should be subject to non-prudential regulation focusing on performance monitoring. This would involve self-regulation backed by statutory powers of government agencies
It recommends that:- SACCOs should be brought under the Ministry of Finance
- Non-cooperative MFIs should be regulated by a self-regulatory organisation, to which membership is mandatory
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