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MICROfinance institutions have been urged to be transparent and comply with all regulatory laws in their operations, an official has said.
Speaking at a public meeting held in Bulawayo on Wednesday, Zimbabwe microfinance wholesale facility (ZMWF) managing director Brian Zimunhu said it was important for MFIs to spell out their lending conditions clearly to enable borrowers to make informed decisions.
“It is important that you set your lending conditions clearly so that when borrowers come to borrow they will be fully aware of what is expected of them before they sign borrowing documents,” said Zimunhu.
“Clarifying all the conditions will help clients to understand and know whether they qualify or not to apply for loans which will reduce operational costs.”
Zimunhu said being transparent would increase the MFI portifolio, promote client loyalty and increase chances for borrowers to get funding timely, adding that background checks on potential clients was critical for their survival.
“You should consult credit reference bureaus to make sure that the person or company you are lending to is not over-indebted. This will reduce a scenario where the borrower will fail to pay back the money,” said Zimunhu.
He said the MFIs should consult with their clients before lending them money to establish if the business they want to venture into would be viable or not.
“MFIs must first talk to the clients before you lend them money to make sure you know what they are going to use the loan for and whether the business will be profitable or not,” he said.
Pensioners called on the MFIs to be inclusive by offering services to the pensioners because most of them are concentrating on lending to small businesses and salaried individuals.
“We want MFIs to put up conditions which are favourable to pensioners because we do need loans to carry on our projects since we are retired. We need interest rates which are affordable,” said one participant.
derick.khumalo