The Regulation of Microfinance Institutions: A Zambian Case Study

This thesis examines regulatory and supervisory issues in relation to microfinance in order to contribute to the design of regulatory policy in Zambia and other developing countries in sub-Saharan Africa. It uses two levels of analysis:

• At the micro level, it evaluates the potential impact of regulation and supervision on three MFIs licensed by the supervisory authority during the period of the study;
• At the macro level, it analyzes the entire microfinance sector using Regulatory Impact Assessment (RIA).

The study recommends that the current existing regulatory framework be maintained. Study findings indicate that:

• At the current stage of development, regulation would have a detrimental effect on the development of the sector;
• Objectives for regulating the sector are unlikely to be met;
• Costs of compliance would be considerable, and would outweigh any potential benefits that could be gained;
• Introduction of microfinance-specific regulations would most likely result in regulatory failure.