‘MFIs behaving like goblins’

A NUMBER of microfinance institutions (MFIs) are behaving “like goblins” charging usurious interest rates that negate their objective of helping the poor, a senior Reserve Bank of Zimbabwe (RBZ) executive has said.

Business Reporter

Norman Mataruka, the senior division chief for banking licensing, supervision and surveillance, told guests at the launch of the Zimbabwe Microfinance and Wholesale Facility (ZMWF) last week that MFIs had to embrace good corporate governance and abide by the rules to build confidence in the sector.

“In other instances, some MFIs were charging unsustainably high interest rates, as much as 40% per month and up to 48% per month, contrary to the objective of microfinance, that is, uplifting the standards of living of the poor,” Mataruka said.

Other than charging high interest rates, some MFIs have been ruthless when dealing with defaulting clients. In some cases they sell assets pledged as collateral by clients.

Mataruka said it was important that such a sector be regulated to remove the lawlessness that was anathema to economic development.

“You can imagine yourself having a nice car, but there are no traffic rules and everybody is a matatu driver,” Mataruka said.

A matatu is a Swahili name for privately-owned public transport.
Mataruka said when the financial sector was liberalised in 1990, “people who never deserved to be bankers found themselves in the banking industry”.

“They always say the best way to rob a bank is to form one. We have got people who robbed others directly by forming institutions.”

Over a dozen banks have been closed since 2004 for the same ailments — concentrated shareholding, weak corporate governance, owner managed or controlled and insider loans which all turned out to be non-performing.

ZMWF is an apex fund set up in 2010 to provide wholesale funding to qualifying MFIs for on-lending to micro and small enterprises and the economically active poor. It is supported by Hivos, Department for International Development and German Agency for International Co-operation.

To date, ZMWF has approved eight loans amounting to $620 000. Its objective is to create and support 18 000 jobs by 2014.

18 Responses to ‘MFIs behaving like goblins’

  1. kuruman December 12, 2012 at 8:34 am #

    8 loans since 2010. sorry kikikkikiki

    • samas December 12, 2012 at 5:22 pm #

      where is it written 8 loans may be i missed it can u show me

      • Dzidzawokuverenga December 13, 2012 at 8:29 am #

        Verenga last sentence, that is if you know what a sentence is…kikikiki

  2. wayne maromo December 12, 2012 at 9:30 am #

    and they all want civil servants, my fellow friends in the civil servants are now taking so little back home because indegenous banks are targeting civil servants for loans so do these micro finance people, leaving us not in the civil service in a quandary.

  3. Hombarume December 12, 2012 at 10:19 am #

    Its their money, they can charge whatever they want as this is unsecured money. Let the competition govern, why want to control.

    Standard Chartered charges $10 for every withdrawal. If you receive $100 for an Invoice, 10% from that goes to bank charges. Thats Gobling, i dont care paying interest of 100% as long as i agree and sign the agreement.

    I think jelousy is with thi Matatu guy. Banks charge 30% on a loan, whats the difference?

    • charles sawala December 13, 2012 at 1:57 am #

      Are you saying banks charge 30% interest per loaned amount per month????
      If I borrow $2000 I have to pay $600.00 after a calender month. Is that correct???
      I am abroad and if it is correct this is a rip off

      • Dzidzawokuverenga December 13, 2012 at 8:34 am #

        I am sure this should be per annum,even though its daylight robbery to charge 30 percentum

        • Hombarume December 13, 2012 at 10:59 am #

          CBZ gives a $1000 loan payable in 6 months. But you can only withdrwa $720. $280 is loan processing fee. By the time you finish paying, you have paid a total of $1300.

          Simply put, you got $720 and paid $580. 81% finance fees.

  4. Joshua Murire December 12, 2012 at 10:37 am #

    Mr Mataruka. I read you said some of these MFI are taking deposits. True I know one lady who was robed of USD47000.00 by on MF with the name ” Befas credit cooperative” after depositing the money promised to be given interest at 15% per month. The lady has been in pains to recover the money without ssuccess. After making a court application for recovery a default judgenment was granted but the institutuion has no assets in excessof USd3000.00 at their offices. May please advise on how the poor lady can be assisted to recover her money?

    • David Sodza December 12, 2012 at 11:15 am #

      Well well well that is the price of greed. The Authorities tell you not to deposit money with MFI’s and you go ahead to place the deposit. What enticed her is 15% per month. She got greedy and was conned. Remember you cant con an honest man and an Honest man cannot be conned.

  5. Befus December 12, 2012 at 12:00 pm #

    Befus scandal pliz give contact details

  6. mbonisi December 12, 2012 at 12:10 pm #

    Instead of complaining about high interest rates charged by MFIs, it is the government’s fault in failing to regulate the industry. The government should come up with an equivalent of the South African National Credit Act (NCA), and the National Credit Regulator (NCR) that places a ceiling on interest rates MFIs can charge. The problem with these guys is that they love re-inventing the wheel. Examples of how MFIs operate abound all over the world – Bangladesh is the home of the found of the Mcrofinance industry – please learn from others.

  7. WeZhira December 12, 2012 at 1:28 pm #

    Problem is RBZ allows such MFIs to operate even if the public gives them information about irregular operations. One fraudulent chap had his MFI closed due to poor governance and deposit taking but was later allowed to operate under a different company name. Who is fooling who? Some of these regulators need to be examined.

    • Dzidzawokuverenga December 13, 2012 at 8:42 am #

      The term “”due diligence”" no longer exists in the RBZ’s vocabulary to say the least. Ndezvemeso muromo zvinyarare. Taura zvako WeZhira

  8. mbonisi December 12, 2012 at 4:20 pm #

    No institution is supposed to take deposits without a Banking licence – mara kanti, whats wrong with Zimbabweans?

  9. Tsano December 12, 2012 at 11:25 pm #

    Matatu guy u are jelous. Go to hell. Wakaba mari dzevanhu necuratorship yako in cahoots with Camelsa. One day you will pay. Mwari ngewemunhu wese.

  10. Tsanoz December 13, 2012 at 7:17 am #

    There are a couple of issues here:
    I think 40% per month is really excessive. But to play devils advocate here the issue is that it may be reflective of the cost and risk to the MFI’s. Secondly, you are not forced to get these loans so it’s the individual themselves who are ripping themselves and if they were not risky individuals they could just go to proper banks for the loans. Regulation may not work as it may be a form of “price controls” which will stop the flow of this microfinance.

  11. tinash December 13, 2012 at 7:56 am #

    SO WHAT CAN WE DO? EVEN MUTODI AKAVHARA VANHU VANGANI BUT HE FREE WHY?WARUZA BHURURU INJUGA IDZI

© 2014 NewsDay Zimbabwe. All Rights Reserved.

DMMA logo