The Uganda Microfinance Regulatory Authority (UMRA) is facing resistance from the government’s proposal to integrate it into the Ministry of Finance.
UMRA’s Executive Director, Edith Tusuubira, emphasized the importance of maintaining UMRA’s autonomy to effectively fulfill its objectives and functions.
She argued that separating policy and regulation formulation from implementation and enforcement is crucial to protect UMRA’s impartiality, especially considering its significant impact on various interests.
Tusuubira highlighted UMRA’s role in safeguarding the public against non-compliance consequences and its contributions to long-term revenue generation for the government. She stressed that globally, independent regulators are more motivated to enforce rules effectively.
The Committee on Finance is reviewing the Rationalisation of Government Agencies (Financial Sector) (Amendment) Bill, 2024, which proposes to integrate UMRA’s functions into the Ministry of Finance.
Some MPs expressed concerns about this move, suggesting that retaining UMRA as an independent body would preserve the gains achieved through the Tier 4 MFIs and Moneylenders Act 2016, which established UMRA.
Hon. Patrick Ocan criticized the government for insufficient research before proposing the rationalization bill and urged for a detailed analysis of the cost-benefit implications. Similarly, Hon. Maximus Ochai cautioned against collapsing UMRA, emphasizing its vital role in supporting and regulating the microfinance sector.
However, Hon. Faith Nakut raised concerns about UMRA’s perceived limited presence nationwide and its alleged focus on protecting money lenders over borrowers’ interests. Hon. Dicksons Kateshumbwa advised UMRA to adopt a proactive approach and prepare a contingency plan instead of being defensive.
The Committee Chairperson, Hon. Amos Kankunda, requested UMRA to provide a comprehensive response detailing the gaps filled and achievements since its establishment.
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