NAIROBI, Kenya, Jan 27 – Micro Finance Institutions (MFI) have said that agency banking will not cripple their industry but will strengthen it if proper regulations are put in place.
Speaking while receiving Sh9.6 million sponsorship for the Africa-Middle East Micro Finance Summit to be held in April from software company Craft Silicon, Lydia Koros of the Association of Micro Credit Institutions in Kenya said the new branchless banking regulation would increase the number of the unbanked population in the rural areas.
“The industry right now is thinking of going into branchless banking, because that is the only way to reach the poorest of the poor in the villages in the country. Many micro finance institutions are now able to get into the heart of the slum area without requiring to have a branch, just through a point of sale device,” she said.
Craft Silicon CEO Kamal Budhabhatti said the micro finance sector would help alleviate poverty.
“In conjunction with the Vision 2030 that the government has, I think it is very important to play this role in poverty alleviation that the micro finance sector does by giving out the loans to the poor people which helps them to grow and at the end of the day helps the growth of the country and achieve Vision 2030.”
Budhabhatti said that Craft Silicon is increasingly sensitive to the needs of the MFI industry and is on the edge of providing appropriate innovative technologies for the country.
The 2006 Nobel Peace Prize winner Professor Muhammad Yunus is expected to be the chief guest during the summit. The summit will offer opportunities to micro credit practitioners to demonstrate through a series of events that microfinance has the capacity to reach the poor and provide a solution to alleviate poverty.
The Finance Act 2009 became operational at the beginning of January, and an amendment was made to the Banking Act to enable use of third party agents by banks.
Banks will therefore be able to leverage on additional cost effective distribution channels to offer financial services.
The National Financial Access Survey of 2009 shows that 32 percent of Kenya’s bankable population remains totally outside the orbit of financial services and many more being served by the informal financial system.