Four Microfinance Institutions close shop in 1st quarter

THE number of Microfinance Institutions (MFIs) in the country have been gradually decreasing due to the failure to meet compliance requirements.

According to the Reserve Bank of Zimbabwe’s Microfinance Industry Report for the Quarter ended March 31, 2015, four MFIs failed to renew their operating licences during the first three months of this year.

“The number of registered microfinance institutions (MFIs) decreased from 147 as at 31 December 2014 to 143 as at 31 March 2015 as some institutions failed to renew their operating licences,” said the central bank’s report.

However, the MFIs that have continued to operate seem to have gone on an expansion drive as indicated by a rise in the number of outlets across the country.

The report shows that the number of MFI branches increased from 473 at the end of last year to 499 as at March, 31 2015. Nine MFIs had branches of between 17 and 51 across the country.

And of the main cities, Harare has the highest numbers of MFIs with 124, followed by Bulawayo with 41, Gweru with 27 and Masvingo with 24. Mutare and Kwekwe had 28 and 18, respectively.

Notwithstanding the reduction in the number of operating MFIs, the remainder’s performance in respect of loans was improved during the period under review. But the increase was in respect of existing clients rather than new ones.

“The sector recorded an increase in total loans from $156.99 million as at 31 December 2014 to $163.51 million as at 31 March 2015, despite the decrease in the total number of licensed MFIs, number of clients and number of loan accounts.

“The growth in total loans is largely attributable to increased lending to existing customers with less focus on new clients by the MFIs as a way of managing delinquency levels in their portfolios,” said the RBZ.

“High level of delinquency levels in the sector has forced some microfinance institutions to scale down their lending activities and at times cease operations.”

The central bank said the growth of the microfinance sector continues to be hampered by funding challenges largely attributed to the general market illiquidity and high cost of funding. — BH24.