PAC Committee MPs Worried as Microfinance Support Centre (MSC) has Operated for 20 Years Without "Risk Management Framework".

📸: MSC Officials appearing before PAC MPs on 21-5-2024.

The Public Accounts Committee (PAC) has summoned the Board members of Microfinance Support Centre to explain why the entity has operated for over 20years without a risk management framework on Expected Credit Losses, despite the entity operating seed capital projects worth Shs249Bn and managing over Shs72Bn savings in Emyooga funds.

The summons followed findings in the December 2023 Auditor General’s report that indicated that Microfinance Support Centre doesn’t have in any documents Risk Management Strategies that would guide the operations of the institution, with many MPs wondering if the current Board members are even aware of their roles at the institution.

"The big question is that this Board and all the Boards that have been there before, comfortably presided over an institution supervised by the Ministry of Finance without the basic framework that would guide this institution, surely for 20years. A draft can’t be in place,” noted Muwanga Kivumbi, Chairperson PAC.

According to the Auditor General, the ECL framework refers to a set of policies, procedures and controls that are put in place to ensure that effective management of credit risk and the accurate computation of expected credit losses. The ECL requires the company to estimate the credit losses over the life of the financial instrument based on the credit risk and future economic conditions.

Simon Peter Rukorera, Finance Manager at Microfinance Support Centre informed MPs that the institution has been following the approved accounting policy in line with the guidelines of computing and the risk management framework will be approved by end of June 2024 saying, “As I speak, we have drafted the ECL policy and we are very sure that before the close of the financial year, this policy would be approved by the board and come by close of this financial year, it will be fully operational.”

However, Rukorera's explanation was rejected by Xavier Kyooma (Ibanda North) who wondered if the Board of Microfinance Support Centre is aware of what they are supposed to do while overseeing the operations of the institution.

“Is the Board aware of what they are supposed to do and do they know that they are responsible for the preparation for the financial statements, do you have an audit Committee? What is its role? Do you have a risk strategy in place? The absence of this framework means that every staff, board member does as they please, they have nothing to follow and when you are working in money, it becomes very difficult and risky. We must have these internal operational manuals such that they help you. On this matter, we must also meet the Board because the confidence we have in Microfinance Support Centre, we can’t leave it just like that.”

Muwanga ruled to have the Board led by Emmanuel Aliba, to come alongside his team including; Fredrick Tabura, Milton Odong, Agnes Kadama and Diana Nandagire noting, “It is a policy matter which I think the Committee is of the need to interact with the Board but above the Board, there is a Ministry and above the Ministry, there is Parliament.”