TOTAL loans advanced by microfinance institutions (MFIs) grew by over 80% to $177,76 million as at June 30 from the same period last year due to improved levels of funding in the sector, the Reserve Bank of Zimbabwe (RBZ) has said.
CHIEF BUSINESS REPORTER
In the same period last year, total loans were $97,01 million.
Total assets increased to $214 million during the period under review from $131,96 million in the comparable period last year.
“The growth in total loans reflects improving levels of funding in the sector particularly from institutional shareholders, development oriented donor funders and off-shore funders,” RBZ said in a latest report on the sector.
“The growth in total loans is also attributed to the emergence of commercially oriented credit only MFIs which are backed by institutional investors or bank holding companies.”
As at June 30 2014 total loans in the sector constituted 4,67% of total banking sector loans of $3,81 billion.
As at June 30 2014, there were 130 registered MFIs. RBZ said the number of licenced MFIs has been fluctuating “as some institutions have not been able to renew their operating licenses due to viability challenges emanating from high levels of delinquent loans”.
At its peak in December 2007, the sector had 309 registered MFIs.
RBZ noted that MFIs had expanded branches to 442 from 334 “reflecting a drive by MFIs to reach out to marginalised areas where communities had no access to formal financial services”.
It said the growth of the sector has been affected by the absence of affordable long term finance particularly donor and government funding, which has resulted in some MFIs failing to renew their licences upon expiry.
The top 10 MFIs controlled 71,40% of the market share in terms of total loans.
RBZ said there some credit- only MFIs that were illegally mobilising deposits from members of the public disguised as debentures or shareholders’ loans. RBZ warned that breaches of the regulations “attract supervisory action including cancelation of operating licence”.
The MFIs loan portfolio was skewed towards consumption accounting for 67% of the total loans.
This comprised of salary-based loans whose repayments are based on deductions at source which is considered secure.
The remainder of the loans were for the productive sector.