BoB urged to regulate micro finance
As part of efforts to develop a conducive environment for micro- finance ( MFIs) in Botswana, an analyst has suggested that regulation of the entities should be moved to the central bank.
Certified expert in micro- finance and author of regulatory policy framework for microfinance institutions in Botswana, Patrick Awuku Dogbe said Botswana should adopt the international best practice of MFI being regulated by the reserve bank.
The Non- Bank Financial Institutions Regulatory Authority ( NBFIRA) currently regulates the country’s MFIs. “It is therefore recommended that the Bank of Botswana ( BoB) should regulate, promote and ensure orderly growth of MFIs in Botswana. “This implies that NBFIRA may have to relinquish the regulation of MFIs to the Bank to avoid any duplication of responsibilities,” said Dogbe.
He called for a non- bank MFI regulatory function to be established in the BoB’s supervision or regulatory department. The writer and analyst said the development will allow commercial banks that want to downscale into micro- finance or intend to have micro- finance units to do so without any regulatory arbitrage. He further said a tiered approach to supervision is conducive to the development of a sound microfinance sector especially as it gives room for more flexibility to microfinance activities, which are still in an experimental stage.