Re­serve Bank green­lights 10 new mi­cro­fi­nance in­sti­tu­tions

Chronicle (Zimbabwe) - - Business Chronicle - Bianca Mlilo Busi­ness Reporter

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

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