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Microfinance Sector Optimistic Of A More Fruitful 2023

By Shingirai Vambe

With financial services being largely foreign-owned when the economy still performed well, the microfinance business was conducted informally and was known with its Shona name ‘chimbadzo’.

In essence, chimbadzo was an illegal business which would be done secretly.

Today, Zimbabwe has over 200 registered micro-finance institutions, as a result of changed macro-economic environment.

The country finds itself in die economic circumstances which requires many people to acquire small loans.

The Zimbabwe Association of Microfinance Institutions (ZAMFI) last week organized a capacity building workshop for its members with the internationally-based consultants of the Financial Inclusion Advocacy Centre.

The regulator, the Reserve Bank of Zimbabwe (RBZ) was invited as a guest to officiate.

RBZ Deputy Director Bank Supervision-Rachael Mushosho receiving flowers from ZAMFI Chairman, Felix Muzvondiwa

RBZ director bank supervision, Rachael Mushosho said ZAMFI was taking an active role to make sure that the sector is capacitated because microfinance institutions had a role to play in improving financial inclusion.

She said the central bank had taken note of submissions made during the workshop, and as the regulator, they are going add this primary information in the national financial inclusion strategy implementation plan.

“The central bank, as the regulator has taken a great initiative in terms of facilitating capacity building and before the end of next month, we are going to have a financial services fare where MFIs are supposed to participate and showcase their products,” said Mushosho.

“This year we are going to have an investor forum, a Global Money week CEO roundtable where MFIs have been included, to showcase why it is critical for the young to take a career in micro finance. What you are also doing, your products and services which are inclusive as you are targeting those that are marginalized,” added Mushosho.

“We expect that you surpass the target as you are aware that the banks focus on big corporates. As MFIs, your work to engender financial inclusion initiatives is being recognized as you target an area of the economy which we think is critical in terms of financial inclusion,” she said

The work of MFIs has been taken with a keen social interest, but only a few are able to take deposits while the majority are credit only facilities.

The issue of rates was one of the most topical subjects.

Consultants, (FIAC) dealt with opportunities post Covid-19, performance management, delinquency and digitalization of systems in the sector.

Most MFIs faced challenges during and after Covid-19, with many failing to recover loans they had given out during the period.

MFI participants at the just ended acceleration program-pic by Shingirai Vambe

Some 33 of the MFIs closed down as a result of the pandemic and the current economic environment.

The acceleration program was attended by 32 officers from 12 different institutions and they all raised issues around the policies which in most cases are in short terms and the unavailability of the credit facility from the central bank only meant for the commercial banks.

It’s a risky business, they all said.

ZAMFI CEO, Godfrey Chitambo urged members to fully-participate in such programs as they engage and interact with organizations that are best fit for their operations.

“Out of over 200 members, less than 20 have positively responded. The training came at a cost of US$500 but we negotiated that downwards so that more of us could attend,” added Chitambo.

US-based Godfrey Crenstil and UK-based Roderick Ahaye shared experiences of the sector in different other countries.

They described the model to be similar though in Zimbabwe there remains need to move with speed towards digitalization.

Zimbabwean MFIs should also seek licencing so that they could be able to accept deposits.

The local MFI wad praised for targeting different marginalized groups including rural women and such youths as university students.

Adding to that, the Ministry of Information and Communication Technology together with the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) are leading government efforts to digitalize all key sectors of the economy.

The ZAMFI board chairperson Ailex Felix Muzvondiwa said this was a good start for the association in 2023.

“It’s is my hope that 2023 will be a profitable and successful year for the microfinance sector. Indeed, it’s us who will make it successful,” he said

Some of the participants at the just ended workshop are FirstMutual, Redsphere, Tottengram, FMC, Yambukai to mention just a few.