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Oliver Kazunga, Senior Business Reporter
THE Zimbabwe Association of Micro Finance Institutions (Zamfi) is lobbying the Reserve Bank of Zimbabwe to extend the tenure of operating licences for microfinance institutions from one year to five years and above.
At the moment, both credit-only and deposit-taking micro finance institutions (MFIs) have licences with one-year tenure and this is reducing investment into the sector due to confidence issues.
The licence tenure for the banking and insurance sectors including asset management firms is perpetual.
In an interview, Zamfi executive director Mr Godfrey Chitambo said:
“The major issue, which is not a secret, is that a one-year licence does not give too much confidence in the MFIs themselves who would have deployed their capital because they have got only a year in terms of what they are aware of.
“So far, we are happy that the Reserve Bank of Zimbabwe has renewed for those who are worth renewing so that they can operate legally in the coming year.
“But what we want is also not to give the Central Bank a lot of burdensome work by spending much of the time working on the registration processes of MFIs.”
He said Zamfi and the monetary authorities including the Ministry of Finance and Economic Development have been amicably working to improve the conditions that promote viability within the MFI sector.
“Our only challenge, which we keep on reminding them in an amicable manner, is that an intention remains an intention until it has materialised into a result.
“And we would be happiest if the licensing tenure for MFIs is extended to at least five years for credit-only institutions and an indefinite tenure for deposit-taking institutions,” Mr Chitambo said, adding that Zamfi was happy they were being updated on progress in that regard while indications were that the licensing tenure could be extended by the start of the second quarter next year.
“It would be welcome if the licensing tenure could be raised to five years for credit-only and an indefinite period for deposit-taking MFIs. The monetary authority has a lot of other very important issues, which we think must be done to take Zimbabwe to the next level to make sure that this country is open for business”.
There are 196 credit-only MFIs and six deposit-taking institutions under the sector. Operators believe a longer term licensing also gives confidence to existing MFIs and potential investors into the sector.
In the past, RBZ availed among others a $15 million women empowerment fund into the MFI sector.
MFIs have been recognised as critical to promoting economic development in the country.
— @okazunga
Online Reporter