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BSA for better supervision of banks and microfinance – IWACU

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In partnership with the Support Project for Agricultural and Rural Financial Inclusion in Burundi (PAIFAR-B), financed by IFAD, the Bank of the Republic of Burundi (BRB) organized, Thursday, October 20, 2022, in Bujumbura, an awareness workshop for Microfinance Institutions on the implementation of the Bank Supervision Application (BSA).

“BSA is the compass in supervision and reporting in the banking and microfinance sector. It allows the remote transmission of financial data on an electronic medium,” said Prosper Ngendanganya, Director of Financial Stability and Financial Inclusion Supervision at the Central Bank, in his opening remarks for the workshop. .

Established since 2015 within the BRB, he said, it currently wants to be scaled up in the microfinance sector as well. “We wanted to bring together all the leaders and some executives of microfinance institutions to make them aware of what the BSA software is. It is used for the transmission of reports to the Central Bank”, he mentioned.

According to him, the ultimate goal of this workshop was to prepare the microfinance sector for this reform so that they can take it into account in budgeting but also for the capacity building of staff in order to be able to effectively comply with the new requirements that will be enacted shortly by the Central Bank.

“In addition to the Central Bank, credit institutions, now there is a project for there to be an extension of the use of the BSA software at the level of the microfinance sector”, he announced, noting that in this process, the BRB has support from the PAIFAR-B project financed by IFAD.

Innovative and advantageous software

According to Alexis Niyongabo, consultant and executive at the Central Bank, Bank Supervision Application (BSA) is software that was initiated in 1997 by the Central Banks of SADC (Southern African Development Community) countries, Kenya and Uganda, and put into operation in 2003. “The Banco de Mozambique takes care of the administrative and development aspects and holds the copyright on behalf of the other partner countries”, he specified, in his presentation during the the workshop of this October 20, 2022.

Currently, he added, this software is operated by all SADC countries except RSA, Mauritius and Tanzania (thus 13/16 SADC countries) as well as other countries outside of community namely Burundi (since 2015), Ethiopia, South Sudan, Uganda, Kenya, Cape Verde, Djibouti, Haiti and East Timor.

A software which has several advantages according to Mr. Ngendanganya: “Previously, for banking establishments, there were physical versions of the periodic reports at the level of the Central Bank but with BSA, there will be online transmissions of the reports required by the Central Bank. Long before the transmission of the reports, he explains, the software will make it possible to detect inconsistencies in the various information also in the various files of the therefore periodic financial statements to be transmitted to the Central Bank.

“…the banking and financial sector must not lag behind when it comes to digital”.

For him, the BSA, which is intended as a supervision tool, will make it possible to carry out automated analyzes but also to be able to establish a financial situation on the basis of financial soundness indicators that can allow, at the level of the permanent control carried out by the Central Bank, and later, the controls carried out on the spot, to take the necessary decisions and to ensure at all times the financial resilience of the microfinance institutions.

And to mention that it is expected that there may be a period of three to six months for the implementation to be effective of the software in microfinance. But the BRB, he reassured, like any other reform, there is a need to involve and support these sectors.

“With the prerequisites that have been presented here, the adjustments that are necessary at the level of the information and management systems of microfinance institutions and with these adjustments of the inevitable costs, there will necessarily be support that tends to assess the moment timely, the process of reforms at the level of microfinance to comply with the requirements of the Central Bank”, he underlined, noting that if necessary, an additional period for reporting via the BSA platform will be granted.

And to point out that in the event of breaches, sanctions are provided: “The BRB enacts a regulatory framework whether for microfinance or credit institutions. And at this level, there are texts concerning the sanctions to be applied in the event of a breach of such and such a provision. These are requirements that must be met by the microfinance sector. And so there are penalties that are provided for. There are reference texts already in place. »

According to him, this software can only be advantageous for customers who will benefit from financial services at a lower cost and above all from innovative services.

PAIFAR-B, a key partner

In this process, Mr. Ngendabanka stressed that PAIFAR-B is a key partner in the operationalization of the BSA but also on different aspects of the microfinance sector, specifically, in agricultural financial inclusion. “It supports the BRB in the implementation of innovations undertaken in the microfinance sector, of which it is the guarantor. The implementation of the BSA greatly reduces the long-standing shortcomings in the reporting of the figures transmitted by the institutions subject to it. It accompanies the BRB for raising awareness, for the realization of this or that other reform initiated by BRB. »

According to this Central Bank executive, it is an important partner because in addition to agricultural financial inclusion, which is an essential component for the project, it is also a plus for the Central Bank’s objective of facilitate access to financial services for all segments of the population and at affordable costs.

Epaphrodite Semyampi: “PAIFAR-B will play a facilitation role, support microfinance institutions to organize themselves properly.”

And for his part, Epaphrodite Semyampi, in charge of rural finance at PAIFAR-B, points out that the project supports microfinance institutions in its various forms. “Here, I would mention in terms of support for capacity building, the mobilization of the guarantee fund, the availability of the line of credit through commercial banks, in this case the BNDE”, he detailed .

According to him, PAIFAR-B will play a facilitating role, supporting microfinance institutions to organize themselves well. With regard to capacity building, he specified that the project will help in the identification of needs and any other need likely to allow the implementation of the BSA software.

“But also, the PAIFAR-B will support the Central Bank to be able to bring together all the actors around this subject which is today like a taboo subject. There is a lot of work that will follow that will be supported by the project. In short, PAIFAR-B will support all stakeholders around this subject: the BRB, microfinance, etc. »

According to him, this software responds to certain shortcomings that have been apparent for some time. Cases of shortcomings in reporting on the part of microfinance institutions, shortcomings in relation to time, human resources devoted to this work, shortcomings in financial resources. “Which handicapped the operation in a global way at the level of microfinance institutions. »

At the level of the Central Bank, there have been difficulties in receiving the various reports on paper and in being able to keep them. “It’s also with a view to wanting to evolve with the times. And the banking and financial sector must not lag behind when it comes to digital,” he concludes.


Main uses of BSA

External user

Download master files;
Fill in the master files;
Send the financial information of the institutions (completed master files);
View transmission status notifications;
Automatic notification of errors in order to make corrections in the reporting states;
Send information to the Central Bank (user changes, executive approvals, etc.);
Consult press releases and information posted by the Central Bank

internal user

Post master files and other information relevant to the banking and/or microfinance sector;
Analyze the quality of the information relating to the reporting statements (errors in order to make corrections in the reporting statements, reporting not transmitted and non-compliance with deadlines);
Process the transmitted data;
Make the combinations according to the statistical needs of the BSA User Services (cross tables, benchmark);
Generate prudential reports, indicators and other personalized reports;
Process matches through custom workflows.

How to ensure the use erases BSA:

Make sure there is an internet connection;
Acquire “MS Excel version 2007 and more”;
Have trained and sufficient contact persons;
Participate in training related to BSA;
Take ownership of the interpretation of the FAQs and the answers provided;
Consult the procedures manual;
Interact frequently with the BSA team of the BRB;
Meet data transmission deadlines.

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