“Microfinance should not be limited to consumer loans” - Ahmetaj: Microbusinesses should have dedicated products. Financial counseling is needed
Microfinance institutions should provide financial advice to categories that are not financially supported by the traditional banking sector, namely families or businesses mainly in rural areas, with low incomes or operating informally, with the aim of increasing their financial inclusion.
This was stated by the Second Deputy Governor of the Bank of Albania, Natasha Ahmetaj, at the 28th Annual Conference of the Microfinance Center, on the topic "Microfinance in Transition: Is the Mission at Risk", adding, among other things, that microfinance should offer products that suit their needs and not focus only on consumer credit.
"Financial counseling, since it is addressed to a segment of the population with a low level of financial literacy, plays an extremely important role, for what is called responsible financial inclusion. Of course, like the entire financial sector, in microfinance we also have new products, which include the use of digital infrastructure, this also includes lending through digital channels, but all these channels must first keep in mind the purpose for which these institutions and this entire industry was established, which is to serve exactly not only the needs of consumers, for what is mostly called consumer credit, but must maintain focus" , said the Deputy Governor.
The microfinance sector has seen several regulatory improvements that have focused on providing more affordable products or transparency with the client and his education. According to the Deputy Governor, other regulatory changes are expected in the future.
"The regulatory changes are of course not finished, they will be accompanied by other changes, which will have at the center of their goals, a clear separation between the lending activity, that is, what we call new microfinance loans, from the activity of managing problem loans, so that we do not have misuse of products, misuse of the mandate that the license has given to these institutions and especially so that we do not have, let's say, a lack of transparency for all categories of clients that microfinance, but also the financial sector in general, has served ," Ahmetaj emphasized.
Microbusinesses have specific needs, different from those of small businesses, so microfinance must offer products that adapt to their needs, the Deputy Governor said, among other things.
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