CLYDE & CO MICROFINANCE UPDATE: DELEGATION OF POWERS AND FUNCTIONS

The Bank of Tanzania has recently delegated its powers and functions by providing that the Savings and Credit Cooperative Societies shall be regulated by the Tanzania Cooperative Development Commission, and the Community Microfinance Groups shall be regulated by Local Government Authorities. This article outlines the new licensing requirements and the powers or functions that have been delegated under the Microfinance Act in detail.

The Microfinance Act No. 10 of 2018 (the Act) provides that an application for a licence under Tier 3 (i.e. the Savings and Credit Cooperative Societies or SACCOS) or Tier 4 (i.e. the Community Microfinance Groups) may be made to the Bank of Tanzania (BoT) or Delegated Authority. A Delegated Authority is a public institution mandated by the BoT to execute its functions and powers under the Act.

Two notices were published on 22 November 2019: the Microfinance (Delegation of Powers and Functions) (Tier 3) Notice GN No. 887; and the Microfinance (Delegation of Powers and Functions) (Tier 4) Notice GN No. 888. Under the two notices, the BoT has delegated its functions and powers in relation to Tier 3 microfinance businesses to the Tanzania Cooperative Development Commission (the Commission), and for Tier 4 businesses to the Local Government Authorities (i.e. township, district, urban and city authorities).

The notices are to be read together with the Microfinance (Savings and Credit Cooperative Societies) Regulations published on 13 September 2019 under GN No. 675 (the Tier 3 Regulations) and the Microfinance (Community Microfinance Groups) Regulations published under GN No. 678 (the Tier 4 Regulations).

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