MICROFINANCE institutions (MFIs) lent $50,5 million for consumptive purposes in the nine months to September, representing a third of the industry’s loans in issue.
BY FIDELITY MHLANGA
Zimbabwe has a thriving MFI sector, which comprises of 189 registered firms.
As of September this year, MFI’s loan portfolio was $176,5 million, and of that, business loans amounted to $46,3 million while agriculture loans took up $40,5 million. Other loans came out to $39 million.
Distribution of lending by methodology indicates that 97% is being advanced as individual lending, while group lending constitutes 3%, a clear sign that the majority of the MFIs are yet to embrace group lending
Chairperson of the Zimbabwe Association of Microfinance Institutions, Virginia Sibanda said the sector was growing though it would require support to flourish.
She said the sector played a key role in poverty alleviation through the provision of tailor made products to stimulate economic empowerment.
“Unlike in other countries where there has been substantial support for non-profit grass root financial institutions, which have morphed into large organisations, Zimbabwean players have had to innovative under very trying circumstances,” Sibanda said.
She added underprivileged members in the society such as women, youths, and rural small holder farmers were benefiting immensely from MFIs.
“The excluded or unbanked, or financially excluded particularly face significant barriers to achieving sustained increases in income and in improving their status. They require complementary support in other areas, such as training in business skills like marketing, finance, financial literacy, to mention but a few,” she said.
The central bank came up with a financial inclusion strategy to create profitable and sustainable MFI’s in 2016.
The MFI’s should facilitate the provision of client-centred, affordable financial services and fill the gaps between demand and supply for financial services, especially in the rural areas, with focus on low income households and micro, small and medium enterprises, which are affected by comparatively higher levels of financial exclusion.