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Sierra Leone Business: Calls for informal financial sector to be regulated – Market Women President

The President for Market Women Association Haja Marie Bob Kandeh has called on the Central Bank to include the informal financial sector as they go about reviewing regulations of the formal financial sector. Speaking during a panel discussion at the first Microfinance Conference, Madam Kandeh said that the laws are not adequate and not effective coupled with the underutilisation of the collateral registry, credit reference bureau, and the review of the Borrowers and Lenders Bill. “There is a disconnection between the formal sector and the informal sector, of which I think the review should be able to make provision for the informal sector” she said. The informal sector which she says accounts for 85% of the GDP are not benefiting from the information that is available for financial services and products. And as a result of that, her members are being scammed with these financial institutions that come into the market providing loan and savings facility, “my people are being defrauded, they don’t even know how and where to vet these institutions.” She called on the Bank of Sierra Leone (BSL) to move away from the normal financial inclusion awareness raising and embark on a more sustained financial education program, which will be a continuous process. Similarly also, the BSL she said should look at an alternative way of addressing the issue of microfinance default as currently the only available remedy is the police, court and jail. “I am concerned about the charge being brought upon them, which is fraudulent conversion, that is the wrong term, which means that they have stolen money” she explained. She added that, “between a lender and a borrower there is a contract, there should be an alternative means of recovering that money, some of these women are widows and single mothers and if you lock them up what will happen to their children” she asked. The legislation she said must make provision for the informal sector as Legal Aid Board cannot always be there to get them out of jail, “they are only helping as there is no law that they could prevent that from happening, so the law should include something that can protect us.” As women, she said that they do not have land or property as collateral, but they can sell their palm oil or bring in something that they treasure which the microfinance institution can hold on to until they pay back. In his response Director Ralph Ansumana from Other Fianncial Services Department at the BSL agreed with Madam Kandeh that the financial inclusion rollout should be done on a more structured basis and regularly. “The Collateral registry has been set up but has to be effective because the women don’t have land. Regulating the informal sector we have to see how we can bring them on board. As Osusu associations in other countries are being regulated and once on awhile the Central Bank goes and look into their operation” he said.  He warned that they as business people should be wary of these financial institutions that come to give them false hope of double funds that they provide as the cost of capital is difficult.

By Zainab Iyamide Joaque

Monday May 13, 2019.

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