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Business Reporter
THE credit-only microfinance institutions (MFIs) have recorded a 15,2 percent growth to ZWL$2,136 billion in total asset size in the first quarter ended March 2021 from ZWL$1,854 billion in the previous quarter.
In its performance report for the period, the Zimbabwe Association of Microfinance Institutions (Zamfi) said the credit-only MFI total asset size reflects a growing industry.
“The bulk of the assets have been invested in loan portfolio, constituting 79 percent of the total asset size,” it said.
The remaining 21 percent is largely in fixed assets. Zamfi said the distribution of the total assets was more in favour of the loan portfolio, which is strategic to gaining more income from the assets through lending business.
During the quarter the capital base of credit-only MFIs amounted to ZWL$946,5 million, reflecting a 574,1 percent increase from ZWL$140,4 million reported in March 2020.
The positive performance of the sector was largely attributable to the adoption of digital technology, which is critical in facilitating loan disbursements and repayment.
Zamfi said a majority of MFIs were already above US$25 000 or ZWL$2 million minimum capital threshold required by the Central Bank for compliance by 31 December 2021 for credit-only microfinance institutions.
“The sector is therefore adequately capitalised and is expected to remain stable with capacity to absorb any unexpected losses in the near future with minimal capital risk,” said Zamfi.
“The key source of the capital growth for the industry shall remain being retained earnings while shareholders equity and debt capital shall continue to play a complementary role to the overall capital injection strategy for the MFIs,” it said.
The credit only MFI sector recorded net profit of ZWL$144 million, up from ZWL$2 million in the corresponding period ending March 2020. While the country was on lockdown during the corresponding periods of Jan- March 2020 and Jan- March 2021, the association said the sector was able to weather the storm during the latter period, an indication of improved and strong operational resilience.
Despite the positive gains, Zamfi says the sector is still exposed to the risk of unfavourable macro-economic environment as well as policy changes that may negatively affect its operations.
It hailed the recently announced Reserve Bank of Zimbabwe (RBZ) Covid-19 ZWL$500 million facility for MSMEs to be disbursed by banks and microfinance institutions as a noble funding initiative to improve the productive capacity of the majority of SMEs.
“Going forward the sector remains hopeful that working together as partners in the financial inclusion agenda shall continue to bear fruits for the betterment of the greater good of the society at large,” said Zamfi.
Online Reporter