THE Bank of Tanzania (BoT) has issued a directive requiring all tier-two microfinance institutions to register as members of either the Tanzania Association of Microfinance Institutions (TAMFI) or the Tanzania Microfinance Union (TAMIU) by the end of this year.

Emmanuel Tutuba, the governor, issued this directive at the launch of self-regulatory rules for microfinances, a collaborative effort between the central bank and the two designated associations.

This delegation of authority is crucial given the surge in tier-two microfinance institutions, which now number 2,600 altogether, affirming that this requirement is meant to bolster oversight and accountability in the rapidly expanding microfinance sector.

."All microfinance institutions not registering under the auspices of TAMFI or TAMIU within the given period will have their licenses revoked," he stated, explaining that mandatory registration will facilitate joint meetings where microfinance institutions can discuss common challenges and formulate collective initiatives for service improvement.

“Any institution operating outside this framework would be in violation of its service provision license,” he specified, demanding that TAMFI and TAMIU work to ensure their members adopt modern technologies to simplify service provision and enhance information management.

He was persuaded that this new arrangement will create more employment opportunities in the financial sector, boost capital for small businesses and stimulate the development of a more inclusive economy.

TAMFI and TAMIU will also be responsible for coordinating activities related to tier-two microfinance institutions, ensuring compliance with laws, regulations and ethical standards, he asserted.

Devotha Minzi, the TAMFI board chairperson, lauded the BoT initiative as a new milestone in financial sector organisation, hailing the mandatory membership directive.

She requested further BoT support particularly in capacity building to effectively carry out their expanded responsibilities, acknowledging that the self-regulatory framework would foster more transparent and trustworthy services.

It would help to dispel the negative perception that some small financial institutions exist to defraud people through onerously charged loans, she declared, underlining that any successful business must have a give and take model that guarantees its sustainability.

“In that case, we are supposed to win customers’ trust with integrity. With these regulations we are going to change the current narrative,” she stated.

Juma Mnanka, the TAMIU national chairperson, said that the union is prepared to oversee all necessary procedures for its member financial institutions, ensuring adherence to the new regulatory framework.