adminZamfi executive director Mr Godfrey Chitambo told members in Bulawayo on Friday that the draft Micro-finance Bill will be tabled before Parliament before an all-stakeholders’ meeting is held.
The Micro-finance Bill, if enacted into law, would govern operations of companies in the micro-finance sector.
“We have been told that the Bill is now in Parliament for reading after which it will come back to stakeholders for discussion within weeks. In two weeks, people are expected to give their views. As Zamfi members, we need to be ready to give our views before the Micro-finance Act is promulgated,” he said.
The all-stakeholders’ conference will include the Consumer Council of Zimbabwe, World Bank, the donor community, opinion leaders such as parliamentarians, and media.
Mr Chitambo said his organisation was working towards the formation of a body that would be responsible for monitoring the implementation of the Micro-finance Act once promulgated.
“During the stakeholders’ meeting, Zamfi members will be constituted in the Micro-finance Advisory Council and it is the body that will represent our views as we move towards enacting the Micro-finance Act,” he said.
He said due to the absence of a Micro-finance Act, micro-finance institutions could not secure $15 million allocated by Government in 2010.
“Two years ago, the Ministry of Finance set aside $15 million to resuscitate the micro-finance sector but we are yet to be given that money because Parliament noted that there was no Act regulating the sector,” said Mr Chitambo.
Speaking at the same occasion, Zamfi deputy director, Mr Reuben Muchada, said the draft Micro-finance Bill was premised on supporting the borrower.
“We have a collective effort to respond to the draft Bill when it comes for discussion with other stakeholders,” he said.
Zimbabwe’s micro-finance sector is faced with challenges that include lack of funding, regulatory and reputational issues.
The Reserve Bank of Zimbabwe recently withdrew trading licences for McDowell’s and All Angles money-lending institutions for unethical business practices.
“Our meeting is also being held against the background that a recent circular from the RBZ revealed that there are some institutions that were charging interest rates as high as 50 percent per month, translating to 600 percent per annum.
“Such interest margins are not acceptable. While it is true that whatever interest rates that you charge should enable you to recover your operational costs, an interest rate of 50 percent is unacceptable.
“In our environment, an interest rate exceeding 20 percent per month is not viewed in good light by our authorities,” said Mr Muchada.
He said the 20 percent interest rate included all charges including loan application handling fee.
“We are dealing with hard currency that does not bounce like a ball. As Zamfi, we are appealing to you all to refrain from charging usurious rates,” he said.
He said micro-finance institutions had been branded “loan sharks”.
“This is because some are charging outlandish interest rates as well as demanding bizarre, vastly disproportionate and often illegal collateral requirements,” he said.
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