Legislation to govern Vicoba underway

With mushrooming of Village Community Banks (Vicoba) across the country, the government has revealed that a legislation to officially recognise and guide their operations is underway to ensure security of members’ contributions.

Deputy Minister of Finance, Mwigulu Nchemba made the announcement yesterday in Parliament saying after completing the process of officiating the community banks, the government pitch in to assist those that will be deemed to be lagging behind in an effort to support small scale entrepreneurs who heavily depend on them.

The deputy minister was responding to a supplementary question raised by Dastan Kitandula (Kilindi, CCM) who had wanted to know the government’s plan to intervene and assure safety of the money saved in Vicoba by their members.

The MP said so far Vicobas are not being guided by any law, a situation that could jeopardize the indemnity of the money saved by members.

Godluck Ole Medeye (Arumeru West, CCM) also raised a related concern, asking if the government has considered helping the Vicoba raise their finances so as to empower small scale entrepreneurs who depend on them.

Responding to Medeye, the deputy minister said once the legislation is in place, the government can then assist them.

Nchemba further explained that, understanding the importance of providing the citizenry in the villages with financial services, the government is continuing with various efforts including forming a national microfinance policy (2000).

“Following such efforts by the government, there has been an increase of small scale financial entities in the informal financial sector which are neither registered nor guided by any authority but offer financial services in both urban and rural areas,” said Nchemba.

He said such entities include VICOBA, ROSCA, VISLA and ASCA but conceded that these institutions face a lot of challenges and to address them, the deputy minister said, in 2013 the government hired a consultant from the Economic Social Research Foundation (ESRF) to assess the national microfinance policy (2000) so as to obtain a policy that corresponds with the current changes of the sector.

“When this assessment is complete, the government will prepare a bill on the Microfinance Act which will oversee operations of microfinance institutions including Vicobas,” he said.

Nchemba was responding to a basic question raised by Assumpter Mshana (Mkenge) who had wanted to know when the government will empower Vicoba as it does SACCOS, considering that the former has registered enormous achievements compared to the latter. 

SOURCE: THE GUARDIAN