The Uganda Microfinance Regulatory Authority (UMRA) has registered its strong opposition to the government’s proposed merger, which would absorb it into the Ministry of Finance. Executives from UMRA voiced their concerns during a session with the Parliamentary Committee on Finance, on 27th February 2024.
Representatives from UMRA, while appearing before the Committee on Finance, argued that merging the authority with the Ministry of Finance would compromise the effectiveness of its objectives and functions. The executives emphasized the need to maintain a separation between policy and regulation formulation and their implementation and enforcement, to preserve impartiality.
Edith Tusuubira, the Executive Director of UMRA, expressed her reservations about the merger.
“Instead of absolving UMRA into the ministry, it would have been much better if we are strengthened in terms of resources to be able to fulfill our mandate,” she stated.
Several members on the Parliamentary Committee on Finance raised their concerns regarding the perceived lack of impact from UMRA. They pointed out that the organization had failed to reach various parts of the country effectively.
“The public feels that UMRA has not penetrated different parts of the country enough. One of the questions was, ‘Have you ever seen UMRA in your district?'” one committee member explained.
Other committee members argue that UMRA has prioritized the interests of money lenders at the expense the majority of borrowers.
“You have registered more money lenders but at the expense of the wanainchi. There are reports that UMRA tends to side more with the lenders than the borrowers,” stated Faith Nakut, the MP for Napak District.
However, there were dissenting voices among the members of parliament, who believed that retaining UMRA as an independent body would be a wiser choice. They highlighted that merging UMRA with the Ministry of Finance would undermine the progress made by the Tier 4 MFIs and Moneylenders Act of 2016.
Hon. Patrick Ocan MP for Apac Municipality questioned the government’s approach to the proposed merger and accused it of insufficient research and preparation before presenting the merger bill to parliament.
In response to the concerns raised during the session, Dicksons Kateshumbwa, the MP Sheema Municipality, advised UMRA to proactively develop an alternative plan and demonstrate its viability to the committee.
The Parliamentary Committee on Finance is currently deliberating the Rationalisation of Government Agencies (Financial Sector) (Amendment) Bill of 2024, which also includes proposals to integrate UMRA’s functions within the Ministry of Finance.
The overall plan for government agency mergers aims to streamline and improve service delivery by reorganizing various ministries and institutions over a three-year period. It is estimated that upon completion, these mergers will save the government up to UGX 988 billion while enhancing operational efficiency.
