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Dr Mlambo said this during the Zimbabwe SME Banking and Micro-Finance Summit held in Harare yesterday in a presentation on the regulatory environment of SME banking and micro-finance sectors in the country.
“As the central bank we are confident that once the Microfinance Bill currently before Parliament comes into law as soon as possible, it will provide for a number of issues such as licensing and supervision of both credit only and deposit taking institutions not yet in place,” he said.
SMEs are faced with many challenges in accessing funding or loan facilities from financial institutions because of a number of reasons mainly to do with collateral.
Dr Mlambo added that only about 18 percent of SMEs in the country have access to formal financial service institutions while the majority put their savings “under the pillow”.
“It is worrying to note that only 18 percent of SMEs in Zimbabwe have access to financial services which is mainly due to lack of suitable and acceptable collateral,” he said.
“Information and tools to prepare bankable project proposals, lack of proper financial records and very high interest rates,” the central bank’s deputy governor added.
Dr Mlambo said SMEs therefore end up resorting to credit-only microfinance institutions for funding and records actually show that total loans issued by these MFIs in December 2011 amounted to US$63 million before increasing to about US$94 million by December 2012. However, despite the increase MFIs are seriously under-capitalised and only offer a limited range of financial products while charging excessive interest rates, in some instances as high as 40 percent per month.
Dr Mlambo also said that as the regulatory authorities it was their mandate to make sure that they come up with policies that can achieve financial stability, financial system integrity and adequate protection for consumers.
The apex bank deputy governor said the RBZ was also charged with ensuring inter operability of electronic systems and guarantee security and safety for transactions.
“As the central bank we strive to offer financial stability that encourages system integrity while ensuring maximum protection of the consumer and security of all transactions.
“It is in line with this that we came up with such provisions as the minimum capital requirement of US$5 million by December 2014 for MFIs,” added Dr Mlambo.
He urged financial institutions to embrace financial inclusion in the financial services sector and hailed the mobile banking and financial services, Internet banking and other innovations that have since been implemented.
He said a number of measures such as relaxation of opening of basic accounts, permitting branchless banking through agents and business correspondents and relaxation of credit qualifying criteria could also help achieve financial inclusion that will go a long way in assisting SMEs.
Dr Mlambo expressed optimism that by the end of the year at least one micro bank should be operational in the country.
“Currently there is a commercial bank that has notified us of their desire to be issued a micro banking licence and it is our sincere hope that by the end of this year we should be having at least an operational micro-bank,” he said.
Online Reporter