THE APPLICATION OF THE LEGAL FRAMEWORKS GOVERNING MICRO FINANCE: A CASE OF CITY ZONE OF JIGJIGA OF SOMALI REGIONAL STATE AT ETHIOPIA

Seid Demeke; Nuru Addisu

Seid Demeke Lecturer, School of Law, Jigjiga University, Jjgjiga, Ethiopia.
Nuru Addisu Lecturer, Department of Accounting and Finance, College of Business and Economics, Jigjiga University, Jjgjiga, Ethiopia.

Keywords: Micro Finance, Legal Frameworks, National Bank of Ethiopia (NBE)

Abstract

There is a discontent on the substance of the legal framework governing micro-finance. The discontent is that the law is not designed taking in to consideration some unique contexts of the pastoral and agro-pastoral communities mainly in relation to the livelihood that sticks on livestock production. The gap created due to less participation of experts from pastoral areas in the course of policy and legal drafting. The point here is that if those experts participate in the drafting process, they able to get the opportunity to reflect the pastoral context and interests. Overall, in addition to the practical challenges related with lack of experts and legal awareness, the regional MFIs are having trouble while applying the laws, which are not pastoral friendly. Policies, legal and institutional frameworks should provide incentive for the micro finance clients like tax exemption and creating market channels. NBE should take into consideration the pastoral socio-economic realms while drafting directives and to this effect, the bank should include stakeholders and experts having experience and specialization on pastoral matters. Besides, it is also important to draw lesson from countries having best experiences on pastoral matters like Kenya and Bangladesh.

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