news - Central Bank of Kenya (CBK) to review Micro Finance Act

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Central Bank of Kenya (CBK) to review Micro Finance Act
February 19, 2010

Nairobi, February 19, 2010 (Kenya Broadcasting Corporation) - The Central Bank of Kenya Friday announced plans to review the Micro Finance Act that came into effect in May 2008.
According to Professor Njuguna Ndungu, the amendments will make it cheaper for the public to access funds from agents of microfinance institutions (MFIs) which he says are vital in steering vision 2030 objectives.

The CBK boss however noted that the MFIs continue to face hurdles in restructuring their shareholding to comply with restrictions in the microfinance Act. The act restricts shareholding by an individual to 25% of the institutions share capital.

He was speaking during a standard chartered and Grameen foundation microfinance conference on optimal financing stratergies for MFIs in a changing environment.

He said they will engage the microfinance industry through the umbrella body, the Association of Microfinance Institution (AMFI), and transform them to a regulated status and also instill public confidence.

Njuguna said it was vital for the microfinance sector to have new frontiers of financial reach through mobilization of public deposits adding that traditional donors are drying up and cannot be relied on to move the sector to the next level.

"We do not have all the solutions but we would definitely like to cultivate partnership with the industry as well as experienced international players to create an enabling environment to build strong institutions that define appropriate incentives and encourage prudent behaviour," he said.

Standard Chartered Bank CEO Richard Etemesi said the bank will continue to finance the microfinance sector despite the hard economic times facing the industry as a result of the global financial crisis.

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