Reserve Bank greenlights 10 new microfinance institutions
THE Reserve Bank of Zimbabwe (RBZ) has licensed 10 new microfinance institutions, bringing the total number of registered MFIs in the country to 173.
The new entities were registered in terms of Section 18 of the Microfinance Act in the period July to September 2016 and are now authorised to conduct business of providing loans, said the RBZ.
Seven of the new players are located in Harare, one in Shurugwi and two in Bulawayo.
These include Umntanashi Finance, Great Relief (Shurugwi), Anthill Capital (Bulawayo), ThincBizz Finance, Valley Finance, Assurcred Investment, Stock Tank Investment, Firstmoney Microfinance (Bulawayo), Twinstock Capital and Bluegrouse Finance.
Seven entities are designated to be money lenders while the other three are creditonly microfinance institutions. Microfi institutions have helped bridge the gap in provision of financial services, which conventional banks have failed to service in the wake of liquidity constraints that tend to favour those based in cities and towns.
Early this year the central bank offered deposit-taking licences to Getbucks Financial Services and African Century Limited while several MFIs are still on the micro-credit level.
The setting up of a minimum capital threshold opens up more avenues for growth for the growing micro-finance sub-sector.
Observers say MFIs play a critical role in the broader economic recovery agenda insofar as they finance smaller business, which are typically shunned by the larger commercial banks due to perceived high default risk.
But a large number of MFIs succumbed to the pressures of capital erosion, resulting in a massive drop in registered numbers from about 1 700 MFIs in 2003, to less than 70 at the start of 2009.
Experts in the area say effectively functioning MFIs have the potential to boost economic performance, albeit from the small-to-medium enterprises base.
There is a need for broad-based strategies to enhance the lending operations of local MFIs, with the central bank stating that the growth of the sector continues to be hampered by funding challenges largely attributed to the limited availability of affordable long-term finance.
Although the growth of the MFIs sector has been sluggish, its loans performance has been fairly reasonable. — @BiancaMlilo