ZIMBABWE’S micro-finance institutions (MFIs) total loans registered a 14,2% growth to US$173,3 between September 2014 and September 2015, official figures show.
The number of licenced players increased to 155 from 135 in the period under review, as government’s national financial inclusion strategy bears fruit.
Statistics obtained from Reserve Bank of Zimbabwe (RBZ) governor John Mangudya’s 2016 Monetary Policy Statement show that three deposit taking microfinance institutions namely, Getbucks Financial Services Ltd, African Century Leasing Company and Collarhedge Finance (Private) Ltd were licenced in the last quarter of 2015 Mangudya said the entrance of more players in the financial sector bodes well for its efforts to promote the deepening of financial markets at a time the banking sector’s capitalisation levels continued to improve from US$811,2 million as at December 31 2014 to US$982,5 million as at December 31 2015 and remained profitable, with a reported aggregate net profit of US$127,47 million for the year ended December 31 2015. A total of 15 out of 18 operating banking institutions recorded profits.
Mangudya said total loans in issue by MFIs also went up to average US$1,18 million per MFI from US$1,12 million per institution the previous year.
The average loan amounts went up from US$589,41 for the 257 loans that were issued as at September 2014 to US$773,47 for the 224 055 loans that were issued as at September 2015.
The number of people doing business with MFIs have however diminished steadily between September 2015 and September 2015, from 220 357 clients to 198 378.
Total assets for MFIs went down from US$210 million in September 2014 to US$202,7 million in December 2014 and further down to US$202,6 in March 2015, before growing marginally to US$202,8 million in June 2015. In September 2015, the total assets went down to US$207,7 million.
Mangudya said micro-finance was by nature targeted at low-income households and micro, small and medium enterprises (bottom of the pyramid).
“Accordingly micro-finance is highly relevant to the Zimbabwean macroeconomic context where the majority of the population falls in the low-income segment, and the business landscape is now tilted towards small scale enterprises,” said the central bank chief.
This comes after 2011 and 2014 FinScope Consumer Survey and the 2012 FinScope SMME Survey revealed that 23% of Zimbabwe’s adult population was financially excluded, only 30% made use of banking services as at 2014 and only 14% are banked.
Going forward, MFIs must prime their operations and governance structures in order to qualify to access funding from Zimbabwe Microfinance Wholesale Fund at concessionary interest rates, Mangudya said.
“The Zimbabwe Micro-finance Wholesale Facility commenced operations in 2012 and was established to provide affordable funding for on-lending to MFIs,” he said.
Mangudya said MFIs and moneylenders must be responsible in their lending activities and should lower their interest rates to avoid condemning borrowers into debt traps.
He said MFIs may act as agents of banks to ensure that the underserved particularly in rural areas have access to financial services.
“Micro-finance institutions must re-orient their loan portfolios from consumptive lending towards financing the productive sectors and should adopt technology driven distribution channels to extend their outreach particularly in rural areas,” Mangudya added.