Microfinance Institutions Regulation in Africa Major Economies: A Comparative Analysis

Abstract

This papers undertakes a comparative analysis of microfinance institutions regulations in African major economies.

We found out that microfinance institutions are basically divided into 3 types namely formal, semi-informal and informal. The formal institutions are regulated and supervised by the central Banks and other approved regulators.

However, semi-formal institutions like NGO’s MFI’S are not strictly regulated while the informal are not regulated at all.It is conclusively agreed that all microfinance institutions requires a level of regulation through banking law, special law and self-regulation. The regulator however need to strike a balance in regulation mixing financial development with need to sustain the activities of the MFI’s Regulations therefore, should be the responsibility of the government, central banks, donors, private investors and international financial institutions.Furthermore,regulations requires sufficient competences and enforcement of prudential guidelines to achieve proper regulation that will grow the MFI’s, reduce poverty in African and protect depositors while making the MFI’s sustainable

Keywords: African countries, Microfinance Institutions, Poverty Reduction, Prudential guidelines.