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More than 30 micro-finance institutions (MFIs) have closed shop in the second half of the year as challenges of capitalisation take their toll on the sector, latest data from the Reserve Bank of Zimbabwe (RBZ) shows. The number of MFIs has dropped to 116 at the end of September from 147 at the end of June this year. Zimbabwean MFIs have in the past largely survived on donor funding as local banks, also facing liquidity constraints, failed to provide them with affordable financial support.
Registrar of MFIs at the RBZ Norman Mataruka said institutions that shut down had found the economic environment unsustainable and voluntarily surrendered their licenses.
“We have had quite a number of MFIs saying they feel the environment is too adverse and therefore surrendering their licences. So this year we have quite a number of licence cancellations,” he said. Mr Mataruka said of the 166 remaining institutions, about 80 percent were operating in the two main cities – Harare and Bulawayo.
“As at September 30, MFIs were saving about 198 000 clients through 417 branches but the problem we have is that most if not 80 percent of the branches are in Harare and Bulawayo,” he said.
“It means the people who are supposed to be targeted who are in the rural areas are not having access to banks and MFIs as well, so we need to look at distribution of branch networks.”
The micro-finance institutions have previously been lauded for filling a gap in provision of financial services which conventional banks, that also tend to favour operating in cities and towns, have failed to service. It is estimated that the top 20 MFIs control about 89 percent of the market share in the sector.
Mr Mataruka said the central bank was also considering reviewing the licence tenure for MFIs, currently renewed every year, to lengthen the period for planning purposes. Not only MFIs have fallen victim to the current harsh economic environment as a number of banks have in the past few years also shut down as a result of cash constraints coupled with poor corporate governance. – New Ziana.
Online Reporter