Microfinance regulatory and policy assessment in SADC – Case study of Namibia, Tanzania and Zambia

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The levels of financial inclusion in SADC vary significantly due to the contrasting levels of economic and financial sector development across the fifteen countries. Similarly, microfinance also has varying degrees of penetration. In some countries, microfinance is the primary means of delivering financial services to the masses while in others, which might have a more developed banking sector, microfinance is one of the means of providing access to financial services for low income clients. The difference in the structure of the microfinance sector affects the type of institutions that provide the microfinance products and services and also the type products and services that they offer. The institutions range from SACCOS to commercial banks, and products include, credit, savings, insurance and remittances.

The significance of the microfinance sector in the provision of financial services in a country, the types of institutions involved and the products and services they offer has a direct bearing on the regulatory environment and the regulatory authority. In SADC, with the exception of South Africa, and Botswana, the Central Bank is involved in the regulation of microfinance. For these two countries, non-prudential microfinance regulation and supervision is the responsibility of a non-bank regulator.

This study and report focuses on an in-depth analysis of the microfinance regulations and policies in three countries; Tanzania, Namibia and Zambia, which were deemed to illustrate different aspects of microfinance markets that can be found in SADC:

  • Namibia has a thriving commercial micro-lending sector with a solid regulatory framework, and a strong focus on consumer protection compared to the others. The micro-enterprise lending sector is still very small.
  • Tanzania has seen the development of a more classical, enterprise focused microfinance sector which includes NGOs, SACCOs, licensed deposit-taking MFIs and microfinance banks. As a result, the regulatory framework focuses more on the prudential requirements for the licensed institutions.
  • Zambia combines both enterprise-focused microfinance and a growing consumer lending sector. Recent changes in the legal and regulatory environment have occurred in an attempt to regulate both sectors.