Chronicle Editor
Rutendo Nyeve, Sunday News Reporter
THE Reserve Bank of Zimbabwe (RBZ) says there are only three out of the eight operating deposit-taking microfinance institutions (DTMFIs) that are compliant with the minimum capital requirement of ZW$5 million.
The three are African Century Limited, Inn Bucks Microbank and Success Microfinance Bank while the other five that are not yet compliant are Empower Bank Limited, Getbucks Microfinance Bank, Lion Microfinance Limited, Ndoro Microfinance Bank Limited, and Zimbabwe Women’s Microfinance Bank Limited.
In his mid-term monetary policy released this month, RBZ Governor Dr John Mangudya said only three out of eight operational DTMFIs were compliant with the minimum capital requirement of ZW$5 million.
“Three out of eight operating DTMFIs are compliant with the minimum capital requirement of ZW$5 million as at 30 June 2023, and these are African Century Limited, Inn Bucks Microbank and Success Microfinance Bank. The other five non-compliant DTMFIs are at various stages of capital raising and they continue to submit on a quarterly basis, updates on their re-capitalisation initiatives. As at 30 June 2023, the aggregate core capital for the DTMFI sub-sector was $131.32 billion, a significant increase from $29.49 billion as at 31 December 2022. The increase was largely driven by fresh capital injections, as well as organic growth,” said Dr Mangudya.
He said the RBZ recognises the importance of the microfinance sector in fostering access to financial services for low-income households and micro, small and medium enterprises adding that they also bridge the gap between banks and microfinance institutions to cover a wider spectrum of clients to low-income populations thereby creating a saving culture among their clients.
The Central Bank said a total of 170 out of 208 credit-only microfinance institutions were compliant with the minimum capital requirements of ZW$ equivalent of USD25,000 with the non-compliant credit-only microfinance institutions putting in place re-capitalisation strategies to comply with the requirements and to facilitate the underwriting of more meaningful businesses.
Overall, the RBZ noted that the microfinance sector was increasingly considered a key instrument in the implementation of effective and sustainable strategies aimed at poverty alleviation and inclusive economic development.
“The microfinance sector in Zimbabwe continues to contribute towards the attainment of Zimbabwe’s 2030 Vision of ‘an upper middle-income society by 2030’ through the provision of essential financial services to low-income and marginalised communities and their micro and small enterprises.
“On aggregate, the sector registered growth in all the main performance indicators over the review period, including loan portfolio, capitalization level, profitability and deposits mobilisation by the deposit-taking microfinance subsector. As at 30 June 2023 there were 216 registered microfinance institutions, comprising 208 credit-only and eight deposit-taking microfinance institutions,” said Dr Mangudya.
He said the microfinance sector registered an increase in aggregated equity from $35.91 billion as at 31 December 2022 to $250.23 billion as at 30 June 2023. The increase was attributed to organic growth and fresh capital injection by some microfinance institutions.
The sector also saw an increase in loan from ZW$46.01 billion as at 31 December 2022, to ZW$355.50 billion as at 30 June 2023.
“The sector registered an improvement in the loan portfolio quality as evidenced by a decrease in the portfolio-at-risk (30 days) ratio from 10.95 percent to 9.48 percent over the same period.
“The microfinance sector registered significant progress with an aggregate net profit of $145.52 billion for six months ended 30 June 2023, from $4.93 billion recorded during the comparable period in 2022. The increase, which exceeded the annual inflation of 175.8 percent as at 30 June 2023, was largely attributed to improved operational efficiency as reflected by an improvement in the average operational self-sufficiency (OSS) ratio,” said Dr Mangudya.
With the growing number of micro, small to medium enterprises country wide, the microfinance sector is expected play a role towards the formalising the sector. — @nyeve14.
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