May 2, 2024
MFIs dish out $31,8 billion loans
MICROFINANCE institutions (MFIs) extended $31,82 billion in loans to various productive sectors of the economy during the third quarter that ended September 30, 2022, the Reserve Bank of Zimbabwe (RBZ) has revealed.
This was a huge jump from the $5,86 billion recorded in the third quarter of 2021. According to central bank data, the industry’s total loan portfolio increased by 100,63 percent over the period under review.
Reserve Bank of Zimbabwe governor John Mangudya
“The average loan size per borrower increased by 96,78 percent to $111,38 million from $56,60 million owing largely to the need for bigger loans in response to the various new business opportunities that were arising from the relative stability being experienced,” RBZ said.
The top 20 micro-finance institutions had an aggregate loan book of $25,95 billion, which constituted 81,58 percent of the total sector loan portfolio. RBZ revealed that the performance and accountability reporting (30 days) ratio declined from 10,39 percent to 9,99 percent throughout the quarter, somewhat improving the portfolio quality compared to the five percent worldwide benchmark.
Accordingly, the number of active clients in the sector increased by 1,95 percent during the quarter under review, from 280,172 at the end of June 2022 to 285,634 at the end of September 2022. “The increase in active loan clients is attributable to the upscaling of business activities following the relaxation of Covid-19 restrictive measures as medium enterprise businesses including vendors sought funding to boost operations.”
MFIs had their net profit rise from $1,18 billion to $9,70 billion, a 725,69 percent gain, during the quarter that ended on September 30, 2021. “The increase was generally driven by interest income, revaluation reserves and application of cost containment measures,” it said.
In comparison to the international standard of 100 percent, the sector’s operational self-sufficiency ratio slightly increased throughout the assessment period to 210,18 percent as of September 30, 2022 from 202,50 percent in June 2022, suggesting the self-sustainability of the industry. In the period, one deposit-taking MFI was compliant with the minimum capital requirement of ZW$ equivalent to US$5 million.
On the other hand, a total of 51 credit-only MFIs were not compliant with the minimum capital requirement of ZW$ equivalent to US$25 000, in comparison to 34 institutions in the previous quarter. The sector was given the nod to lend in foreign currency, a move that meant microfinanciers considered a value preservation strategy and policy with the capacity to improve the profitability and sustainability of the sector.
