Microfinance loan book up 13pc

HARARE - Zimbabwe's microfinance sector is on a growth path after its loan book jumped 13 percent to $225,13 million in the year to December 2015.

The Reserve Bank of Zimbabwe (RBZ) said the increase was largely attributed to aggressive growth of loan portfolios, particularly in the areas of asset and agricultural financing.

This comes as microfinance institutions (MFIs) are responding to the call by the central bank to provide funding to the productive Small to Medium Enterprise’s and smallholder farmers.

However, the central bank said microfinance institutions need to strictly vet their clients as the sector’s portfolio risk, at 10,72 percent for the year ended December 2015, remains above the prudential regional benchmark of five percent.

“The ratio marginally increased from 9,05 percent as at September 30, 2015 to 10,7 percent as for the period under review reflecting inherent credit risk vulnerabilities in the sector in view of the current economic challenges,” the central bank said in its annual report on the state of the MFI sector.

The apex bank added that it was working with stakeholders on mechanisms to reduce the portfolio risk. The initiatives include setting up the Credit Reference System and enhanced regulatory oversight to address credit risk in the MFI sector.

“Microfinance institutions have also been enhancing their credit assessments, by investing in risk management systems, information technology and incorporating the Microfinance Core Client Protection Principles,” the RBZ said.

At the close of the year under review, lending was skewed towards consumption at $101,52 million, which constituted 54,24 percent of the sector’s total loans.

“A number of MFIs continue to focus on consumption lending, which is dominated by government employees, to take advantage of the government’s direct deduction facility in an effort to manage default risk.

“MFIs have heeded RBZ calls for reorienting their lending portfolios towards productive lending as reflected by the improvement in productive lending from 29,11 percent in 2013 to 45,76 percent in 2015.

MFIs — which traditionally target low income households and micro, small and medium enterprises (bottom of the pyramid) — recorded a decrease in licensed players at the close of the year from 155 as at September 30, 2015 to 152 for the period under review.

For the quarter to December 31, 2015, the RBZ issued six new licences comprising one microfinance, four moneylending and one deposit-taking microfinance licence.

Comments (1)

I'M A NUST GRADUATE AGED 25 LOOKING FOR EMPLOYMENT IN ANY MICROFINANCE INSTITUTION. I HAVE 1YEAR WORK EXPERIENCE AND I ACTUALLY DID A RESEARCH PROJECT ON MICROFINANCE AND DEVELOPMENT. contact details 071 6650 864 nqobilekeynes@gmail.com

Arthur - 9 May 2016

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.