adminMicrofinance Institutions (MFIs) disbursed loans worth around $17 million in the first quarter of the year to various sectors of the economy, an official has said. Zimbabwe Association of Microfinance Institutions (Zamfi) executive director Mr Godfrey Chitambo told New Ziana the sector was playing a big role in driving economic development although access to funding for on-lending remained a major challenge.
“At least $17 million has been disbursed in the first quarter of this year,” he said.
The comparable figure disbursed during the same period last year could not be immediately established.
Small businesses mostly in the informal sector as well as individuals are major beneficiaries of financial support from the microfinance sector.
The informal sector is the heart of the Zimbabwean economy, providing employment to more than five million people.
Mr Chitambo said the role of MFIs remained largely misunderstood as only the negative aspects and malpractices by some operators usually came under the spotlight.
“Members of the public only hear snippets about MFIs, the other positive issues are rarely portrayed in the media,” he said.
MFIs have been rechristened loan sharks due to the exorbitant interest rates of more than 50 percent per month which some of them charge and the heinous means that they use to deal with defaulters.
Mr Chitambo said while there were various sources from which MFIs could get funds for on-lending, the interest rates were however prohibitive.
Since the adoption of multiple foreign currencies, MFIs have managed to get funds for on-lending from commercial banks, the Diaspora and donors while some have used their personal funds.
Most investors pulled out of the sector at the height of the country’s economic challenges in the past decade which led to the closure of a number of MFIs.
But with the anticipated enactment of the Microfinance Bill, expectations are high that investors will trek back, as this will mark the return of order and confidence in the sector. — New Ziana.
Online Reporter